Tax collection mandate increases tax debt

Reality at the grassroots

Yen Thanh District has implemented tax collection authorization via post since October 2017. Mr. Phan Van Dung - Head of the Inter-commune Tax Team of Yen Thanh Tax Department said: The implementation of tax collection authorization (UNTT) via post has encountered some difficulties. For example, coordination between the Tax sector and the Post Office in transmitting and receiving data through the centralized tax management software (TMS) is still slow.

The reason is that the steps to process business operations on this software are still complicated, some tables and charts cannot be processed directly on the software but must be compared and processed manually, which takes a lot of time.

Checking transport vehicles. Photo: Van Truong

The amount of tax collection implemented in the past time is still quite low, the whole Yen Thanh district currently has over 900 individual business households paying tax, of which 450/900 households are transport business. Transport households alone only collect from 20/450 households, about over 15 million VND/month. Total tax collection is only from 100-120 million VND/month, the rate is only over 40%.

The main reason for the above situation is that the authorized collection force is still small and has many tasks, so it has not been closely following the area and has not urged collection. Especially the private transport tax in Yen Thanh area, the authorized collection force can hardly collect.

The same is true in Thanh Chuong district. Having worked for many years at the Thanh Duc Commune Cultural Office, Thanh Chuong District, since October 2017, Ms. Thai Thi My has been assigned the additional task of collecting taxes from production and business households in the area. However, since taking up the job, she has almost never completed the task, even though the whole commune only has 36 tax collectors.

Ms. My shared: “The whole commune has only 6 business households that generate monthly taxes, the most difficult are the 30 transportation business households, they often refuse to pay and are rarely at home. As the person collecting the money, they do not have the functions of monitoring and checking, so they have to accept it...”.

Proposal of the Tax Department

Following the direction of the General Department of Taxation in Decision 1672/QD-TCT dated October 5, 2017, Nghe An Tax Department expanded the pilot implementation of tax collection authorization for business individuals paying tax by lump sum method to 21/21 districts, cities and towns. Previously, the Provincial Tax Department had piloted in a number of localities.

The Tax Department has issued many documents directing the Tax Departments and Branches to implement the policies of the Ministry of Finance and the General Department of Taxation. At the same time, it advised the Provincial People's Committee to issue documents directing implementation. The Tax Department selected Nghe An Post Office, signed a contract with Nghe An Post Office, and signed a detailed contract between the Tax Department and the District Post Offices.

Accordingly, the tax authority authorizes the Post Office to collect taxes from individual business households that pay taxes by the lump sum method (including households using invoices). The Post Office's fee is a maximum of 3% of the total revenue of individual business households.

Nghe An Post Office assigns the task of directly signing detailed UNTT contracts to Post Offices of districts, cities and towns. The Post Office sends staff to coordinate with the Inter-ward and Commune Tax Teams to approach the area and introduce UNTT staff to each individual business.

However, according to Ms. Nguyen Thi Trang - Head of General Department of Nghe An Tax Department: The number of employees doing tax collection work at Nghe An Post Office is only 1 person in charge of 1 commune, the area is large, the commune post office staff also has many other jobs of the post office, so the time invested in tax collection work is little and there is no experience in tax collection work.

There is also a problem with tax receipts. Nghe An Post Office registers and prints Tax Receipts to issue to taxpayers when collecting taxes; however, at certain times, due to urgent implementation time and application errors, the Post Office must write the collected tax amount on the Tax Receipt to issue to taxpayers when collecting taxes.

Implementation period of the UNTT, from the 4th quarter of 2016 to the end of the 3rd quarter of 2017 (piloting the UNTT at the Vinh City Tax Department, Dien Chau District, Quynh Luu): The total revenue from business households paying taxes under the lump-sum method at these 3 Tax Departments from October 2016 to the end of September 2017 was 89.6 billion VND (of which the revenue collected through the post office was 54.7 billion VND, accounting for 61%), the implementation rate reached 106% compared to the arising amount. After expanding the collection area to 21 districts and cities, up to now, 8 Tax Departments have reduced debt, 13 Tax Departments have increased debt.

Collecting private transport tax is almost impossible for postal staff. Photo: TC

In fact, at the Cua Lo Town Tax Department, seasonal business individuals (business period from April to July every year) account for a large number and have high revenue. For these individuals, the tax authority collects taxes once a year. Therefore, authorizing tax collection to the Post Office is meaningless.

As for the District Tax Department, the number of transport business households accounts for a large proportion. The collection of outstanding debts and taxes incurred by transport households requires the drastic participation of local authorities in which the People's Committees of communes, wards, towns, and the police force play an important role. If the Tax Department is left to the post office staff, it will be difficult to fulfill their responsibilities.

With that reality, Nghe An Tax Department has proposed that the General Department of Taxation transfer the authorized tax collection unit for individual business households paying tax by lump sum method from the Post Office to the People's Committees of communes, wards and towns (collectively referred to as commune level).

In Nghe An province, based on Decision No. 77/2016/QD-UBND dated December 20, 2016 of Nghe An Provincial People's Committee regulating the decentralization of revenue sources, expenditure tasks between budget levels and the percentage (%) of revenue division between budget levels of Nghe An province in 2017, stable until 2020, the revenue from business activities directly affects the expenditure sources of the People's Committee at the commune level.

Therefore, the delegation of tax collection to the People's Committee at the commune level aims to enhance the responsibility of the commune-level government in enhancing the exploitation and good management of revenue from businesses paying taxes under the lump-sum method; linking budget revenue with spending needs, thereby preventing budget losses and meeting spending needs in the area.