Tax authority “refuses” to collect insurance premium

	Different comments on proposal to let Tax agency collect social insurance
	Proposing Tax authority to collect compulsory social insurance
	Expenditure for social insurance management only increased by 6%

Illustrative photo. Source: Internet

In the draft statement on proposal for development of the Law on Tax Administration (amended) issued by the Ministry of Finance for comments, the merger of collection of Social insurance premium into the Tax authority is one of the two solutions provided by the Ministry of Finance. This work is to simplify administrative procedures and facilitate tax payers and social insurance premium payers and improve the business environment.

In the two solutions, the first solution is to implement as current, it means that the tax administration and collection of social insurance premium are still implemented by the Tax authority and Insurance authority. However, for this solution, the Ministry of Finance said that the coordination between the two authorities achieved certain results but still did not reach expectation. The reason was that there were many differences between the two authorities such as the declaration and payment time to have a basis for calculation of personal income tax and social insurance premium.

The second solution causes many disputations, because the Tax authority will collect compulsory insurance amounts for employers. According to leaders of the Finance sector, the positive point of this solution is to reduce the quantity of declarations to be submitted to the State agencies.

The Ministry of Finance said that the solution helped to reduce management cost of the State management agency. With the implementation of this solution, the Tax authority is the leading agency in charge of inspection for employers in complying with the policies on tax and social insurance.

In negative terms, the leaders of the Ministry of Finance also acknowledged that in the initial period of merger of collection of Social insurance premium into the Tax authority, the Tax sector needs to grasp specialized knowledge in collection of insurance premium.

However, between the two solutions, the leaders of the Ministry of Finance proposes to select the second solution, which means that the Tax authority collects social insurance premium.

The Ministry of Labor, Invalid and Social Affairs, Vietnam Social Insurance has proposed to implement the first solution, which means that the collection of tax and social insurance premium is independently implemented by the Tax authority and Insurance authority as per current provisions. These agencies also have proposed the Finance sector to add international experience with the issue.

Ministry of Home Affairs, Ministry of Information and Communications, Ministry of Planning and Investment, Vietnam Chamber of Commerce and Industry (VCCI) have said that the second solution needs to be considered, because it could increase the workload for Tax Authority.

In addition, representatives of the ministries have also expressed their views that the data and human resource for Tax sector still has shortcomings. It is necessary to have specific roadmaps and plans to do tax and insurance administration well.

For Ministry of Justice, this Ministry has assessed that the merger and transfer will greatly affect the arrangement of the two authorities’ apparatus. Therefore, the Ministry proposed the Ministry of Finance to strictly evaluate for the above solution to ensure the feasibility in the implementation. On the other hand, the Ministry also said that it is necessary to specify whether or not compulsory social insurance amounts are subject to the amendment of the Law on Tax Administration.

For Tax Departments, the statement also showed that 17 tax departments proposed to select the first solution. Because the amounts of Tax and Social Insurance is different in terms of nature, collection policy and collecting agency.

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The representatives of Tax departments also said that the Tax authority is also faced with many difficulties in performing their tax collection tasks and other receivables due to the tax debts of enterprises. Moreover, some receivables must be authorized to other agencies. Therefore, the tax Department said that if selecting the solution that the tax agency shall collect the social insurance premium, the implementation will be very difficult. Furthermore, the merger will lead to misunderstandings by people because the tax agency collects too many fields.

Receiving opinions from ministries, sectors and units, the leaders of Ministry of Finance stated that the above content would be amended towards the Tax authority only to coordinate to exchange and provide information and set up specialized inspection on the compliance with provisions of the law on Social insurance and Tax of income payers and individuals in collecting Social insurance premium.