Feb 2, 2013

Vietnam - Bans won’t be useful in building non-cash economy

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VietNamNet Bridge – The tentative suggestion on requiring via-bank payment for the transactions of valuable products, to many people, is just “trifle,” and raises no worry to them, because they believe they can play tricks to dodge the laws.

The draft decree on cash payments being compiled by the State Bank of Vietnam says that people have to pay through banks if they want to buy real estate, stocks or cars, or motorcycles.

Nguyen Thanh Tuan, a senior executive of VIB Bank, said the decree, if adopted, would help minimize the tax evasion help implement the plan to go towards a non-cash economy.

The State now fails to collect debts from trade transactions because of the wrong declarations about the value of transactions. For example, a motorbike is sold at VND40 million, but the invoice showed that the products is sold at VND20 million only. This means that the taxable value has been lowered to below the actual values, thus leading to the lower tax sums the involved parties have to pay.

Once buyers and sellers have to make payment via banks, they would not be able to declare the wrong prices, because they would be required to explain where the remaining VND20 million come from.

However, Tuan thinks it would be very difficult to implement the decree, because of the Vietnamese people’s habit of making payment in cash. Meanwhile, businesses may play tricks to evade tax. Especially, tax officers even show them the ways to dodge the laws.

This explains why many enterprises keep two different accountancy systems at the same time, one for showing to tax officers, and the other for internal use.

Linh, a housewife in Hanoi, said she prefers making payment in cash instead of making payment through banks. “I would rather pay in cash right at the shop on delivery. If I am required to transfer money via bank account, I would have to go to the bank, which would take time, and pay for the remittance service,” Linh said.

Pham Dinh Thang in the new urban area of Linh Dam in Hanoi also said there exists the loopholes in the laws which can be exploited to evade tax.

“My BMW X5 is priced at VND5 billion. However, the issued invoice showed that it was sold at VND3 billion only. As such, the seller can avoid tax, while the state fails to collect tax,” Thang said.

Thang thinks that the new regulation, in principle, would help prevent the tax evasion. However, he is not sure about the enforcement of the regulation, because in many cases, laws cannot be brought into life.

Meanwhile, Nguyen Duc Viet, a representative of a Mercedes Benz’s sales agent, said he fears the new regulation would cause inconvenience.

According to Viet, if the remittance goes smoothly, money would go to the targeted accounts just after five or 10 minutes, and buyers can get deliveries soon. However, if troubles occur, the money would only reach the targeted accounts after four hours at least.

“No one wants to waste time to wait. Meanwhile, they would have to pay service fee when they remit money through banks. Therefore, I think the new regulation would be unfeasible,” Viet said.

“People, in order to help the state to collect debts, will have to bear a kind of fee,” Linh commented.

Tran Thuy

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