Mr. Dang Ngoc Minh, Deputy Director of the General Department of Taxation, chaired a press conference on Decree 126. Photo Duy Vu

According to new regulations, from December 5 commercial banks are responsible for providing bank account information of taxpayers and those paying taxes on behalf of overseas organizations and individuals that have e-commerce business activities in Vietnam.

Mr. Luu Duc Huy, Director of the Tax Policy Department (General Department of Taxation), told the media on December 1 that, according to Clauses 2 and 3, Article 30 of Decree 126, commercial banks are responsible for providing information about taxpayers' payment accounts to tax authorities, including the name of the account holder, the account number according to the taxpayer's tax code, and date of opening and closing of the account.

Huy stressed the need for tax agencies to be able to monitor the cash flow generated by transnational businesses, especially those that operate online. "The single most important tool for us is to closely monitor the cash flow and this could be achieved with the cooperation of commercial banks," he said.

For instance, commercial banks and other financial institutions have an obligation to fulfil any tax duties of their foreign-based clients, who sold goods and services - including e-commerce products and services - into Vietnam's market yet failed to register or failed to declare income or meet financial duties to the country's tax authority.

In cases the banks were unable to do so, they must compile a list of transactions and the amount transferred, which will later be submitted to the general department.

Huy explained that to manage the implementation of tax obligations of e-commerce traders based on cross-border platforms, it is necessary to manage cash flow. “The most important step is to control cash flow. This can be managed through banks,” Huy said.

Officials of the General Department of Taxation said that after Decree 126, there will be a circular guiding the obligation of declarations for cross-border e-commerce businesses in Vietnam.

The tax agency also plans to work with consulting and auditing companies to invite Youtube, Amazon, Google, Netflix ... to work with tax authorities on their tax obligations.

“Businesses are responsible to pay corporate income tax and value-added tax for services involving cross-border transactions with Vietnam,” said Mr. Dang Ngoc Minh, Deputy General of the General Department of Taxation.

Internet giants such as Google, Facebook and Youtube are likely to be singled out and put under scrutiny under the new decree.

Not just business-to-business transactions, personal account transactions will also be monitored, said Dang Ngoc Minh, the general department's deputy director.

"We prefer foreign-based businesses to register with the tax authority. However, should they fail to comply we will be collecting evidence and request commercial banks to track personal accounts that were involved," Minh said.

Meanwhile, payments made to personal bank accounts from Google, Facebook and Youtube will be monitored for irregularities. In the meantime, tax agencies continue to encourage individuals to come forward and register and declare income with the authority.

Duy Vu

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