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Finance Ministry tightens taxation of real estate, online businesses

The Saigon Times

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HCMC – The Ministry of Finance will tighten control over the taxation of property transactions and online businesses this year.

The ministry sent an official dispatch to the Ministry of Public Security, the Ministry of Justice and the municipal and provincial People’s Committees, asking them to collaborate in preventing tax evasion of property transactions.

This is the second official dispatch on tightening taxation of property transactions that the ministry has issued in just one month. 

The General Department of Taxation under the Ministry of Finance has also asked local tax departments to focus on inspecting tax declaration documents from enterprises and individuals in real estate to identify those at high risk of tax evasion and conduct inspections. 

According to the Finance Ministry, personal income tax collection from property transactions accounts for some 10% of the country’s total personal income tax revenue and ranks second among 10 sectors. 

However, the Ministry of Finance said the country only collects over VND10 trillion from personal income tax of real estate transactions every year, much lower than expected.

Nguyen Son, director of the Tax Department of District 5, HCMC, said tax losses in real estate transactions mainly come from the difference between the market price and the regulated price frame. To avoid paying high taxes, real estate purchase contracts are often declared at a very low value, many times lower than the agreed value between sellers and buyers to avoid taxes.

The taxation authorities will also tighten control over the taxation of digital transactions.

Tightening tax management and tax collection from online business activities and individuals and businesses with revenue generated from social media platforms such as Facebook and YouTube have been identified as one of the key tasks of the General Department of Taxation this year.

The tax authorities of Vietnam collected some VND1,314 billion from businesses that signed online advertising contracts with foreign organizations that did not establish legal entities in Vietnam, such as with Google, Facebook and YouTube last year.

The tax revenue from individuals in Vietnam providing cross-border services including online marketing, online advertising, the production of digital content and the application of information technology on foreign social networking sites such as Google, Facebook and YouTube reached VND498 billion.

In total, tax revenue from activities of cross-border platforms was about VND1,812 billion.

Circular 92 stipulates that individuals who generate an income from Google, Facebook or YouTube worth over VND100 million a year must pay tax at the rate of 5% of value-added tax and 2% of personal income tax based on the taxable revenue. 

However, it is difficult to collect taxes from these individuals as they operate on cross-border platforms.

According to data from the tax authority, Vietnam has about 15,000 channels making money on YouTube, but only some 30% of them are managed by multi-channel networks that make tax declarations and payments.

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