Thorny Problem of Tax Evasion, Fraud in Catering, Shopping Services

Some restaurants in Hanoi and Ho Chi Minh City do not give invoices to their customers. If their customers ask for invoices, they usually say “Please leave your information here and return to take your invoices next week” or “Please go to our office at…”. Moreover, they usually give non-tax invoices to customers although their bill value includes the value-added tax (VAT). In the meantime, many customers do not know whether their bills include VAT or not. Furthermore, troublesome steps to get VAT invoices inhibit them from these papers. But, many units exclude this tax from selling prices and they will add 10 per cent of VAT when their customers request invoices. This option will dent consumers’ pockets and many do not want to spend additional time and money.

 

Furthermore, some units often request customers to provide tax codes before they issue invoices. This adds more difficulty for buyers. Nevertheless, Point 3, Section II, Part A of Circular 120/2002/TT-BTC dated December 30, 2002 of the Ministry of Finance on instructions on printing, issuance, management and use of invoices provide that “Invoice content must have sufficient of following items to be legally valid: Full name; address; tax code (if applicable), payment account (if any) of buyer and seller; name of goods and service, counting unit, quantity, unit price and value of goods; tax rate and VAT value; total payment value; and signatures of seller and buyer. This means that tax code is not a mandatory element on VAT invoice. In case the buyer does not take the invoice or provide the name and address, the supplying party must still issue invoice and clearly write down “This buyer does not get the invoice" and leave bill payment stub for check by authorities.

 

Preventing tax loss in economic life in general and in food business sector in particular is quite difficult and complicated. The government drops a substantial amount of tax every day as food business is very popular across the country. And, many companies are willing to purchase invoices to legalise their profits, thus adding more difficulty to tax authorities.

 

An official from the General Department of Taxation said, counteracting the act of VAT invoice fraudulence in catering service units is difficult because tax authorities must notify companies of their visits three days before they arrive while the fine value is small. When selling units do not issue invoices in time, they will be fined merely VND10 million. If they do not issue invoices, they will be punished for the act of tax evasion and the rate of fine is equal to three times of the value recorded on those invoices. Therefore, the fine value is too small in relation to gains taken by violators from their acts. Indeed, the punishment is not strong enough to deter.

 

The General Department of Taxation added that the tax sector has made every effort to stop tax loss in business units. Nevertheless, millions of units are operating eateries while tax inspectors are too thin to perform a full examination. In fact, the tax service sector has also studied possible solutions to uproot tax evasion by imposing stricter accounting controls in business units and connecting their accounting networks with tax authorities. This solution is used by many countries in the world. Nonetheless, in Vietnam, it will need more time to carry out further studies and complete technical infrastructure systems. To limit tax losses in catering business and protect legitimate rights and interests of consumers, invoices must be issued and taken by consumers.