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Dinh Vu

Economic Sector

Last updated: Wednesday, September 19, 2018


Flat-rate Revenue Creating Fair Environment for Doing Online Business

Posted: Friday, September 15, 2017

The General Department of Taxation has employed various measures to encourage, communicate and urge organisations and individuals doing online business to fulfil tax obligations.

The General Department of Taxation under the Ministry of Finance issued Official Document 2623/2017 on strengthened tax administration for e-commerce business. The General Department directed its subordinate tax departments to cooperate with the State Bank of Vietnam (SBV) to request the SBV Inspectorate to support providing account statements of organisations and individuals doing e-commerce business opened at commercial banks in Vietnam and non-bank institutions licensed for provision of intermediary payment services by the SBV.

After two months of deployment, the number of organisations and individuals doing online business registering for tax payment with tax authorities is lower than expected, said a senior official from the General Department.
The General Department intensified tax administration for e-commerce business, including doing business via social networks. The agency submitted Official Dispatch 6015/BTC-TCT dated May 10, 2017 to the Ministry of Finance to report to the Prime Minister. Then, the General Department sent Official Dispatch 2623/TCT-CS dated June 16, 2017 to heads of Provincial/Municipal Tax Departments for implementation.

Under the direction of the General Department of Taxation, local tax authorities have reviewed individuals with signs of doing online business via Facebook to identify and classify them regardless of whether they registered tax or not. After two months of application in Hanoi and Ho Chi Minh City, tax departments have checked accounts of 27,000 personal accounts whose owners had signs of doing business via Facebook. They have classified them into groups for easier management. If social network accounts have been deactivated and unavailable, no notifications will be sent to them. As for active users, tax authorities will update their personal data to serve tax calculation.

In case individuals use social network accounts to advertise products for sale for corporate entities, they will be subject to regulations on corporate entities. If individuals have not registered for tax, authorities will guide them to register and declare business revenue. After two months, around 3,000 unregistered individuals sent official feedback to tax offices.

An official from the General Department of Taxation said, it is always very difficult to manage tax subject to individuals doing business in Vietnam, including doing online business via social networks and doing business in traditional form because of their low sense of law compliance, very small business scale – with profit just enough for daily livelihoods, and cash on delivery payment. In addition, doing online business is open to everyone, including freelance workers, students, housewives, and even public employees.

There are certain risks in taxing individuals doing online business via social networks as they may not be present at fixed locations, have certain IT levels and hard to determine real business value if data are collected via social networks. They typically have a low sense of law compliance, do not use bookkeeping, and run very small business – enough for them to live from hand to mouth. The value collected from this sector accounts for less than 2 per cent of total State budget revenue).

Therefore, stepping up tax administration in this area is not aimed at increasing State budget revenue but ensuring business equity for all while raising people's respect for the law.

Tax authorities have not focused much on fields that brought in small tax for the State.

They are building individual business databases which will be used as the base for determining revenues and tax payables of individuals. The database is collected from official sources like land administration authorities, commercial banks, power suppliers, water suppliers, communication service providers, and delivery service providers.

In the coming time, the General Department of Taxation will continue communicating and directing local tax authorities to carry out solutions to support individuals registering and declaring business revenue. Taxable value is from VND100 million upwards.

Thanh Nga

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