The Ministry of Finance proposed that the tax management law be amended to improve efficiency (Photo: VNA) Hanoi (VNA) - The Ministryof Finance has proposed amendments to the Law on Tax Management, aiming toenhance efficiency of tax collection from multinational companies, cross-bordertransactions and online businesses.
In a recently announced statement about a proposal for compiling an amendeddraft on the Law on Tax Management, the ministry offered to increase the timefor tax inspection.
Currently, the maximum time for a tax inspection is 45 working days and 70working days for complicated cases. However, conducting tax inspections atlarge-scale or multinational companies with a complicated structure andrelated-party transactions are time-consuming.
The ministry said that it normally took more than one year for tax inspectionat foreign-invested companies such as Metro and BigC and the tax watchdogs mustcollect information from mother companies or foreign tax agencies.
The ministry cited statistics of the Organisation for Economic Cooperation andDevelopment (OECD) that time for implementing an inspection of transfer pricingaveraged 573 working days in the world.
The current regulations are no longer suitable for implementing tax inspectionsat all companies, the ministry said.
The ministry proposed that the time fortax inspection at companies with related-party and cross-border transactions beincreased to 360 working days.
According to the finance ministry, the law needed to be amended to efficientlycalculate and collect taxes from global technology companies such as Google andFacebook.
The ministry said most global technologycompanies did not register their business or have official representativeoffices in Vietnam while their transactions were cross-border, making it hardto calculate and collect taxes.
For example, Google and Facebook provided online advertising services inVietnam in two ways. The first was through agencies in Vietnam and the secondwas conducted through online payment via credit cards or e-wallets.
The ministry said that it was difficult to clarify the real values oftransactions conducted in the second way.
In addition, it was also not easy to verify advertising revenues from clickcounts of foreign Internet companies as doing this would require checks ofpayment transactions at banks of both buyers and services providers but banksof foreign Internet companies were mostly abroad.
“The tax management of online businesses faces difficulties in clarifyingtaxpayers, revenues, business scale and transaction history,” the ministrysaid, adding that co-ordination between relevant ministries and agencies mustbe enhanced to better manage tax collection from e-commerce businesses.
Accordingly, the ministry proposed the State Bank of Vietnam to study theregulation of requiring cross-border payment transactions to be conductedthrough local payment gateway (the National Payment Corporation of Vietnam).
Only by this, could tax watchdogs manage values of cross-border transactions toimpose tax, the ministry said, adding that many countries in the world such asEuropean countries, India and South Korea, had such a regulation.
The finance ministry also proposed the Ministry of Information andCommunications require foreign technologies companies such as Google, Facebookand Apple to declare and pay foreign contractor tax on the services provided toVietnamese organisations or individuals.
The ministry also called for enhanced co-operation with foreign tax agenciesand Internet services providers like VDC, FPT, Mobifone, Vinaphone and Viettelto better manage values of e-commerce transactions and banking payments.
For individuals selling things online, the finance ministry proposed to imposevalue added tax and individual income tax on products with prices above 1million VND (44 USD) and when transacted two times per day or more.
The ministry said that business through social network pages was booming inVietnam but tax management was still lagging behind.
The Ministry of Finance also proposedinvestigation function to be empowered to tax watchdogs, adding that some 80countries in the world currently had tax investigation bodies.
The ministry has sent a document to the Ministry of Planning and Investment torequest checks on business operation, after finding that thousands ofimport-export companies halted operation or removed their office addresseswithout reporting.
This triggered worries that those firms took advantage of open businessregistry procedures to start a business then halt operations to avoid and evadetaxes.
The ministry’s statistics showed that in 2015 and 2016, more than 1,000 firmsabandoned their addresses and had no operations in at least six months.
More than 15,400 others had no import-export activities in at least six monthswithout reporting to the management agencies while their information on thebusiness registration portal was still “operating”.
Twenty-four firms were found with tax violations but they abandoned theiraddresses without completing bankruptcy and dissolving procedures followingestablished regulations to avoid paying tax arrears and fines. Especially,eight of them had tax arrears worth 12 billion VND.
With the aim of tackling this issue, the finance ministry proposed the Ministryof Planning and Investment to complete the mechanism for co-operating inmanaging business operations.-VNA
VNA
