In the plan to strengthen revenue management, urging collection and fight against revenue loss in 2021, Mrs. Phan Thi Thang, Vice Chairman of HCM City People's Committee, Director of HCM City Steering Committee on prevent revenue loss, suggested that the HCM City Customs Department and Tax Department should cooperate with other units to combat the revenue loss.

HCM City Customs official check enterprise’s dossier. Photo: T.H

Anti-transfer pricing from associated transactions

To prevent revenue loss, HCM City Customs Department and HCM City Tax Department will coordinate to implement many special projects, including the project of preventing revenue loss from transfer pricing of firms having associated transactions carried out by two parties.

Vice Chairwoman of the People's Committee of HCM City Phan Thi Thang suggested HCM City Customs Department coordinate with the City Tax Department to sign a memorandum of understanding to provide information between the two units to enhance the effectiveness of tax collection and VAT refund management of local enterprises. At the same time, coordinating in providing data on imported goods transporting into Vietnam via express delivery, customs declarations exceeding the tax-exemption quota in accordance with the Law on Tax Administration and the Law on Import and Export Tax to compare the revenue of this product in the taxpayer's tax declaration. In particular, when there are signs of transfer pricing of firms having associated transactions (mainly FDI firms), it is necessary to work with tax authorities to handle, especially capital contributed to investment projects that include machinery equipment, raw materials, intangible assets and copyrights overvalued.

Reviewing firms performing export production outsourcing; classifying and making a list of high-risk firms for monitoring and applying strict management measures; closely monitor the tax debts that are advance received and the expiration date of each processing contract to require firms that do not have timely liquidity, transfer to domestic consumption and then abscond, the customs authority will make a decision for imposing tax on raw materials and auxiliary materials used for processing, production and export and transfer to the police for investigation and handling.

In the fight against transfer pricing, the criteria to identify the subjects are specified, such as taxpayers fail to declare, declare incomplete information or do not submit Appendix I or provide incomplete information of dossier on determining the transfer pricing of associated transaction specified in Appendix II, Appendix III of Decree 132/2020/ND-CP of the Government; taxpayers use untruthful and untrue information on uncontrolled transactions to analyse, compare, declare and determine prices of related transactions or rely on documents, data and vouchers that are illegal, invalid or have unclear origin to identify the price, profit rate or profit distribution ratio applied to the transaction.

To do this, the Vice Chairman of the People's Committee of HCM City requested the HCM City Tax Department draft a document summarising the acts of transfer pricing under Vietnamese tax law and send it to FDI firms to communicate and warn to help businesses comply with Vietnamese tax law. At the same time, send to independent auditing companies and tax agents providing tax declaration support services for businesses to declare transfer price dossiers of client businesses. To promote inspection, check and strictly control transfer pricing activities, reporting on loss and transferring profit to overseas of FDI firms.

The market management authority and the customs authority with the function of controlling the circulation of goods, if detecting any sign of transfer pricing should work with the tax authority to handle and pay attention to the cases of contributing capital in investment projects that are machinery and equipment, raw materials, intangible assets and overvalued copyrights.

Prevent revenue loss from e-commerce business

Organisations providing e-commerce trading floors (including domestic and foreign exchanges) connecting sellers and buyers; organisations selling goods on websites, including Vietnamese websites and foreign websites; service providers; advertising services, tourism, booking services, online training, airline tickets, event organisation, etc. Businesses that open websites to sell goods and provide services that are directly produced by themselves; individuals who sell goods and provide services on social networking sites such as Facebook or Zalo who directly open accounts; organisations and individuals residing in Vietnam providing cross-border services (marketing, online advertising, digital content production, information technology application) that generate income from foreign social networking sites such as Google, Facebook and YouTube.

For businesses selling goods imported from abroad into Vietnam via express delivery, the tax authority will work with the HCM City Customs Department to request data on imported goods delivered to Vietnam, to compare the revenue of this product with tax declaration and payment.

For individuals residing in the country conducting e-commerce business, HCM City Tax Department will review digital content on YouTube pages to determine the names and addresses of the YouTubers, the banks will verify the receiving account to take measures.

Carry out inspection of firms providing freight forwarding services for e-commerce businesses, especially in cases where the forwarders are authorised to collect money on delivery (in the form of COD), and then identifying organisations and individuals engaged in e-commerce business, and their revenue from e-commerce business.

Coordinating with banks in providing payment accounts via banks that are not registered with tax authorities, providing statements of the payment transaction accounts opened at banks, as a basis for encouraging businesses to make a declaration of the actual business or transfer to conducting inspection and examination for the firm.

To effectively prevent revenue loss from e-commerce and prevent loss of state revenue, the People's Committee of HCM City will work with the Ministry of Industry and Trade on a coordination mechanism between the two sides in State management and regulations on information sharing to carry out the review and inspection of the budget obligations of individuals and firms conducting e-commerce business in the city. Along with that, the People's Committee of HCM City will work with the Ministry of Information and Communications to devise a coordination mechanism for exploiting information from technical infrastructure providers for the owners of e-commerce websites to sell goods and service providers.