About Banks Reporting Account Holder Information to Tax Authorities

Regulating that banks provide information about customer accounts to tax authorities raises concerns about the risk that personal information will be breached or misused.

Specifically, in accordance with Decree 126/2020 that governs the Tax Administration Law, effective as of December 5, banks must provide information on customer accounts to the tax authorities. The provision of information takes place periodically.

Responding to Vietnamese BBC News, lawyer Le Trung Phat, director of Le Trung Phat law firm (Ho Chi Minh City) said that this provision will contribute a small part to the collection of people and business organizations who have not paid for a long time. Taxes, especially individuals and organizations doing business online or on e-commerce platforms. However, the lawyer said that this solution “is not radical.”

Attorney Phung Thanh Son, Director of the Law World Law Firm, suggested that this decree is a legitimate necessity and for the common good to strictly manage and combat tax losses. However, he noted that the fact that many agencies have access to a client’s privacy will make it difficult to determine which agency owns responsibility when privacy is compromised. Meanwhile, the interests of clients are not guaranteed.

Decree 126 requires commercial banks to periodically provide information on each taxpayer’s current account, including the name of the account holder, the account number according to the tax code issued by the tax authority, and the date the account was opened. date of closing of the account and date at the request of the owner of the tax agency, for the purposes of inspection and supervision to determine the tax obligations payable.

The decree establishes that the tax authorities are responsible for the confidentiality of the information and fully responsible for the security of the information.

Furthermore, Decree 126 also stipulates that banks must retain and pay the tax obligations of foreign suppliers who have permanent establishments in Vietnam to do e-commerce business, on digital platforms with groups. domestic organizations and individuals.

In the event that natural persons purchase goods and services with a card or other forms of banks or payment intermediaries cannot deduct or pay on behalf of these units, these units are in charge of monitoring the amount transferred to suppliers in the country. . and send monthly to the General Directorate of Taxation.

Each month, a commercial bank or intermediary payment service provider is responsible for reporting and remitting to the state budget the amount deducted or paid on behalf of the foreign provider’s tax liability. .

The biggest problem people have with this decree is going against the laws and regulations on the confidentiality of customer accounts.

Ngoc Nguyen, a young man who has a habit of using credit cards, told the BBC: “If this decree really applies, how much money I spend and with whom I transact, the tax authorities will know.” If you are a security conscious person, it will not be safe to use your credit card. The previous decree goes against the trend of not using cash. Also, how do you know what money is trading money? , the money is from friends to transfer to borrow taxes. So anyone has how much property, whatever they do, they know what privacy is to be respected. ”

In fact, each country has its own rules on this matter.

The report “Improving access to bank information for tax purposes” by the Organization for Economic Cooperation 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 state tax authorities.

“The 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 the information confidential.

Trung Hoang, a businessman from Ho Chi Minh City, told the BBC:

“Although many people say that the countries of Europe are doing the same, so there is no opinion, but these countries have a monitoring mechanism to ensure that the interests of customers are not illegally infringed. Currently your information is used for wrong purposes, citizens can sue tax authorities or banks, but in Vietnam such regulation also means giving full powers to banks and tax authorities. The voice of the people is very small. “

Lawyer Phung Thanh Son discussed 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 between business entities, especially in the tax era. Industry 4.0 with the online sales method gradually replacing traditional businesses … makes state tax administration difficult.

“In my opinion, at a general level, Decree 126/2020 / ND-CP does not contravene the principle of confidentiality of customer information.”

“As a general principle, customer information should be kept confidential. However, exceptions are made for public and state interests. Therefore, from the Law on Protection of Consumer Rights to the Law. Current credit institutions make exceptions, but on the basis of a legal request from a competent authority. In addition, the Tax Administration Law also stipulates that the State Bank of Vietnam is responsible for direct credit institutions to connect and supply information to tax authorities. “

However, lawyer Son also pointed out a security issue that concerns the public: “The instability of this Decree does not specify when the tax authorities have the right to request and the scope of the disclosure. … This leads the tax authorities to abuse and request the account information of all customers, which can result in a privacy violation. it reflects both the personal preferences, tendencies and emotions as well as the personal relationships of the person with whom the information is disclosed (both the recipient and the sender). Tiger or hurt the person whose information is disclosed. “

The lawyer cited article 38 of the Civil Code of 2015 that “privacy, personal secrets and family secrets are inviolable and are protected by law” and this law has no exceptions as a case at the request of a competent state agency.

“Therefore, in my opinion, the disclosure of customer information should and should be limited by the protection of personal privacy. Or, in other words, the law should clearly specify the circumstances in which tax authorities may The right to request information and the level of provision To limit the disclosure of privacy, it is convenient to use the criteria of the number of transactions / day, month and the amount of each transfer to filter the account. For example, the bank only periodically provides accounts that receive money from 100 transactions / month or more or receive the amount of each transaction above one billion VND; and when providing, the bank only provides contact information. In relation to transactions taxable according to the law, it is not they provide personal transactions such as donations, sponsorships, loans and debt settlement, “suggested LS Son.

Attorney Phat suggested:

In my opinion, to avoid abuse of power, it is necessary to specify the conditions that the tax authorities themselves, when requesting information, must also be aware of the owners from the credit institutions. The other is to carry out commercial activities and generate payment transactions through banks. In general, the interests of bank account holders in particular, “said Phat.