Tax collection from house rental needs inter-sectoral coordination

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Lawyer Ha Huy Phong, CEO of Inteco Law firm

Recently, to control revenues from the rental of houses, Ha Noi Tax Department and HCM City Tax Department have taken measures to prevent tax loss from the rental of houses, apartments and business premises. How do you assess this?

Article 5 of the law on Tax Administration No.38/QH14/2019 stipulates that all organisations, households, household businesses, individuals shall pay their taxes in compliance with the law. This provision shows that all organisations, households, household businesses, individuals have arisen taxable incomes and subject to tax payable, must pay taxes. We must comply with this provision in a unified, equal and drastic manner. It is not only about anti-tax loss but also the State management and the fairness for all taxpayers.

The strict control of these revenues by some localities is necessary and must be widely performed across the country. In this context, this performance is essential, and inter-agency coordination should be strengthened to prevent the Covid-19 pandemic while ensuring interests of society and related entities.

Circular 92 of the Ministry of Finance provides that the revenue from apartment rentals is subject to revenue from rental property. However, according to a report from the taxman, many taxpayers have not yet complied with the regulation. What is the solution for the taxman to control the revenue?

Revenue from idle assets that is leased out by owners such as houses, cars, business premises, etc and those assets provide income for lessor, are subject to taxable income. However, many taxpayers have not yet paid taxes due to their lack of awareness. On one hand, many individuals and households do not know about this regulation because they think they only lease out these assets to earn more income and not for business purposes. On the other hand, some taxpayers know about their tax obligations but they avoid or evade taxes. The taxman does not have sufficient tools and effective solutions to manage these assets.

To promote efficiency of the operation, we need to take effective measures, including controlling of declaration of assets, incomes combined with document and invoice regime of individuals and households with business registration and without business registration.We should implement solutions for non-cash payments and databases of income and expenditure of those to control legal and illegal cash flows. Because, the income and expenditure of taxpayer are not declared, so the taxman cannot manage taxable income sources.

First of all, the Tax administration should work with other agencies in each area to manage these lessors to encourage them to implement tax obligations and force them to pay taxes if necessary.

To prevent tax loss for house rental, in addition to the performance of the taxmen, cooperation from local governments is necessary. Should the regulations on the responsibilities of relevant agencies in tax administration for this operation be issued or not?

Inter-sectoral coordination is essential, but each agency has different functions and tasks, so the performance of each agency should be specified. In the 4.0 era, the connection of data and information in the e-Government environment may be implemented. For example, ward police can list lessors, and the taxman can use this data to check their tax obligation. However, it is not necessary for police to check each lessor. Each field is managed by a focal point to avoid overlapping in the management scope, causing trouble and negative impacts for the people.

Cooperation and assignment of rights and obligations of each administrative agency in the same area is an effective method to implement public administration, rather than assignment to all management agencies.