Tax collection from tech-based business activities faces difficulties

16-Nov-2018 Intellasia | The Saigon Times | 6:00 AM Print This Post

National Assembly deputies at a discussion on the draft amendment of the law on tax administration said tax collection from technology-based business operations such as ride-hailing service and online sale is tough due to the lack of regulations governing these new types of business, Dan Tri news site reported.

Speaking at the discussion, deputy Huynh Thanh Chung, chair of the Young Entrepreneurs Association of Binh Duong Province, mentioned tax collection from ride-hailing firms like Grab, stressing the need for a formula for tax calculation to minimise losses for tax collection and at the same time facilitate the application of advanced technology to provide services.

Minister of Planning and Investment Nguyen Chi Dung said this is a difficult issue to address and has courted controversy among the public. Many countries are still grappling with new types of business such as ride-hailing service.

Studies show that most countries said the sharing economy, in which assets or services are shared by means of the Internet, should be self-developed, Dung said.

The minister remarked that Internet-based businesses were still new and rapidly developing. He added that if the country were to back the traditional business type and did not encourage the development of technology and the sharing economy, the residents would not benefit from advancements in technology. However, if the country supports technology, traditional enterprises would take a hit.

It is necessary to open negotiations on tax collection between the State and technology-based enterprises and then impose tax levels accordingly, Dung stressed.

Commenting on the Vinasun vs Grab case, the minister suggested conciliation as a solution to Vinasun’s lawsuit against Grab as there are no rules in place to judge the case.

Dung proposed remodelling the tax administration system as it was designed to manage collections rather than create and encourage collection sources, which hampers the country’s growth.

Meanwhile, Finance minister Dinh Tien Dung suggested that agencies and departments should collaborate on tax management for the strong development of the digital economy, ecommerce and the sharing economy.

Dinh Tien Dung stressed that tax collection from vendors and businesspeople joining ecommerce platforms seems impossible because identifying the type of business activities they conduct is not a simple task and regulations on new types of businesses have yet to be issued. The tax agencies, however, still have to tighten control on tax collection from subjects running new types of business.


Category: Economy, Vietnam

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