Govt vows to crack down on tax fraud
The Ordinance on Personal Income Tax came into force in July, 2004, but tax evasion is still rampant. Thoi bao Tai chinh (Financial Times) spoke with deputy general director of the General Tax Department, Nguyen Thi Cuc.
How does the ordinance purport to tax high income earners?
The number of high income earners in our society is very small, but its significance is great. The high income tax levied on them will help narrow the gap between high and the low income earners and gradually achieve the goal of social equality.
The collections from the high income earners will be invested in improving the life of poor people and those living in remote and far-flung areas.
Despite their low numbers, the sum high income earners pay as tax is significant. As 75 per cent of the population lives on agriculture, each year the State budget is able to collect just VND1.5 trillion (US$95.5 million) in tax from agricultural land use rights. Taxes collected from some 400,000 high income earners stand at almost VND4 trillion ($254.8 million).
What is more important is that the ordinance constitutes a trial run before collecting income tax across the board. To achieve this goal, all income earners in the country will have to apply for their tax file number.
The ordinance has been described as very comprehensive. Can you elaborate?
I can summarise the three progressive aspects in the ordinance as follows:
Any one who earns VND60 million ($3,820) a year or more will have to pay income tax. Artists, singers and professional footballers and sports people will enjoy a 25 per cent income tax rebate.
This preferential policy aims to help them cover insurance costs even when they cannot pursue their unique careers.
Elimination of tax levied on gifts worth less than VND2 million from abroad.
The ordinance prescribes the following new rates:
Personal income tax will be applied to both regular and non-regular incomes. The taxable threshold starts at VND5 million per month for locals and VND8 million for foreigners and Vietnamese working overseas.
Vietnamese with monthly incomes of between VND5-40 million ($510-2,500) will pay taxes ranging from 10 to 30 per cent. Those earning more than VND40 million a month will incur a 40 per cent tax.
The ordinance says that any one who earns more than the taxable threshold have the responsibility to fill in the tax forms themselves. Do you think this is a good method?
Every one has the responsibility to fill in their tax forms. However, in case of workers working for a company, for instance at the Vietsovpetro joint venture, since their tax is already deducted from their monthly wages, there is no need for them to fill in the tax forms at the Vung Tau tax office. However, in case of a singer, who is not on the official list at any unit, she/he has to go to the nearest tax office to declare tax.
If anyone is found to evade tax, their names will be made public through the media.
Another solution to the problem is to withdraw a singer’s performance licence with the support of the Ministry of Culture and Information. Similar action will be taken against any importer or exporter who fails to pay tariffs. In addition, we will slap sanctions on offenders under the ordinance.
How has implementation of the ordinance fared?
I can say what has been achieved in the year since the new ordinance came into force is beyond our expectation. However, the topic under discussion these days is the tax paid by singers and actors/actresses. — VNS
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