Providing bank account information: Legal status increased to prevent tax loss from e-commerce

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Decree 126/2020/ND-CP guiding the Law on Tax Administration takes effect from December 5. Photo: Thuy Linh.

Enhancing responsibility in providing information by the bank

According to Decree 126/2020/ND-CP guiding the Law on Tax Administration, from December 5, commercial banks shall provide information about taxpayers' payment accounts to tax authorities.

Specifically, at the request of the tax authority, the commercial bank shall provide information about each taxpayer's payment account, including the name of the account holder, the account number according to the tax code issued by the tax authority, account opening date, and account closing date.

In addition, the commercial bank shall provide transaction information via the account, account balance, transaction data at the request of the head of the tax authority for inspection to determine the payable tax obligations and apply coercive measures to enforce administrative decisions on tax administration in accordance with the tax law.

Decree 126 states that tax authority is in charge of keeping information confidential and is fully responsible for information security in line with the Law on Tax Administration and relevant laws.

Notably, Decree 126 also stipulates that the commercial bank shall implement tax deduction and tax payment under authorization by overseas providers who do not have a permanent establishment in Vietnam and are engaged in e-commerce business with organizations and individuals in Vietnam as per the provisions of Clause 3, Article 27 of the Law on Tax Administration.

Every month, the commercial bank and payment service provider shall declare and pay the deducted amount and pay tax under authorization by overseas providers to the State budget under the form issued by the Minister of Finance.

According to many experts, in recent years, many individuals have earned from Google, YouTube or multinational companies exploiting online advertising services with billions of dollars in revenue in Vietnam, but have not paid taxes. This is not acceptable.

“The supplementation of regulations on commercial banks providing account information, tax deduction and authorized tax payment in the Law on Tax Administration will be more legal and more effective, especially for cross-border e-commerce transactions. Thereby, it contributes to preventing tax losses from this field, and raising awareness for income recipients who intend to implement tax avoidance,” an expert said.

Information transparency

Nguyen Duc Huy, Deputy Head of the Office of the General Department of Taxation, said that stemming from the tax collection on e-commerce business activities, according to the Law on E-commerce Business, to determine the income source, the tax authority must have information from the bank. If the previous Law on Tax Administration stipulates that the commercial bank must provide relevant information to the tax authority upon request, Decree 126 and the current Law on Tax Administration stipulate that in addition to providing information as required, the commercial bank must provide periodic information to the tax authority.

“The providing of periodic information about taxpayers’ accounts by the bank is only applied to a few specific cases, especially with e-commerce business activities associated with foreign parties. For example, the tax authority will request the bank to provide information about an individual in Vietnam paid by Google pays for Play store issuance. The tax authority will grasp information and request the taxpayer to declare and pay tax. This regulation does not apply to all taxpayers' bank accounts,” Huy said.

According to the representative of the General Department of Taxation, this is specified in the circular and the regulations on coordination between the Ministry of Finance and the State Bank. This is just one of the factors for determining taxes, not for all and is not based on balance fluctuations in the account to calculate tax.

This regulation will help the management of e-commerce tax to be more transparent. If the individual declares and pays taxes in a transparent manner, there is no problem.

In particular, taxpayers do not have to worry about information disclosure because the tax authority still has the right to ask banks to provide customer information to serve tax administration. The tax authority is also responsible for the confidentiality of customers' personal information in accordance with the law.