Law on Tax Administration (revised): need to "process" regulations related to anti-price transfer

The Draft Law on Tax Administration (revised) was just submitted for the third time with better regulations on tax administration. Photo: Internet.

The elaborate preparation process

The Draft Law on Tax Administration (revised) was just submitted for the third time with better regulations on tax administration. To develop the content of the draft law, the Ministry of Finance reviewed the 10-year assessment of tax administration, developed a report referring to international experiences as a basis for drafting the Law on Tax Administration (amended); collaborated with some professional associations, Vietnam Chamber of Commerce and Industry to hold the workshop for comments on the Draft Law; built the official document for the opinions of relevant ministries and branches.

At the same time, the Draft Law on Tax Administration has been posted on the electronic portal of the Government, the Ministry of Finance and the General Department of Taxation to get opinions widely from people and businesses. So far, the Ministry of Finance has received 110 comments from organizations, agencies and units inside and outside the Ministry of Finance.

At the meeting of Deputy Prime Minister Vuong Dinh Hue and leaders of some ministries, branches, the National Assembly Finance and Budget Committee discussed about the draft Law on Tax Administration (amended) on the morning of 27/8, Deputy Minister of Finance Tran Xuan Ha said that most of the opinions agreed on the scope of regulation of the draft law regulating the management of taxes and other revenues of the State budget managed by the tax authorities. However, some people said that other revenues belonging to the budget that are not managed by the tax office should also be closely monitored. They also questioned about the appropriateness of management of other revenues from the budget. With these comments, the Ministry of Finance has continuously absorbed, criticized and completed the content of the draft law.

Under the careful preparation of the Ministry of Finance, Deputy Prime Minister Vuong Dinh Hue evaluated that the draft law was meticulously prepared. However, Deputy Prime Minister Vuong Dinh Hue asked the Ministry of Finance to explain clearly the amended contents and scope of the Law. In particular, it is necessary to emphasize that the inheritance of existing regulations are still valid; to ensure the spirit of strict management of taxes and create favorable conditions for the parties involved in the implementation of duties and obligations; to intensify the application of information technology in tax administration in order to further reduce administrative procedures, improve transparency and management capacity; to adapt to the development of science and technology for good tax management, especially for informal sector business.

Capture the trend of digital economy

Commenting on the Law on Tax Administration (revised), Deputy Prime Minister Vuong Dinh Hue requested the Drafting Committee to make more efforts to adapt and apply scientific and technological achievements to tax management and tax collection. In reality, the technology is developing rapidly, creating diversified and complex economic and digital models. The tax department must be aware of this trend, coordinate with related ministries and sectors to fully implement the tax policies, create equity for all taxpayers.

"The amendment to the law must be adapted to the rapid development of science and technology, especially in the context of the Revolution 4.0. At present, there are many new forms and methods of business, such as e-commerce. Therefore, to manage the tax on this activity, the tax agency must also change their management method accordingly," the Deputy Prime Minister emphasized.

Together with that, the Deputy Prime Minister requested the Ministry of Finance to revise the provisions of the current law on the authority to remove tax arrears, late payments and fines.

"With the current levels of fines, the Minister can completely issue a sanction decision instead of pushing responsibility to the Prime Minister. The Prime Minister should only issue decisions on exemption from late payment in case of natural calamities, fires, unexpected accidents or other force majeure events," said the Deputy Prime Minister.

The Deputy PM also asked the Ministry of Finance to "process" regulations related to anti-price transfer of multinational companies in the direction of developing measures to prevent erosion of profits, strictly manage the excessive deduction of interest expenses to settle the situation that in Vietnam, subsidiaries transfer their profits abroad through the loans of the holding company which is the capital contribution in essence. It is necessary to have a closer look at taxation rights of Vietnam with indirect capital transfers from foreign companies that own property in Vietnam, and add tools for handling taxpayers who establish a nominal company without substantial business.

The provisions of the draft law ensure that affiliated enterprises pay taxes commensurate with the value generated in Vietnam on the basis of research and application of international practices such as risk allocation, independent transactions... There should be more clarification in the law on the provision of associated companies’ tax records; study and supplement the administrative sanction in effect with the act of failing to declare and deliberately failing to comply with the adjustment of transfer pricing.

The Deputy PM also asked the Ministry of Finance to re-evaluate the invoices management policies in VAT (self-printed invoices) because in fact, there are enterprises that do not issue invoices, they purchase invoices from "ghost" enterprises for fraudulent tax rebate and fraudulent tax deductions. At the same time, conduct the removal of inventory invoices creating a gap in invoice management and tax evasion. "No matter how we reform the tax, we cannot distort the nature of taxation," said Deputy Prime Minister Vuong Dinh Hue.