Specifically, according to Decree 126/2020 guiding the Law on Tax Administration, effective from December 5, Vietnamese banks must provide customer account information to tax authorities. Information providing is set to be made periodically.
Answering BBC News Vietnamese, lawyer Le Trung Phat, director of law firm Le Trung Phat (Ho Chi Minh City) said that this regulation will contribute a small part to the collection of individuals and business organizations that have not paid taxes, especially individuals and organizations doing business online or on e-commerce platforms. However, the lawyer said that this solution is “not radical.”
Lawyer Phung Thanh Son, Director of Law World Law Firm, said that this decree is a legitimate need and for the common good to strictly manage and prevent tax loss. However, he pointed out that the fact that many agencies have access to a client’s privacy, it will be difficult to determine which agency the responsibility belongs to when the privacy is compromised. Meanwhile, the interests of customers are not guaranteed.
What is the decree?
Decree 126 requires commercial banks to periodically provide information about each taxpayer’s checking account, including name of account holder, account number according to the tax code issued by the tax authority, and date of account opening, account closing date and account at the request of the head of the tax agency, for the purpose of inspection and examination to determine payable tax obligations.
The decree states that the tax authorities are responsible for keeping information confidential and fully responsible for the security of information.
In addition, Decree 126 also stipulates that banks must withhold and pay tax obligations of overseas suppliers who have permanent establishments in Vietnam to do e-commerce business, on digital platforms with groups. domestic organizations and individuals.
In case individuals buy goods and services by card or other forms of banks or payment intermediaries can not deduct or pay on behalf of these units, these units are responsible for monitoring the amount transferred to suppliers in the country and send to the General Department of Taxation monthly.
Every month, a commercial bank or an intermediary payment service provider is responsible for declaring and remitting to the state budget the amount deducted or paid on behalf of the overseas supplier’s tax liability.
The biggest problem of people with this decree is going against the laws and regulations on the confidentiality of customers’ accounts.
Ngoc Nguyen, a young person who has a habit of using credit cards, told the BBC: “If really this decree is applied, how much money I spend, and with whom I transact, it will be understood by the tax authorities. If you are a person who is concerned about security, you will find it unsafe to use your credit card. The above decree goes against the trend of not using cash. Moreover, how do you know which money is business money? the money is from friends to transfer to borrow tax. Then anyone has how much property, whatever they do, they know what is privacy that needs to be respected.”
In fact, each country has its own rules on this issue.
The report “Improving access to banking information for tax purposes” by the Organization for Economic Co-operation and Development (OECD) published in 2020, on the one hand, recognizes that customer privacy is important, on the other hand, emphasizing that it is necessary for banks to provide customer information to the state tax agency.
“Governments of all OECD member countries recognize the importance of allowing government institutions to access banking information for certain law enforcement purposes (eg, money laundering). Even OECD member states also provide their tax authorities, directly or indirectly, the ability to access banking information for at least some tax administration purposes,” the report says.
Currently, most of the member countries of this organization have laws that protect the financial health of individuals and organizations. Therefore, in cases of legal access, tax authorities must exercise caution and have an obligation to keep information confidential.
Mr. Trung Hoang, a business man in Ho Chi Minh City, told the BBC:
“Although many people say that countries in Europe are doing the same, so there is no opinion, but these countries have a monitoring mechanism to ensure the interests of customers are not infringed illegally. Currently, their information is misused, citizens can sue tax authorities or banks, but in Vietnam, such regulation also means giving full power to banks and tax authorities. The voice of the people is very small.”
What did the lawyers say?
Lawyer Phung Thanh Son analyzed with the BBC that this decree is not only against tax loss but also makes sense to create a fair business environment and healthy competition among business entities, especially in the era of taxation. Industry 4.0 with the method of online sales gradually replacing traditional businesses … makes the tax administration of the state more difficult.
“In my opinion, on a general level, Decree 126/2020 / ND-CP does not go against the principle of customer information confidentiality.”
“As a general principle, customers’ information must be kept confidential. However, exceptions are made for public and state interests. Therefore, from the Law on the Protection of Consumer Rights to the Law. Exceptions are made by current credit institutions, but on the basis of a legal request from a competent authority, the Law on Tax Administration also stipulates that the State Bank of Vietnam is responsible for direct credit institutions in connecting and supplying information to tax authorities.”
However, lawyer Son also pointed out a security issue that is concerned by the public: “The instability of this Decree does not specify when the tax authorities are entitled to request and the extent of disclosure. … This leads to the tax authorities abusing and request the account information of all customers, which can result in a breach of privacy. reflects both personal preferences, tendencies, and emotions, the personal relationships of the person with whom the information is disclosed (both the receiver and the sender). Feeling shamed or hurt the person whose information is disclosed.”
The lawyer cited Article 38 of the 2015 Civil Code that “Private life, personal secrets, and family secrets are inviolable and protected by the law” and this law has no exceptions such as the case at the request of a competent state agency.
“Therefore, in my opinion, the disclosure of customer information should be limited by the protection of personal privacy. Or in other words, the law should clearly specify the circumstances in which tax authorities have the right to request information and the level of provision to limit the disclosure of privacy, the number of transactions/day, month and the amount of each transfer should be used to filter out accounts. For example, the bank only periodically provides accounts that receive money from 100 transactions/month or more or receive the amount of each transaction over VND1 billion; and when providing, the bank only provides interrelated information. In relation to taxable transactions in accordance with the law, personal transactions such as donation, sponsorship, borrowing, and debt repayment are not provided,” lawyer Son suggested.
Lawyer Phat suggested:
“In my opinion, in order to avoid abuse of power, we need to specify conditions that the tax authorities themselves when they request information, must also have evidence of credit institutions about the owners. The other is doing business activities and generating payment transactions through banks so that it can harmonize the purpose of preserving state management and do not affect the interests of the people in general, and the interests of the bank account holders in particular,” said Phat.