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Assoc. Prof. Dr. Le Xuan Truong, the Dean of Senior Lecturer of Tax, the Academy of Finance.

A reporter of the Customs Newspaper exchanged with Assoc. Prof. Dr. Le Xuan Truong, the Dean of Senior Lecturer of Tax, the Academy of Finance about this issue.

Being aware of the "loopholes” in the management of tax collection for online business, the General Department of Taxation has directed the local tax authorities to review and implement the collection measures. What do you think about this move?

This is a appropriate and necessary move in the tax administration. According to the Law, taxation is an obligation of all organizations and individuals and tax administration, which must be lawful, public, transparent and equal. This means that when determining that an online business person is subject to tax, but in practice the tax obligation has not been fulfilled, the tax authority shall strengthen management within its powers and responsibilities. This is reasonable.

Could you please explain more about the "reasonable” tasks that you confirmed. Or, in other words, is there any legal basis for the tax department to require individuals doing online business to fulfill their tax obligations? Do these individuals violate the Law if they do not pay taxes, Sir?

Till now, the legal basis for determining the tax obligations of online business is very clear. I would like to refer to some specific provisions as follows:

Article 4 of the Law on Value Added Tax (VAT) states: "VAT payers are organizations and individuals producing and trading goods and services subject to VAT".

Article 2 of the Law on Personal Income Tax (PIT) stipulates that "PIT payers are resident individuals who have taxable incomes defined in Article 3 of this Law arising inside and outside the Vietnamese territory and individuals and non-residents with taxable incomes specified in Article 3 of this Law and arising in the Vietnamese territory. " Point a, Clause 1, Article 3 of the Law on Personal Income Tax stipulates the objects liable to PIT as "income from production and trading of goods and services".

In addition, Article 7 of the Tax Administration Law which regulates the obligations of taxpayers also emphasizes the obligations, including: tax registration; accuracy and submitting tax records on time, and paying full tax at the right place in a timely fashion.

From the references above, individuals with taxable income of any kind (whether or not having a fixed place, doing business in the traditional or online business) must register, declare and pay taxes in accordance with the Law. If they fail to declare and pay tax, it means that individuals doing business online have violated the tax Law.

Similar to companies, under the Law on Tax Administration, VAT Law, CIT Law and other tax laws, enterprises and economic organizations that conduct online business must also register, declare and pay taxes in accordance with the Law. Failure to do so is a violation of the tax Law.

Although the Taxation has been "encouraging" taxpayers by sending messages and notifications to individuals doing an online business, the number of people who registered with the tax office is lower than expectations. In your opinion, what should the Taxation do to make online business tax collection effectively?

In order to effectively manage the taxes on this mode of business, the tax sector has many things to do.

First of all, it is necessary to complete the system of legal documents (Laws) on tax administration for organizations and individuals engaged in the e-commerce business. At present, the legal framework for tax administration for an e-commerce business is the Electronic Transaction Law No. 51/2005 / QH11. However, the guiding documents of E-transaction Law only deal with socio-economic relations in specific areas. In fact, the difficulties and obstacles in controlling the trading of goods and services of individuals doing business online over the past time and the distinctive characteristics of this business field show that it is necessary to have the Law on electronic transaction and tax administration in the e-commerce business. This system of law will contribute to clarifying the obligations and responsibilities of carrying out procedures for registration, declaration, electronic transactions of business organizations and individuals, electronic commerce; the order and procedures for conducting goods purchase and sale transactions in online business; responsibilities and powers of the tax agencies, the Ministry of Information and Communications and the Ministry of Industry and Trade in managing e-transactions of online business organizations and individuals; the order and procedures for inspections, examination and handling of violations in e-commerce business activities.

In addition, the General Department of Taxation should set up a department specializing in the prevention of high-tech tax fraud. This may be the Center for Prevention of High-Tech Tax Fraud under the General Department of Taxation with the functions of advising the competent authorities on promulgating legal provisions on the prevention and fight against high-tech tax fraud; building professional procedures in order to detect and prevent acts of tax fraud involving the use of high technologies; coordinating with the General Department and Tax Inspectorate to focus on enterprises with signs of fraud.

On the basis of revising the legal framework for tax administration for e-commerce business activities, tax authorities at all levels should take the initiative in coordinating with related state agencies (the Ministry of Information and Communications , The Ministry of Industry and Trade) to implement professional measures to control online business transactions and guide individuals to fulfill tax obligations for the State.

Equally important, we need to do propaganda well for online businesses to understand to fulfill tax obligations, to the whole society to understand and support the tax administration.

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Thank you!