Third Working Session of the Congress (term XIII): Discussing the Law on changing, supplementing a few articles of the Law on Taxation Management

​All delegates agreed with the Government’s Submission and Verification Report of Congress’ Finance-Budget Committee on the importance of the Law on changing and supplementing a few articles of the Law on Taxation Management. However, as for the range of changes, delegates think that research is needed for a comprehensive change, not just modifications to some articles to limit the problems in the current Law on Taxation management.

As for the specification of the Draft Law, delegates thought that lots of rules of the Law cannot guarantee their specifications; Some important contents promulgated by the Government or Ministry of Finance as legal documents are not irrational and close enough. Mr. Tran Quang Chieu (Nam Dinh) showed that, in the current Law on Taxation management, there are 19 articles whose guidelines on implementation provided by the Government and Ministry of Finance. In the Draft Law on changing, there are 33 articles and 12 clauses whose guidelines on implementation provided by the Government. Therefore, among 120 articles of the Law on Taxation management, there are more than 31 contents whose guidelines on implementation provided by the Government and Ministry of Finance. On average, there is 1 out of every 4 articles whose guidelines on implementation provided by the Government and Ministry of Finance. The delegates suggested the Government to direct relevant compiling authorities to be more specific in each article of the Law, to minimize the number of the articles handed over to the Government and Ministry of Finance. The contents of clear and suitable articles need to be specified as maximum as possible in order to be supplemented in the Law submitted to the Congress at the fourth Working Session.

As for the rules to handle with case of tax payment delay, punishment for any wrong declaration which lead to inadequate payable tax amount or exceeding tax refund. Mr Bui Van Xuyen (Thai Binh) suggested to keep the same penalty for tax payment delay prescribed in the current law: “Taxpayers who commit tax payment delay must pay full amount of tax together with a fine of 0.05% per day based on late tax payment because it may be impossible to “increase the fine  up to 0.07% / day based on tax payment delays”. Delegates Do Huu Lam (Long An), Mai Thi Anh Tuyet (An Giang), Truong Thi Hue (Thai Nguyen), K’Krah (Dak Nong) also agree with the opinion above. According to Mr. Do Huu Lam (Long An): Commitment of tax payment delay is not cheating on purpose so it is considered as interest of late tax payment, not a penalty. Policies on handling late payment rate need to be correlative with interest rate. The delegate explained: at the moment, the interest rate of short-term loan for 4 fields: Agriculture, rural ereas; Export, supporting industry and medium/small companies is about 14-15% per year. The penalty prescribed in the Current law is 0.05% a day (18% per year) is pretty high compared the Banking Interest Rate. If it is increased to 0.07% a day, it is too high compared with the current Banking Interest Rate.

As for the rules to set tax rate, all delegates agreed that contents related to pre-agreement mechanism of the method of determining taxable price is one of the important issues mentioned in the content of Law on change and supplement which is hoped to partially limit and prevent situation of transfer pricing which causes loss to State budget. However, Ms Nguyen Thi Kim Be (Kien Giang) thought the content of the Law is still general, not focusing on issues related to pre-agreement mechanism of the method of determining taxable price, content of execution and sanction… She suggested compiling authorities need to review and supplement the law with specific contents of this regulation to raise the validity and effectiveness of the Law. Delegate K’Krah (Dak Nong) suggested providing Tax Administration with the function of inspection in the Law on Taxation management and transfer pricing Prevention because according to him, situations of transfer pricing among domestic and foreign enterprises occur regularly, causing great tax loss.

As for the rule of tax debt relief, delegate Tran Hoang Ngan (Ho Chi Minh city) suggested that all kind of companies should be considered in this content. Delegate K’Krah (Dak Nong) also suggested the Congress should forgive taxation dept of companies which have dissolved, been out of business, no longer located at the area of tax registration, no longer doing business; state-owned companies which have received the decision on tax debt dissolution; state-owned companies whose owners have been changed that have not been able to own tax debt, new legal person is not assigned to be responsible for these tax debt; small business households doing unprofitable business and stop doing business.

Delegate Pham Huy Hung (Ha Noi) also worried about disadvantages in the current personal incoming tax rate. According to him, the current incoming tax rate is not reasonable, not right and not ediquate for employees to recover labor ability, cover their fundamental expenditures, and improve their life; gaps between levels of taxable income, which are not reasonable, impact social motivation; Companies cannot help improving employees’ income without raising their incoming tax, that’s why employees’ salary improvement rate is very low… Delegates suggest some solutions: Recalculating payment on based on the starting rate of personal income taxation, increasing minimum taxation rate, properly calculating labor recovery rate and sufficient payment for minimum expenses; the exemption rate on family circumstances amended on the basis of payment, starting rate of personal income taxation, annual exemption are not stable, but based on practical situations, demands on social security, earning capacity of tax payers, which needs to be reestablished aiming at a more proper criteria of exemption rate on family circumstances; extending the gaps between tax levels; benefits and allowance which are not included in taxable income and non-taxable income… 

Delegates spent lots of time discussing rules of taxation management together; duty of taxpayer in the applications of information and technology; taxpaying deadline for export products, guarantee duration; management and punishment structure.

                                                                                                         Source: Vietnam News Agency