Before the regulation that banks must provide taxpayers' account information to the tax office, online merchants have passed on many ways to "avoid tax".

Decree 126 has stricter regulations on tax administration for individuals
engaged in online business. Photo: Thuy Linh 

However, online businesses transact vigorously and many times in the e-commerce environment will not be able to "anonymize" for too long because the tax administration’s legal corridor is complete.

Tax evasion

In Vietnam, the potential for business development on social networks and e-commerce is huge. According to the General Department of Taxation and data provided by joint stock commercial banks, there are currently more than 18,300 organizations and individuals opening accounts at banks with the total income received from the websites of social network Google, Facebook, Youtube totalling more than VND1.4 trillion.

However, many say that this is actually just the tip of the iceberg, when many individuals doing business on social networks are always looking for ways to hide their income and avoid taxes.

With the above situation, Decree 126/2020 / ND-CP of the Government detailing a number of articles of the Law on Tax Administration (effective from December 5) has stricter regulations on tax administration of individuals engaged in business online.

Specifically, according to the provisions of Clause 2, Article 30 of Decree 126, from December 5, commercial banks are responsible for providing transaction information via the account, account balance and transaction data according to proposals of the heads of tax administration agencies to serve the purpose of inspection and examination to determine payable tax obligations. At the same time, to take coercive measures to enforce administrative decisions on tax administration according to the provisions of the tax law.

After Decree 126 was issued, online dealers continued to try to bypass the authorities.

Specifically, recently, a series of owners of sales pages on Facebook simultaneously shared information such as: "From December 5, banks have an obligation to provide account information to the tax agency. Expect customers to have a bank transfer note: No need to record any payment, do not mention anything, do not mention Facebook.”

Many Facebook public accounts used to sell in the past. Receiving money is now also quietly deleting information and all transactions are reported via Facebook, Zalo or via phone numbers. Not only that, there are other ways to "avoid" taxes such as: Priority in cash collection; dividing multiple accounts to receive money (even keeping an account in the name of a relative); if the customer has a bank transfer, he/she just writes the name and takes a screen capture to send and suggest customers when transferring money only to write the information "donation or gift" and not mention the word "goods".

Ms. Ta Thu Dung (owner of a clothing store on Nghia Tan, Cau Giay, Hanoi) said that it is not fair for online shop owners to find ways to avoid such tax obligations.

"We lose our shop rentals, we have to pay license fees and personal income tax fully to the tax office, why do many online businesses whose revenue is bigger than us do not have to pay tax? Using the social networking platform without having to pay taxes, the price of their products will be much cheaper than us. It is not fair," said Ms. Dung.

The Tax Office will "trace" in any way

According to Assoc. Prof. Dr. Dinh Trong Thinh, a senior lecturer at the Academy of Finance, it is unfair that online businesses avoid tax because traditional businesses always pay taxes fully. Moreover, helping sellers to circumvent the law and evade taxes will cause a lot of consequences.

"In developed countries, if the account increases by US$1,000, the bank will be on behalf of the tax authorities to ask where this US$1,000 is, how and what kind of taxes do you pay to help customers for tax declaration and tax payment? To avoid tax evasion, there must be close coordination between local authorities, banks, tax authorities, market management," said Associate Professor, Dr. Dinh Trong Thinh

According to many experts, Decree 126 will be a "barrier" to prevent tax evasion of some individuals doing business on e-commerce sites and social networks, making tax collection transparent and contributing to the state budget. At the same time this will ensure fairness in tax liability between traditional business and business on digital platforms.

Facing this issue, Deputy Director of the General Department of Taxation Dang Ngoc Minh said that in reality, there was a situation of dealing with and avoiding taxes when this Decree took effect. The situation of online transactions without names and content to avoid tax is gradually becoming more common. However, the leader of the General Department of Taxation affirmed that in one way or another, the Tax Office will also find out, there will be many measures to collect taxes.

According to the provisions of Decree 126 and the current Law on Tax Administration, one principle of tax compliance of individuals and organizations is to declare, pay and be responsible for their own behavior. Accordingly, in all cases, if the individual evades tax, they will be found by the tax agency based on the payment "traces", payment records, and transactions on e-commerce sites. If an individual has a lot of transactions on the e-commerce environment, then that person cannot remain hidden forever.

Regarding tax enforcement with accounts, the leader of the General Department of Taxation said that the current law allows synchronous implementation of seven enforcement measures, including: notice, name, request to pay tax via account, control invoices. Depending on the circumstances and conditions, the tax agency will consider using the most effective method. The ultimate goal is how to correctly and fully collect taxes.