The emergence of social networking platforms creates a conducive environment for the growth of e-commerce; however, instances of tax evasion in online sales also occur.
Numerous methods to evade taxes
Recently, tax authorities have intensified their efforts to trace online sellers via e-commerce platforms and banking institutions to ensure tax compliance. However, the practices of individuals and organizations engaged in e-commerce on social networking platforms, who fail to declare or conceal their actual revenue, are becoming increasingly sophisticated.
Typically, certain sellers on social networks frequently finalize orders via phone calls or following livestreams or advertisements on these platforms. Subsequently, the seller directs customers to transfer payment for their purchases without including any content related to the goods, opting instead for terms such as "loan," "debt repayment," or "gift." In contrast, direct sellers request that customers pay in cash rather than through bank transfers.
Another tactic employed by shop owners involves utilizing multiple personal accounts to receive sales revenue. Once the earnings reach 99 million VND, they switch to a different account number. Additionally, individuals conducting business on social media platforms often employ various methods to evade tax obligations, such as failing to declare income, concealing revenue, and manipulating cash flow.
According to tax regulations, online sales are classified as activities involving the distribution and supply of goods. As outlined in Circular No. 40/2021/TT-BTC issued by the Ministry of Finance, the value-added tax rate is set at 1%, while the personal income tax rate is established at 0.5%, as specified in Appendix I of the list pertaining to industries that calculate value-added tax and personal income tax based on a percentage of revenue for business households and individuals. Consequently, business households and individuals engaged in online sales with revenue of 100 million VND or more are required to remit value-added tax and personal income tax in accordance with regulations. Many businesses have exploited this revenue threshold to evade tax obligations.
However, tax experts caution that the aforementioned tax evasion strategies are fraught with risk and challenging to execute without detection by tax authorities. Mr. Pham Viet Anh, Head of the Tax Team for Thuan An City within the Tax Department of Region XVI, stated that even if a seller opts to receive cash rather than depositing funds into a bank account, the tax authority can still identify such transactions. This is due to the existence of a comprehensive database that is synchronized with data from e-commerce platforms. According to regulations, business households and individuals are required to use citizen identification cards to register stores on various e-commerce platforms, indicating that multiple stores may share a common owner. The tax authority will assess taxable revenue not based on the number of accounts receiving income, but rather on the total income generated by the store owner across all e-commerce platforms, irrespective of the account into which the business owner receives funds, whether in cash or otherwise. Should the store owner's revenue surpass the non-taxable threshold without proper declaration and tax payment, they will face additional tax liabilities upon discovery by the State agency.
To correct the information retention
The provincial tax department announced that the tax authority is actively collaborating with e-commerce platforms and pertinent state management agencies to streamline the extensive database of taxpayers engaged in e-commerce activities.
Consequently, the units collaborate to enhance the process of gathering information from sellers via e-commerce platforms, thereby effectively overseeing the fulfillment of obligations to regularly and continuously provide information to tax authorities and other state management agencies. E-commerce platforms must ensure the secure storage of information pertaining to individuals conducting business on the platform to mitigate joint liability. Additionally, e-commerce platforms are tasked with managing product consumption, preventing the circulation of counterfeit goods, and safeguarding consumer rights.
In the near future, the Ministry of Finance will collaborate with the Ministry of Industry and Trade to develop solutions that require e-commerce platforms to promptly rectify their information storage practices, ensuring the provision of accurate data to state management agencies. For organizations and individuals engaged in e-commerce, the tax authority will implement a targeted inspection and examination plan. The focus of these tax inspections will remain on entities that operate e-commerce platforms, as well as companies serving as intermediaries for transportation and payment. Through these inspections, the tax authority will continue to gather data on organizations and individuals generating income via the social networking platforms of these companies, thereby facilitating ongoing review and enforcement of tax management in accordance with regulations.
ACCORDING TO THE REGULATIONS OF THE TAX INDUSTRY, SELLERS WHO ENGAGE IN TAX EVASION WHEN IDENTIFIED BY THE TAX AUTHORITY WILL BE SUBJECT TO TAX COLLECTION AND PENALTIES. THUS, TAX EVASION IS PUNISHED AT A RATE OF 2-3 TIMES THE AMOUNT OF TAXES EVADED. |
Reported by Thanh Hong - Translated by Vi Bao
