Vietnam fails to control cash outflow via credit cards

VietNamNet Bridge – After the public got amazed by the information about Google and Facebook alleged tax evasion, it has been shocked again by the news that Vietnam fails to control the cash flow which goes out of the Vietnamese territory, via credit cards.

Facebook's, Google's agents suspected of evading tax in Vietnam

MOF: Vietnam has the right to tax Google and Facebook  

Vietnamese people enriching Facebook

Vietnamese people pay more for apps

80 percent of transactions carried out via credit cards
Quan, who is working for a digital content company in HCM City, has affirmed that most popular payment method for the advertisements on Google is paying via personal accounts.

When asked why the payment is not carried out through Google’s ad agents in Vietnam, Quan cited several reasons. Firstly, with online transactions, clients would be able to obtain exact figures, which allows them to measure the ad effects. Meanwhile, if making payment though agents, clients have no other choice than trusting the figures provided by the agents. 

Secondly, clients do not want to make payment though agents, because the agents may charge some other additional kinds of fees.

A big problem exists, according to Quan, is that personal credit cards have been used not only to make payment for personal transactions, but for companies’ transactions as well.

Of course, the transactions have not been put under the control by state management agencies and taxation body. This means that Vietnam fails to collect tax from the highly valuable transactions.

Lao dong newspaper has quoted its source as saying that the number of transactions via credit cards from Vietnam to pay for ad bookings on Google and Facebook, which have been “outside the law”, has reached 80 percent. If this is true, the total ad revenue that Google or Facebook can get from the Vietnamese market would be much higher than 40 million dollars – the figure that Le Hong Minh, General Director of VNG – has presumed.

As such, a big cash volume has been flowing out of the Vietnamese territory, which remains out of the reach of the Vietnamese state management agencies. Meanwhile, the businessmen do not have to pay tax for the fat profits they make.

How to control the cash outflow?

In the age of the “flat world”, more and more cross-border commercial transactions with online payment have been applied. Online payment has been used not only to pay for the ad pieces on Google or Facebook, but also for kinds of transactions.

More and more mobile phone and tablet users in Vietnam have got accustomed to buying apps online.

According to Fabien Lotz, a senior executive of Nokia Indochina, from 2009, when Nokia Store was set up to the end of December 2011, there were 100 million downloads of the apps carried out in Vietnam. He also said that Vietnam is among the top 10 countries which most download Nokia Store’s apps.

If a download is charged one dollar, and 50 percent of the downloads have to pay fees, the total fee paid by Vietnamese clients is really a huge sum, which means that a huge sum of money went out of Vietnam during that time.

A paradox exists, according to e-commerce experts, that the more e-commerce and online payment in Vietnam develops, the bigger the uncontrollable outflow cash is.

Regarding the Facebook and Google cases, the Ministry of Finance has stated that Vietnam has the right to tax Google and Facebook. Meanwhile, the HCM City Taxation Agency has stated that it will take inspection tours to clarify if Google’s and Facebook’s agents evade tax, or land a hand to the big guys to evade tax.

Source: Lao dong