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Plan to tax business households causes controversy

The General Department of Taxation’s plan of taxing business households with annual revenue from 100 million VND (4,300) is causing controversy.

In the Document No 4965 regarding tax management on business households who were subjects to presumptive tax, the tax watchdog was asked to conduct a review on individuals and business households nation-wide subjected to tax management and impose tax on those earning revenue from 100 million VND.

Those mentioned even included individuals running irregular businesses such as motorbike drivers and vendors, who were assumed to have an unstable and low income, which has triggered a stir.

In an explanation, Ta Thi Phuong Lan, Deputy Director of the Individual Income Tax Management Department, said the tax watchdog would only tax business households and individuals with fixed business location and with annual revenue from 100 million VND.

She said checking people’s finance did not always mean they must pay tax. Lan stressed that small business individuals who earned revenue under the level for taxation would not be included.

It is estimated there were more than 580,000 business households with fixed locations but not put under the management of tax agencies.

Lan said the review aimed to build a database for tax management including individuals like motorbike drivers, vendors, stevedores and small traders.

Still, the General Department of Taxation’s intention of taxing those with annual revenue from 100 million VND also cause a controversy over its feasibility and effectiveness.

Dinh Trong Thinh from the Academy of Finance said any business must be subjected to tax management, adding that it was reasonable to conduct a review on the number of business households and individuals to build a database.

Thinh said business households accounted for just 2 percent of the total budget revenue but it was still necessary to enhance tax management. He added the collection of presumptive tax must be ensured transparency to prevent unfairness.

Nguyen Khac Quoc Bao was quoted by Tuoi Tre online newspaper as saying the number of individuals running business like motorbike drivers or venders was large. It was necessary to know their revenue for tax management but its also required significant time and human resources to do this.

Bao said the tax watchdog should compare the gain for budget revenue and the cost for collecting taxes on these subjects, adding that it would be more efficient to enhance tax management on multinational enterprises and prevention against transfer pricing.

Currently, tax losses remained huge, Bao said, adding that enhancing tax collection on those who had low incomes would certainly cause issues.

The General Department of Taxation’s statistics showed tax arrears totaled 79 trillion VND as of November 30, 2018.