HANOI: Luu Duc Huy head of the General Department of Taxation’s (GDT) Policy Division, said at a meeting in early December discussing the draft amendments to the Law on Tax Administration that his agency proposes adding one chapter on tax investigation to the draft to adapt to the country’s increasingly deep global integration.
Vietnam has so far signed agreements on the avoidance of double taxation with 76 countries. The country has also undertaken numerous tax commitments with ASEAN and the World Trade Organization (WTO). “We propose being empowered to investigate tax issues and then send the investigation results to other investigation agencies. The department now has the right to assess and inspect tax performance at enterprises, but these functions are not strong enough to help us realise the commitments in the international conventions on taxes,” Huy added. As an example, he cited the US as a country where the tax agency has the power of tax investigation. He said that only this agency has this function. “If the GDT has tax investigation power and even the right to prosecute under the draft amendments, this may cause negative impacts on the transparency of tax management and objectiveness of investigation and litigation, thus possibly causing a pressure on taxpayers,” said Pham Thi Thu Trang, a partner of accounting firm EY’s Tax and Advisory Services.
“Though the US tax agency has tax investigation power, they do not have the right to prosecute. Vietnam should carefully consider the proposal as the country is trying to prevent the criminalisation of economic issues,” she added. Echoing Trang’s view, Pham Thi Giang Thu from the Hanoi Law University said that the changes on tax investigation authority should not be added in the draft amendments.
“If the proposal is approved, some related laws will have to be amended, including the Law on Criminal Procedure,” Thu said. “We should not apply all mechanisms in the US and other countries to Vietnam. We instead have prevention measures.”
Dang Thi Binh An of tax advisory company C&A also raised concerns over the issue. An said the scale and authority of GDT should be carefully considered before making any change. If this agency is given tax investigation powers, another issue is whether or not their investigation results will be re-checked by prosecution-related agencies. This may cause a burden on businesses.
At present, many agencies in Vietnam are capable of tax assessment and inspection, including the Government Inspectorate and the State Audit of Vietnam. The Ministry of Public Security and the customs agency also have tax investigation powers.
