Codes to boost state tax coffers

Vietnam Tax Consultants’ Association chairwoman Nguyen Thi Cuc

Many people reportedly lodge claims as dependents of more than one taxpayer. True?

Generally, everyone wants their tax payments to be low. Therefore, mothers and fathers declared their kids and parents as dependents to lower tax payments.

Even, there were cases the parents have sons and daughters. Their sons and daughters, even sons-in-law and daughters-in-law all declared parents as their dependents. In these cases, tax reductions for many dependents caused serious losses to state budget.

So, how can we beat this fraudulent behaviour?

At this time, tax authorities only give tax codes to taxpayers, leading to such fraud, so that if dependents also have tax codes, this could help tackle false declarations.

Taxpayers, apart from filling information about dependents, would need to give their dependent tax codes. If the dependent tax codes are already used by other family members, the taxpayers could not fulfill tax declarations due to computer refusal.

It has proven hard to control taxpayers’ dependent declarations unless the dependents are given their own tax codes since we could only resort to taxpayers’ obedience.

Tax authorities once mulled giving tax codes to all people, but this has yet to become true. Why?

This means the tax bodies had detected cheats in tax declarations and tried to source rectification measures. This target has yet to be realised, in my view, because current information technology infrastructure system could not meet the set requirements or the expenses to make this set goal come true are colossal, making immediate implementation impossible. I expect these issues could soon be addressed to stamp out wrong tax declarations.

How is it handled in other countries?

In many countries, the new-borns are given civil codes at birth which will follow their life-time. The tax authorities in these countries, therefore, often use these civil codes as tax codes and these tax codes also follow their life-time.

In Vietnam, relevant ministries and state agencies reportedly contemplate giving civil codes to people at birth and these codes will also attach to them during their lifetime.

If civil codes were given, tax organisations would provide tax codes based on civil codes to save expenses. However, the move could not be done overnight since it involved diverse state bodies and individuals’ other codes like their bank account numbers, driver’s license numbers or social insurance book numbers.

To avert cheats in dependent declarations, we should primarily honour tax codes on taxpayers’ all dependents.