On October 4, 2016, the Ministry of Finance issued Decision 2128/QD-BTC on pilot application of electronic tax declaration to house-leasing individuals in Hanoi and HCM City. The pilot period will last from November 11, 2016 to December 31, 2017 and the scope of application will be expanded later on. Granting an interview on the sidelines of the press conference on new points in this pilot deployment on October 21, Ms. Nguyen Thi Hanh, Director of Personal Income Tax Department under the General Department of Taxation, said that this will be the start of electronic tax declaration applicable to individuals. This new approach will be applied in more fields to facilitate taxpayers as stated in the e-government roadmap. Le Hien reports.
Why did the authority choose to pilot the declaration of corporate income tax and value-added tax to house-leasing individuals, rather than other entities in the society?
We have studied the case years before we chose to pilot electronic tax declaration to house-leasing individuals. We thought that they have a more stable income from rentals and have certain level of knowledge to apply information technology to interact with the tax sector than other subjects in society. Therefore, this application is well-founded and highly practical.
What benefits will taxpayers have?
The electronic tax declaration allows house-leasing individuals in need of declaring value added tax and personal income tax via internet means, thus facilitating taxpayers. For the time being, landlords have to declare and pay personal income tax and value added tax on a quarterly basis. At the time of tax declaration, they have to go to tax offices where they have leasing properties and then go to banks/treasuries for tax payment. Many taxpayers fulfil procedures on the due date for tax declaration and payment. Many people have permanent addresses in Ho Chi Minh City but they rent houses in Hanoi and possess houses for lease in other localities like Quang Ninh, Hai Phong and Hai Duong. If they do not directly go to registered offices to declare and pay taxes and ask others to do these instead, the latter may confront emerging issues that they cannot settle on their own. And, they will easily get fined for being late in tax payment. Even in Hanoi and HCM City, many people living in downtown have to go to suburban areas to carry out tax payment procedures because they have houses for rent there.
Carrying out tax declaration procedures in one-stop single-window tax offices and settling tax payments at treasury offices/banks in public business hours is rather inconvenient for people having to work during that time. They have to leave their working places to get taxes paid.
The current tax payment method takes both time and money from house-leasing taxpayers. Meanwhile, they need only one-off registration to open electronic tax payment accounts on information portals of tax authorities and follow provided instructions to have their procedures done. After completing the registration and filling in the form, they can settle tax payments from internet-connected devices from home. Furthermore, they can carry out tax payments anytime they want. Currently, four banks are serving this scheme, including Vietcombank, Agribank, BIDV and Vietinbank.
Is house-leasing tax declaration mandatory or not? What are applicable tax rates? How will the tax sector manage this activity to avoid tax losses?
The electronic house-leasing tax declaration is a new additional public service that tax authorities want to provide for people in a bid to further reform administrative procedures. This is not obligatory to taxpayers. They can still complete procedures as previously if they prefer.
The electronic tax declaration targets individuals having tax codes administered by tax authorities, using internet-connected devices (capable of receiving messages) and having e-mail address. Under the current law, the taxable house-leasing income is VND100 million onwards a year. The personal income tax is 5 per cent and the VAT is 5 per cent.
To avoid tax losses in this business, tax authorities will impose strict supervision at all levels of management on housing declaration of people. After information technology is applied smoothly, personnel for tax payment service will be reduced accordingly. Thus, we can assign more personnel to take on supervision and inspection.
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