Ho Chi Minh City to crack down on tax-evading Facebook retailers
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The tax man is threatening to shut down social media accounts, but savvy retailers know that it’s an empty threat. Ho Chi Minh City sent out tax demands to nearly 13,500 Facebook retailers over a month ago, but a representative from the city’s Tax Department told that so far only around 1,000 of them have responded.
As a result, the city’s tax authorities have decided to work on tougher solutions to crack down on potential tax-evading online retailers, and have asked the Ministry of Finance to finalize regulations regarding tax declarations and deductions at source, as well as the supervision of online business activities.
The city’s tax department also said it is considering a name-and-shame approach to individuals and organizations that refuse to pay tax.
To combat retailers that open multiple Facebook accounts to avoid detection, the department claimed it had come up with multiple solutions, such as closing down accounts or sending officials posing as customers to confront them in person.
It also said it would ask the State Bank of Vietnam for copies of retailers’ bank statements to determine their incomes, and courier companies would be asked to provide information on the quantity and value of the goods they transport for them.
However, many online retailers say that the tax man has no authority over Facebook.
Nguyen Thi Cuc, who chairs the Vietnam Tax Consultants’ Association, also told that Vietnam does not have a comprehensive tax policy for online businesses, and that collecting taxes is difficult because most transactions are conducted in cash.
Many retailers claim they already have business licenses and have declared tax, and only use Facebook to advertise their products, while others say they earn less than VND100 million ($4,400) annually so they are not required to declare tax by law.
Questions & Answers
Q.What measures is Ho Chi Minh City considering to enforce tax compliance among online retailers?
What measures is Ho Chi Minh City considering to enforce tax compliance among online retailers?
The city's tax department plans to ask the Ministry of Finance to finalise regulations for tax declarations and deductions, and for online business supervision. They are also considering a name-and-shame approach and methods to combat retailers using multiple accounts, such as closing them down or sending officials as customers.
Q.How do some online retailers justify not paying tax or responding to demands?
How do some online retailers justify not paying tax or responding to demands?
Some retailers claim they earn less than VND100 million annually, meaning they are not legally required to declare tax. Others state they already possess business licences and have declared tax, using Facebook solely for advertising their products.
Q.What challenges does the Vietnam Tax Consultants’ Association identify regarding online business taxation?
What challenges does the Vietnam Tax Consultants’ Association identify regarding online business taxation?
The Association states that Vietnam lacks a comprehensive tax policy specifically for online businesses. Also, collecting taxes is made difficult because the majority of transactions are conducted using cash.