Revised Law on Tax Administration: Covering the "loophole" of e-commerce tax administration

Currently, the current Law on Tax Administration is managing taxpayers under self-declaration and self-payment mechanism. Picture: Thuy Linh.

Many "loopholes"

In Vietnam, many companies have recently developed a kind of online business through the purchase of goods, services, advertising... on the media such as television, e-commerce website, floor e-commerce transactions, and social networks of foreign countries. This business model is growing because of the convenience of the characteristics of the type of business over the network. However, according to Assoc. Prof. Le Xuan Truong, Head of the Tax and Customs Department of the Financial Academy, E-commerce tax is a sector that is losing money in many localities, because Tax authorities have not put these people into management and have not controlled the business transactions of these objects.

"Regarding mechanisms and policies, the current Law on Tax Administration has created the basis and allowed tax agencies to take initiative in managing taxpayers in traditional and e-commerce environment as prescribed in the self-declaration mechanism; The third party's obligation is to provide information (including electronic information), and modernization of tax administration (encouraging the implementation of electronic transactions). These regulations have created a management "loophole" from the business registration authority. In addition, the combination of network operators, tax authorities and commercial banks are not close to the loss of tax revenue in this business," Mr. Truong shared.

According to Mr. Truong, now the number of individuals with "terrible" revenue from online business is not rare. Evidence is that individual cases collected by the tax authorities are up to billions VND. However, these cases are only discovered after the data is provided by the bank about the fact of "cash flow" on the account as these individuals only accept tax payment after the entry of the investigation agency. This shows that the self-declaration mechanism will not work if there is no strict control mechanism and the active participation of the tax authorities alone. This business can be controlled.

On the other hand, in the view of Mr. Hoang Thuy Duong, Deputy General Director of KPMG Vietnam, difficulties encountered in managing and collecting taxes on e-commerce are partly due to the lack of specific tax policy for this new and unique sector. For example, the Ministry of Finance issued Circular No. 103/2014/ TT-BTC dated August 6, 2014 guiding the performance of tax obligations applicable to foreign organizations and individuals doing business in Vietnam or has income in Vietnam. However, this Circular does not specifically regulate the field of electronic commerce, such as methods of calculating, declaring and paying taxes associated with the characteristics of this field.

According to the General Department of Taxation, the management of tax on e-commerce only stops in the immediate measures, according to each case, but no overall and long term strategy. The management of taxes on e-commerce still faces difficulties arising from the inherent characteristics of the digital economy, as well as unfinished policies.

Building legal barriers

According to many experts, our country still lacks a lot of tools to manage e-commerce taxes such as databases, technical infrastructure, systems, human resources, supervision and morality of a Law-based order for the people. This is an indispensable consequence of the rapid development of social relationships that are strongly supported by the rapid development of information technology, which is currently outdated.

Therefore, in order to manage the tax in general and e-commerce in particular, the tax authorities are still able to facilitate taxpayers, prevent and mitigate the adverse consequences of e-commerce, and expand the tax base in the context. At present, there should be a system of new legal documents suitable for e-commerce activities.

In the draft Law on Tax Administration (amended), the Ministry of Finance has added provisions related to tax management for e-commerce activities such as database development; Electronic tax services (electronic tax returns, electronic invoices, online tax payments ...). In addition, the draft Law on Supplements defines the responsibilities of ministries, agencies, organizations and units. The State Bank of Vietnam (SBV), commercial banks, the Ministry of Industry and Trade, the Ministry of Information and Communication, the Ministry of Public Security, etc., The State must co-ordinate with the Ministry of Finance in managing taxes on e-commerce activities. Specifically, the State Bank must develop the national payment system, e-learning for use in e-commerce models, setting up a mechanism for managing and monitoring payment transactions in order to serve the State management in supplying operation for cross-border services in e-commerce.

In addition, the Draft Law on Tax Administration (Amendment) further stipulates that the tax authorities must set up "data processing centers in e-transactions" to receive and control tax dossiers (tax registration, declaration tax, tax collection, tax refund, tax exemption,...) and automatic check, pay notice to taxpayers automatically.

According to Mr. Cao Anh Tuan, Deputy General Director of Taxation, in the development of digital economy, cross-border transactions are quite common. To manage the tax on this activity, there are two very important contents that the tax authorities have reformed, that is the implementation of electronic invoices and payments through banks. If we do not manage these two issues, we will not create an equal business environment among businesses.