In a recently announced statement about a proposal for compiling an
amended draft on the Law on Tax Management, the ministry offered to
increase the time for tax inspection.
Currently, the maximum time for a tax inspection is 45 working days
and 70 working days for complicated cases. However, conducting tax
inspections at large-scale or multinational companies with a complicated
structure and related-party transactions are time-consuming.
The ministry said that it normally took more than one year for tax
inspection at foreign-invested companies such as Metro and BigC and the
tax watchdogs must collect information from mother companies or foreign
The ministry cited statistics of the Organisation for Economic
Co-operation and Development that time for implementing an inspection of
transfer pricing averaged 573 working days in the world.
The current regulations are no longer suitable for implementing tax inspections at all companies, the ministry said.
The ministry proposed that the time for tax inspection at companies
with related-party and cross-border transactions be increased to 360
Taxing online transactions
According to the finance ministry, the law needed to be amended to
efficiently calculate and collect taxes from global technology companies
such as Google and Facebook.
The ministry said most global technology companies did not register
their business or have official representative offices in Viet Nam while
their transactions were cross-border, making it hard to calculate and
For example, Google and Facebook provided online advertising services
in Viet Nam in two ways. The first was through agencies in Viet Nam and
the second was conducted through online payment via credit cards or
The ministry said that it was difficult to clarify the real values of transactions conducted in the second way.
In addition, it was also not easy to verify advertising revenues from
click counts of foreign Internet companies as doing this would require
checks of payment transactions at banks of both buyers and services
providers but banks of foreign Internet companies were mostly abroad.
“The tax management of online businesses faces difficulties in
clarifying taxpayers, revenues, business scale and transaction history,”
the ministry said, adding that co-ordination between relevant
ministries and agencies must be enhanced to better manage tax collection
from e-commerce businesses.
Accordingly, the finance ministry proposed the State Bank of Viet Nam
to study the regulation of requiring cross-border payment transactions
to be conducted through local payment gateway (the National Payment
Corporation of Viet Nam).
Only by this, could tax watchdogs manage values of cross-border
transactions to impose tax, the ministry said, adding that many
countries in the world such as European countries, India and South
Korea, had such a regulation.
The finance ministry also proposed the Ministry of Information and
Communications require foreign technologies companies such as Google,
Facebook and Apple to declare and pay foreign contractor tax on the
services provided to Vietnamese organisations or individuals.
The ministry also called for enhanced co-operation with foreign tax
agencies and Internet services providers like VDC, FPT, Mobifone,
Vinaphone and Viettel to better manage values of e-commerce transactions
and banking payments.
For individuals selling things online, the finance ministry proposed
to impose value added tax and individual income tax on products with
prices above VND1 million (US$44) and when transacted two times per day
The ministry said that business through social network pages was
booming in Viet Nam but tax management was still lagging behind.
The Ministry of Finance also proposed investigation function to be
empowered to tax watchdogs, adding that some 80 countries in the world
currently had tax investigation bodies.
Check business operation
The ministry has sent a document to the Ministry of Planning and
Investment to request checks on business operation, after finding that
thousands of import-export companies halted operation or removed their
office addresses without reporting.
This triggered worries that those firms took advantage of open
business registry procedures to start a business then halt operations to
avoid and evade taxes.
The ministry’s statistics showed that in 2015 and 2016, more than
1,000 firms abandoned their addresses and had no operations in at least
More than 15,400 others had no import-export activities in at least
six months without reporting to the management agencies while their
information on the business registration portal was still “operating”.
Twenty-four firms were found with tax violations but they abandoned
their addresses without completing bankruptcy and dissolving procedures
following established regulations to avoid paying tax arrears and fines.
Especially, eight of them had tax arrears worth VND12 billion.
With the aim of tackling this issue, the finance ministry proposed
the Ministry of Planning and Investment to complete the mechanism for
co-operating in managing business operations.