Online traders who do not make tax declaration and tax payment may be subject to criminal penalties

Sir, the Tax sector is conducting a review to collect taxes from online traders, could you tell us about the legality of the tax sector on collecting tax arrears from these account holders?

The tax sector collecting tax arrears from online business account holders is completely consistent with the law. Social networking is becoming more and more popular and many people are making a big profit from these activities. According to the provisions of Point i, Clause 1, Article 2 of Circular 95/2016/TT-BTC, people conducting social business activities are those subject to tax payment.

Thus, withholding tax declaration and payment will be considered an administrative offense in the field of taxation as provided in the Clause 3, Article 1 of Circular 166/2013/TT-BTC. Acts of withholding tax declaration and payment will be handled in accordance with the Clause 1 of Article 13 of Circular 166/2013/TT-BTC, together with remedial measures taken by State agencies to enforce tax arrears payment in accordance with the provisions of Paragraph 6, Article 13 of Circular 166/2013/TT-BTC.

Thus, based on the above, the tax sector have rights to collect tax arrears from the account holders on the social network.

What will the online business account holders face if they do not declare and pay taxes?

According to the above legal documents, if online account holders do not declare and pay taxes on arising income or other taxable items within 90 days after the deadline for payment as prescribed by law, they will be regarded as conducting acts of tax evasion or tax fraud under Clause 1, Article 108 of the Tax Administration Law.

Accordingly, depending on the tax evaded and fraudulent tax amounts, online business account holders will be administratively sanctioned with one to three times the evaded tax amount and forced to fully pay taxes into the state budget as prescribed by the Article 13 of Circular No. 166/2013 / TT-BTC.

Seriously, online business tax holders can be subject to criminal penalties of up to 5 years imprisonment for individuals, plus a fine of up to 10 billion VND, as well as being permanently suspended from commercial legal entities for their tax evasion under the regulations of Criminal Code.

To avoid these risks, what should online business account holders do?

In order to avoid such risks, account holders need to voluntarily and proactively carry out procedures for tax declaration and payment at local tax administration agencies.

At present, the responsible agencies have implemented the propaganda and guidance on tax obligations, as well as the application of measures from encouragement and information to online business account holders for voluntarily doing business registration procedures and tax declaration. However, after a period of implementation, besides account holders who actively declare, there are still many individuals “waiting for the stars” or deliberately avoiding, ignoring after receipt of the tax collection request from the tax department.

Online business account holders should know that when a collection decision has been issued, guided and disseminated, with taxpayers that still deliberately delay or ignore tax declaration procedures, the Tax agencies in accordance with the law, have the legal tools to determine that the act is a tax evasion. These account holders may be subject to tax administrative sanctions and, if necessary, may be subject to criminal prosecution.

Besides, many cases, when being asked to declare tax, look for every reason to prove that the turnover is not more than 100 million VND per year, so as to not pay taxes (the Circular 92/2015/TT-BTC dated June 15, 2015 ). However, the functional agencies can coordinate with related units such as the bank where the account is opened, the transport service provider with collections... to review and collect information for inspecting the accuracy of the tax declaration and payment. Therefore, in addition to being active, online business account holders also need to declare honestly to avoid legal risks later.

Thank you, Sir!