Tighten inspection of income tax from social networks

Inspections ofmore than 500 businesses

According to the Ho Chi Minh City Tax Department, in 2019, through inspection and examination of 531 enterprises in industries, fields and activities with high tax risks, more than VND746 billion was collected and fined, the loss was decreased by VND1,193 billion, and the deduction was reduced by VND40 billion. In particular, a number of hot topics with a high amount of retrospective tax, such as: subjects of businesses with associated transactions, Ho Chi Minh City Tax Department has inspected 54 enterprises with associated transactions, collected and fined nearly VND45 billion, and reduced losses bymore thanVND161 billion.

In order for enterprises to comply with tax declaration and payment according to regulations, besides training, propagating and supporting the declaration of transfer prices according to the current tax policies, the HCMC Tax Department has guided tax administration for enterprises having associated transactions with more than 3,000 enterprises, auditing companies, tax agents, departments, branches and more than 700 tax officials conducting inspection activities to raise their awareness and operational skills.

In addition, the fight against tax losses for construction and real estate businesses has been drastically implemented by the HCMC Tax Department.

Subjects of inspection are cases of transfer of projects or real estate, or construction (main contractors and subcontractors), or lending money not according to market prices to optimize tax costs; enterprises incurred many initial investment costs for their project but could not account for it, so investors seek ways to increase costs to offset expenses.

Through inspection in 2019, VND124 billion was collected and fined, the loss was decreased by VND96 billion, the deduction was reduced by VND2 billion from 70 inspected businesses;121 enterprises were inspected and checked after VAT refund, resulting in VAT refund recovery and a fine of VND155 billion.

Add tax management tools from social networks

According to the HCMCTax Department, the situation of organisations and individuals receiving high income from abroad but not voluntarily declaring taxes has been a problem.

In 2019, the HCMC Tax Department inspected 103 organisations and individuals, collected and fined VND19 billion in personal income taxes from individuals and organisations with income from Google, Facebook and YouTube but they did not declare and pay taxes.

Notably, among thousands of people earning money from making content for social networking sites, only 22 organisations and individuals voluntarily declared their additional income in 2019.

This year, after a review, the HCMC Tax Department found a YouTube channel owner who earned up to VND19 billion in the three years of 2016-2018 but did not declare and pay taxes.Only when this person was invited to the office, this person admitted and paid the arrears tax of VND1.5 billion. Therefore, the HCMC Tax Department will focus on inspecting and reviewing suchcasesto avoid tax losses.

Regarding the tax declaration and payment by organisations and individuals trading goods and providing services online, the HCMC Tax Department said in 2019, only 56 organisations and individuals voluntarily made additional declarations. The HCMC Tax Department has inspected 580 organisations and individuals, with a total of collected tax and fine of more than VND41 billion.

In particular, a business that had revenues from providing advertising services and online game services to organisations and individuals in Vietnam and abroad, but the tax payment declaration was insufficient. According to the inspection results from 2015 to 2018, the HCMC Tax Department collected arrears and fines with more than VND20.8 billion of late payment.

According to the HCMC Tax Department, the Law on Tax Administration 2019 will come into effect on July 1, 2020, which provides for the responsibility of providing taxpayers' information.

Accordingly, organisations and individuals at banks must provide their account number information according to taxpayers' tax identification numbers to tax administration agencies.In addition, the bank is also responsible for deducting and paying tax obligations of organisations and individuals in foreign e-commerce businesses that generate income from Vietnam; block the taxpayer's account of enforcement of administrative decisions at the request of the tax administration agencies. Thus, after July 1, 2020, the amount of Personal Income Tax arrears is forecast to increase sharply as the tax authorities will review a wide range of banks, not just a few that provided information like last time.