Tax authorities will strictly manage online business with “huge” revenues

Organizations and individuals doing business online are obliged to pay tax in accordance with the law. Photo: ST.

Hard to find transaction

In order to strengthen tax administration for e-commerce businesses, including individuals doing business via social networks, under the guidance of the General Department of Taxation, tax departments have carried out a review of individuals having business signs on Facebook to identify and classify individuals who have registered tax or not. According to the General Department of Taxation, so far, the Hanoi Tax Department and the of Ho Chi Minh City Tax Department have reviewed about 27,000 personal accounts who have business signs via Facebook.

Tax offices have classified subjects to apply appropriate management methods such as: for closed accounts no longer operating, they will not send notices; for business individuals currently under the management of tax offices that use social networks for advertisement of goods, the tax offices will update their information in the database for determining the revenue. After the implementation, about 3,000 individuals in the group have not registered for tax to the tax authorities.

However, these are only statistics, and in reality, individuals with large sales appear more and more in the form of selling on Facebook, such as by post, livestream, and sales via open groups or private groups.

This is a challenge for the tax administration to manage this type of business. According to the General Department of Taxation, e-commerce transactions have virtual characteristics, are difficult to verify identity information, and easy to delete and alter, so it is difficult to capture transactions. As a result, the current taxation management for online business forms is very difficult, because of: difficulties accurately determining taxpayers, turnover, and grasping the scale of business, as well as the whole transaction processing. Especially, business individuals through social networks are not present at a fixed location and having low level of information technology, it is difficult to determine the real business turnover if only based on social transaction information.

Use technology to manage technology

Assoc. Prof. Le Xuan Truong, Dean of Graduate Studies, Academy of Finance, said that business organizations and individuals are obliged to pay taxes in accordance with the law. Tax authorities must take measures to ensure that taxpayers, not the tax authorities, are willing to pay taxes. To do that, first of all, individuals must declare themselves. If an individual does not declare himself/ herself, the tax office shall use professional measures to investigate and determine turnover as the basis for tax calculation. The Law on Tax Administration clearly stipulates the bases for the tax office to set the turnover as the basis for tax calculation. The process of investigating fixed taxation allows the participation of local governments, tax councils and a large number of taxpayers. Therefore, the determination of the tax rate is not exactly accurate, but it will be the legal basis applied in practice.

According to Mr. Truong, the nature of tax administration for online sales is the tax administration of e-commerce business. The general principle is that since individuals using Internet technology for transactions, the tax authorities also use technology to capture information and manage taxes. The experience of South Korea is that their General Department of Taxation establishes a Center for the Prevention of High Tech Tax Frauds to guide professional measures and directly coordinate with state agencies to manage taxation for online business individuals. In addition, the mechanisms and policies should be applied in the direction of simple, open procedures, low tax rates, information publicity, transparency... to ensure the right to freedom of business of the people.

In order to be able to better manage this new type of business, according to expert Ngo Tri Long, "First, it must simplify tax policy, second is forced coercion and third, sanction. The tax sector must be transparent, strict, clear and timely improve its level. If implemented drastically, then the number of online businesses will have to be careful, and from that, the tax declaration will be rule driven.

Messages to individuals who have high profit via social media, Ms. Nguyen Thi Cuc, Chairman of the Vietnam Tax Consultant Association said that, individuals doing business in general, including individuals doing business online, must have a sense of observance of tax law in order to ensure the lawful business interests according to the provisions of law, without affecting the business activities and family life.

"Regarding the tax domain, according to the provisions of the Law on Tax Administration, within 10 days as from the date of commencement of production and business activities, tax registration must be made with the tax agencies for guidance to declare and pay tax according to regulations if the business turnover is more than VND 100 million per year. In case of failure to declare and pay tax, it shall be determined as an act of tax evasion, which shall be subject to a fine of up to 3 times of the tax amount payable, and more seriously, shall be examined for penal liability. Therefore, business individuals should know the rules for proper implementation”, Ms. Nguyen Thi Cuc advised.