The HCM City Taxation Department has found some signs of Vietnamese companies lending a hand to international social networks, such as Google, Facebook and YouTube, to evade tax or to make wrong declarations about the tax sums to pay.
Le Thi Thu Huong, Deputy Head of the HCM City Taxation Department has announced that the department is checking data to find out the tax evaders, impose punishment and collect tax arrears.
Huong said that the taxation body is trying to find out how many enterprises in the city which are working as the agents for social networks. The decision to take the large scale inspection in the field has been made, after the taxation body discovered some enterprises making wrong tax declarations and lending a hand to others to evade tax.
Also according to Huong, many enterprises working as the agents for social networks such as Facebook, Google and YouTube have been making tax declarations and paying tax. However, it is still unclear if they are honest while declaring tax, or deliberately lower the tax sums they have to pay.
The HCM City Taxation Department has recently discovered some enterprises which act as the agents for social networks, but have not registered business, or played tricks to evade tax. They also do not pay contractor withholding tax for the advertisement sales of social networks.
A lot of businesses register their business in many business fields, including online ads, but they do not mention the revenue from the business field when declaring tax.
A leader of the taxation body has admitted that it will take time to check the list of the enterprises acting as the agents for social networks, but he has affirmed that the task must be fulfilled.
Among the social networks, only Yahoo has set up a representative company, registered its business and declared tax in Vietnam.
Meanwhile, in response, Google’s ad partner in Vietnam – CleverAds - believes that Vietnam and Ireland, the host country of Google, have a double taxation avoidance agreement, therefore, Google does not have to pay contractor withholding tax in Vietnam.
Nguyen Khanh Trinh, Director of CleverAds has affirmed on VnExpress that the enterprise has always been obeying all the tax duties since its establishment in 2008.
He said that for the ads on Google, CleverAds does not have to pay the contractor withholding tax in Vietnam as stipulated in the double taxation avoidance agreement signed between Vietnam and Ireland.
The same treatment is being applied to the Vietnamese enterprises which do not have offices in Ireland, but still do business in Ireland. They do not have to pay contractor tax.
At present, the regulations about tax duties, applied to foreign institutions and individuals who do business in Vietnam or have income in Vietnam, can be found in the Circular No. 134 by the Ministry of Finance. The circular stipulates that the foreign institutions and individuals who provide services to Vietnamese institutions and individuals (the services are carried out in foreign countries), including advertisement, marketing, trade promotion and investment, are not the subject of the Circular No. 134.
Trinh, when citing the legal document, has affirmed that not only Google, Facebook, but the other e-commerce websites which have income sources from Vietnam will not have to pay tax, because they are not covered by the circular.
Taj Meadows, Asia Pacific Foreign Relation Director of Google, has affirmed on VnExpress that Google always gives prominence to obeying local laws, including the tax regulations.
Huong from the HCM City Taxation Department has said the department would reconsider the case. If Google pays tax in Ireland, where it sets the headquarters, it will not have to pay tax in Vietnam. If it has not paid tax yet, it will have to bear the contractor withholding tax.