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Finance Ministry vows to tighten management of cross-border services

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Under a proposal by the Ministry of Finance (MOF), the payment for cross-border services will be made through the national payment portal NAPAS, a unit belonging to the State Bank.

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The payment for cross-border services must be made through NAPAS

 

This will allow taxation bodies to control revenue from services and to ask foreign institutions to pay tax.

MOF, which is drafting the amended Tax Management Law, has asked all relevant agencies to tighten management over e-commerce activities and fight against the loss of revenue from tax collections.

The State Bank has been asked to set up a regulation which forces all the payments for cross-border services to be made via NAPAS.

Foreign network operators in Vietnam will be asked to set up divisions or representative offices in Vietnam to closely coordinate with Vietnamese state management agencies.

MOF has also asked MIC (Ministry of Information and Communication) to work with them and ask foreign service providers (Google, Facebook and Apple) to declare and pay contractor tax for services they provide to Vietnamese institutions and individuals.

State management agencies will have to exchange information with taxation bodies in other countries, and with internet service providers (VDC, FPT, MobiFone, VinaPhone and Viettel) to obtain information about the number and value of e-commerce transactions and payment.

Luu Duc Huy from the General Department of Taxation (GDT) affirmed that the payment via NAPAS will help reduce the loss in revenue from tax collection. 

If the policy is applied, taxation bodies will be informed about all transactions while they won’t have to ask banks for daily statements.

The policy is being applied in some European countries, India and South Korea.

According to MOF, while e-commerce explodes and multinational conglomerates make fat profits from providing online ad services in Vietnam, the amount of tax paid to the state budget is insignificant.

Dang Binh An from C&A, a tax consultancy firm, said more and more services have been provided across the border and if activities are uncontrolled, the loss of revenue from tax collection will be increasingly high. 

An believes that payment via NAPAS is a good solution.

However, some businesses still have doubts about the feasibility of the idea, according to Vu Tu Thanh from the US-ASEAN Business Council. 

What will happen if all transactions only have one ‘entry’ and the payment portal is collapsed by hackers? What will SBV do to rescue businesses and mitigate damages?

Another technical problem that businesses are worried about is the capacity of the transmission line. 

When all payments have to go through one entry, it will be like a funnel. So, there must be technological solutions which ensure smooth operation of the system.

 

Source: VietNamNet

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