Strengthening anti-tax loss for new business activities

Difficulties in collecting e-commerce taxes

Walking through the markets and supermarkets in Vinh city on normal days, one can see the situation of "deserted as a temple", especially at clothing and technology stalls.... The reason is not only the Covid-19 epidemic, but also the strong development of commerce. Most office ladies, or those with good incomes and busy jobs, have chosen to transact online to buy goods, especially clothing, household items of brands, technology products, health care products...

When a sales transaction occurs online, tax evasion occurs easily: First, the seller ships the goods through many shippers, these shippers pay the seller, receive the goods, then the shipper delivers the goods to the customer, the customer pays the shipper a second time along with the shipping fee. Second, the buyer transfers cash to the seller, third, the buyer transfers money to the seller but does not specify the content. Fourth, the seller sells traditional stalls and declares taxes to the tax authority according to revenue, but still sells mainly online and this revenue is not declared. The tax sector has not yet fully controlled these payment and business methods.

Online business is currently booming and is a development trend for all types of businesses. Illustration photo

With that method, even the Tax Department, when having access to the customer's account, cannot know which transaction is a purchase or sale, or what the content is, because the transferred money can be given, donated, given, lent, etc. between the parties.

Currently, although there are sanctions, only large sales sites such as Zalo, Facebook, and some large owners declare taxes, while thousands of smaller websites are still very difficult to control.

Mr. Vuong Dinh Chinh - Head of Propaganda and Support Department, Nghe An Tax Department

Up to this point, despite many efforts, according to many tax management experts, managing and preventing tax losses for e-commerce activities is a challenge for the industry.

The difficulty is not only due to the subjective reason of the capacity of the tax staff but also the nature and content of e-commerce activities which are completely different from traditional business. The business subjects are diverse, there is no clear headquarters, constantly changing products, there are many accounts under one owner, cash is used in transactions, many payment methods are used, etc., so it is not simple to require business people to declare and pay taxes.

However, in reality, it is not impossible to manage. For example, large sales pages and accounts often have a large number of followers or friends, so it is easy to grasp through their sales posts. Many Facebook accounts in Nghe An and in other provinces and cities have been selling for many years and publicly, many people know, buy a lot of products, the number of followers is up to tens of thousands, hundreds of thousands of people in general, customers in particular, but the Tax Department still has not collected taxes.

E-commerce revenue poses many difficulties in management. Illustration photo

Hanoi's experience shows that, up to now, the Hanoi Tax Department has had a list and accounts of 36,068 online shops with a transaction amount of 14,290 billion VND; of which, 35,971 are personal accounts with a transaction amount of 4,851 billion VND; 97 are business accounts with a transaction amount of 9,438 billion VND and has initially encouraged many account owners to declare and pay taxes.

The development of e-commerce is a new trend of business in the world. Currently, the decrease in sales of traditional markets will mean that sales in e-commerce will increase. However, e-commerce revenue actually poses many difficulties in management.

Mr. Nguyen Van Duan - Head of General Affairs Department, Nghe An Market Management Department

According to the representative of the Market Management Department and the Department of Industry and Trade of Nghe An, in recent times, besides some businesses and brands doing e-commerce professionally and properly, when businesses have publicly registered information with the Ministry of Industry and Trade about their names and website addresses, there are still platforms and social network owners who "appear and disappear" selling goods that do not ensure quality or violate intellectual property rights; avoiding the control of authorities. The most disadvantaged are customers who buy fake or counterfeit goods and do not know where to complain.

Tax management for business activitiese-commerceIn the provinces it is difficult but in Nghe An it is even more difficult. In many large areas, remote areas, however, this type of business has also been quite popular in the mountains, mainly small-scale business.

In Nghe An, the Provincial People's Committee has issued a Directive on strengthening tax management for commercial business activities since July 2020 and although the authorities have had some coordination activities, the results have not been positive.

Business at supermarkets and markets is being affected by e-commerce. Photo: Tran Chau

Up to now, Nghe An Tax Department is still monitoring and grasping but has no specific data.

At the central level, the Tax Department, although determined to step in to inspect, tighten management and collect taxes, the results are currently quite modest because the owners of social networking sites are all abroad and payment transactions in our country still use cash. Even if it is by transfer, it has not received enthusiastic support from the "big guys" - banks.

Strengthening tax management on real estate transfers

Increasing the provision of information on the origin and land transfer process so that tax authorities can have management solutions and limit tax losses is one of the contents of the discussion and recommendations of Vinh City Tax Department at the conference on deploying the tasks of Nghe An Tax sector in 2021.

Accordingly, over time,land transfer transaction, including land division and transfer is quite active, the Tax Department also receives all the documents transferred by the One-Stop Department, averaging 45 to 50 documents and transactions per day.

Recently, at one-stop transaction centers, the number of people coming to transact land and carry out mortgage procedures for loans is quite large. Photo: Nguyen Hai

However, as Mr. Phan Van Viet - Head of Vinh City Tax Department admitted: Tax management related to land is quite complicated and the Tax Department mainly knows the records and determines tax obligations based on information transferred by departments, divisions and units. Therefore, the Tax Department is almost the last agency to check and complete the transaction.

In fact, not only in Vinh City but also in other delta districts, land transfer transactions have been bustling in the past 2 years. Through research at the one-stop-shop departments of the districts, land-related transactions account for 2/3 of the transactions at the one-stop-shop centers at the district and commune levels every day.

For a long time, normally, when transferring a plot of land to another person, procedures must be completed at a State agency. However, recently, due to the increased profits in land transfer and to avoid tax obligations, many land buyers "circumvent the law" by making a deposit file with an office or broker, along with a land sale authorization paper.

That is why some plots of land have to change hands 5-7 times, each time the owner makes a profit of 20 million to hundreds of millions of dong but does not complete the procedures. Only when the final buyer comes to the ward-commune one-stop shop and the district-level People's Committee to complete the procedures.

People participate in land auction in Hoang Mai town. Photo: PV

In addition, at land auctions, besides some land buyers, there are investors who buy documents and auction 8-10 lots, accounting for 1/3 to 2/3 of the lots put up for sale. After the auction is successful, instead of completing procedures and financial obligations when transferring, they are willing to "sell" the land right at the scene and make a profit that the state cannot control.

A representative of the Department of Natural Resources and Environment of Quynh Luu district said: There was a day when auctioning land in Quynh Hong and recently in Quynh Thach (Quynh Luu), one person won 25 plots of land, accounting for ¼ of the total plots put up for sale in the commune. Then, in the afternoon, this person sold 24 plots, earning a difference of over 1 billion VND. The departments and offices knew about that large income but could not collect tax.

Not only the above mentioned business sectors, restaurant and petrol businesses still have tax losses that have not been completely overcome. Enterprises self-declare taxes based on output invoices, however, people do not have the habit of getting invoices after using the service. Even when shopping at mini supermarkets, whether paying by cashless, swiping cards or transferring money, the store prints invoices for customers, however, most customers leave the invoices at the store and do not take them back. Therefore, many stores have stopped printing invoices.

Therefore, there is still a need for stronger and more drastic research and solutions in tax management activities for areas with revenue losses to generate more revenue for the budget./.