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Cash register connected with tax agency: “Sword of treasure against revenue loss”

Economic expert Vu Vinh Phu

In the context that e-commerce is increasingly developing in Vietnam, the tax authority has introduced many measures to manage tax revenue and prevent tax loss. How do you evaluate this work?

Under the Law on Tax Administration, Vietnam is managing tax in the commercial sector by two forms of flat tax and value-added tax. The flat tax is applied to households with a turnover of less than VND100 million per year and the value-added tax to enterprises that have a turnover of more than VND100 million or more and comply with accounting conditions.

The form of flat tax is very simple for both business households and the tax official, but it sometimes is not close to the actual revenue, because monthly tax assessment is declared by households and approved by the ward’s or district’s council, but based on accounting and statistics.

The form of value-added tax is more scientific and stricter than the flat tax; the implementation has still revealed shortcomings leading to revenue loss.

Currently, the seller does not issue a value-added invoice in most transactions. Or, although added value is included in the selling price, the buyer can only receive invoices that have no legal value. Or the buyer only issues value-added invoices upon the request by the buyer.

In the draft circular guiding Decree 123/2020 regulating invoices and documents, the Ministry of Finance requests trade centres, supermarkets, food service business households and retailers to create e-invoices with a tax authority's code by a standard-formatted cash register connected to the tax office. What do you think about this regulation?

The sales software of enterprises is only used for daily internal accounting and has not been regularly connected with the local tax authority. To change the management method, the draft circular guiding Decree 123/2020 provide for trade centres, supermarkets, cafeteria, restaurants, hotels, drug sales, entertainment services, consumer goods retailers who are using invoices and vouchers with tax authority’s code to create invoices by a cash register connected with the tax officer. This must be done 24 hours per day and starts from July 1, 2022. Those who are well prepared can deploy this before July 1.

The connection has been done in some countries in ASEAN. If the regulation takes effect, it will be a ”sword of treasure” against revenue loss, bring sufficient and accurate revenue and create fair competitiveness among business firms across the country.

If draft circular is officially issued, businesses and business households have only a short time to prepare the necessary conditions to perform, do you give any suggestions?

Vietnamese enterprises are mainly small and medium ones, so the State, local government and ministries and sectors need to have policies to support them in building hard and hard and software infrastructure to make connections efficiently. Human resource training courses are also needed.

For the connection, it is also necessary to strengthen inspection and supervision of compliance with the regulations of the Ministry of Finance and the General Department of Taxation. Press agencies should praise those who seriously launch the connection, issue e-invoices customers and criticise those who do not strictly carry out the regulations and commit other violations.

Motivated by the determination of the leadership and the efforts of businesses, this "sword of treasure” will promote the efficiency of tax administration in Vietnam in the future, contributing to collecting sufficient and accurate revenues sufficient and creating fairness in tax obligations to the State from enterprises.