Tightening inspection of tax collecting from social network

Taxpayers implemented declaration of personal income tax at HCM City Tax Department. Photo: T.H

Inspecting more than 500 enterprises

According to HCM City Tax Department, in 2019, by checking and inspection 14 specialised projects with 513 enterprises operating in sector with high risk of tax evasion, tax authorities collected tax arrears and sanctioned more than VND 746 billion, reducing loss by VND 1,193 billion, deducting VND 40 billion. In particular, it included a number of topics with a high amount of tax arrears which were received many concerns, such as specialised project on enterprises with associated transactions, Ho Chi Minh City Tax Department inspected 54 enterprises with associated transactions, collected and sanctioned nearly VND45 billion, reducing losses by more than VND161 billion.

To help businesses implement tax declaration and payment in accordance with regulations, besides training, communication and supporting declaration of transfer prices complying with current tax policies, HCM City Tax Department has instructed on tax administration for enterprises that have associated transactions with more than 3,000 enterprises, auditing companies, tax agents, departments, sectors and upwards of 700 tax officials doing inspection work to raise awareness and professional skills.

In addition, revenue loss prevention for construction and real estate businesses has also been drastically implemented by the HCM City Tax Department. The subjects of inspection are cases transfering projects or real estate, or construction (main contractors and sub-contractors), or lending money without following market prices to optimise tax expenses; enterprises arising many initial investment costs for the project but it cannot enter in accounts, so investors seek ways to increase costs to offset the amount already spent.

Via inspecting in this field in 2019, the tax authority collect and sanctioned VND124 billion, reducing a deduction of VND 96 billion, a decrease of VND 2 billion from 70 enterprises that are subject to inspection and post-audit after refunding VAT of 121 enterprises, resulting in the recovery of VND 155 billion.

More tax management tools from social networks

According to the HCM City Tax Department, organisations and individuals receiving "huge" income from abroad but not voluntarily declaring taxes has been a painful issue in the past time.

In 2019, Ho Chi Minh City Tax Department inspected and checked 103 organisations and individuals, collected and sanctioned VND19 billion of personal income tax from individuals and organisations earning income from Google, Facebook and YouTube but did not declare to pay taxes. Notably, among thousands of people earning income from generating content for social networking sites, in 2019, only 22 organisations and individuals voluntarily made additional declarations of income. In 2019, after checking, Ho Chi Minh City Tax Department discovered an individual living in Ho Chi Minh City who was a YouTube channel owner, earning an income of up to VND 19 billion from 2016-2018 but this person did not declare to pay taxes. Only when the force made contact, this person admitted and paid fully the amount of arrears tax of VND1.5 billion. Therefore, HCM City Tax Department would focus on inspecting and checking these objects to avoid tax losses.

Regarding tax declaration and payment by organisations and individuals trading goods and providing online services, Ho Chi Minh City Tax Department said in 2019, only 56 organisations and individuals voluntarily made additional declarations. Ho Chi Minh City Tax Department has inspected 580 organisations and individuals, with a total amount of tax recovery more than VND 41 billion. In particular, a business that generated revenue by providing advertising services and online game services for organisations and individuals in Vietnam and abroad but failed to declare and pay full amount of tax payment. From the inspection results from 2015 to 2018, Ho Chi Minh City Tax Department collected arrears and sanctioned by more than VND 20.8 billion of late payment.

According to the Ho Chi Minh City Tax Department, the Tax Administration Law 2019 will take effect from July 1, 2020, stipulating the responsibility of providing taxpayers information of organisations and individuals at banks to provide information about account numbers according to tax codes of taxpayers to tax authorities. Besides that, the bank is also responsible for deducting and paying tax obligations of organisations and individuals living aboard operating e-commerce activities that generate income from Vietnam; blocking accounts of taxpayers subject to administrative enforcement decisions as request by tax authorities. Thus, after July 1, 2020, the amount of personal income tax to be collected is forecasted to increase strongly because tax authorities will review a wide range of banks, not just a few that provide information like in the past.