Viewpoints and Goals on VAT Fraud Prevention

abuse, but neither of these principles guarantees the rule of law in its implementation.

Fifth, the scope of tax refund is too broad, combined with the "pre-withdrawal, post-audit" mechanism and the loose procedures for establishing enterprises stipulated in the Enterprise Law, so the State's money lost through this route is quite large.

Sixth, the mechanism for implementing VAT obligations still involves many elements of the subsidized administrative management mechanism, so VAT obligations are not guaranteed in a fair and satisfactory manner. The legal value of tax codes, tax declarations, tax payment notices, and tax settlements have not been determined in VAT law, leading to arbitrariness in the implementation process.

Seventh, invoices and documents still lack important data to determine the legal responsibilities of the parties, their legal value has not been clearly determined, the management mechanism is loose, the creation and use of invoices and documents when purchasing goods and services has not become a habit, so the phenomenon of invoice fraud to appropriate State budget money through tax deduction or VAT refund has developed to an alarming level and does not stop at the individuality of each enterprise but there is collusion between enterprises.

The above shortcomings have raised the necessity of perfecting the VAT law and the mechanism to ensure implementation, and at the same time are the practical basis for proposing solutions to perfect the VAT law and the mechanism to ensure implementation.

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CHAPTER III

SOME MEASURES TO PREVENT VAT FRAUD IN OUR COUNTRY

I. VIEWPOINTS AND GOALS ON PREVENTING VAT FRAUD

1. The necessity of perfecting the VAT law and implementation mechanism

Based on the requirements of the development of the market economy and the current economic restructuring of our country, as well as the requirements of expanding international economic cooperation and the current globalization trend, it is inevitable to continue to improve the VAT law and the mechanism to ensure implementation.

The Vietnamese market economy itself has its own characteristics and these characteristics have had important impacts on the process of formation, development and improvement of economic law in general and tax law in particular. Therefore, the improvement of the current VAT law is on the one hand to meet the requirements of the socialist-oriented market economy in Vietnam, on the other hand to meet the self-regulation mechanism of the market when the market economy itself has developed as well as to ensure the suitability of the current economic restructuring process of our country. On the other hand, in the trend of international economic integration and globalization, the goal of protection and revenue generation through tariffs is no longer effective, revenue from export and import taxes will gradually narrow, while the ability to increase revenue from direct taxes (income tax) is also very rare, because the income level of our people is very low, so the most feasible solution in the immediate future is to enhance the role of indirect taxes, in which the role of VAT is extremely important. Therefore, perfecting the VAT law and the mechanism to ensure implementation is set out as a necessity to enhance the role of compensating for the decline in state budget revenue.

In the trend of globalization and economic integration with participation in international trade associations and organizations such as the Association of Southeast Asian Nations (ASEAN) and the World Trade Organization (WTO), the formation of important tax alliances requires adjustments to VAT laws as well as mechanisms to ensure their implementation must be transformed in accordance with socio-economic conditions to create favorable conditions for proactive participation in international cooperation development. Moreover, although our country is currently under pressure from the process of reducing import taxes according to CEPT/AFTA tariff reduction commitments, it is still necessary to create momentum for economic development to promote Vietnamese enterprises.

adapt to fluctuations and competitive pressures to enhance competitiveness in the international market, for this reason, the VAT law requires fundamental changes. In addition, due to the impact of globalization, the freedom of business of business entities has been expanded on many new dimensions and nuances in the establishment of business establishments. Fully exploiting the benefits through transfer pricing measures along with the flexible movement of capital and labor flows on a global scale has made tax competition between countries more intense and the result of this competition has made the tax law systems of countries around the world tend to converge and depend on each other more. Therefore, the improvement of VAT law in Vietnam and the mechanism to ensure implementation cannot stand outside that vortex.

On the other hand, the globalization trend will make tax enforcement and management in our country more difficult due to the complexity of transnational economic activities, the possibility of tax evasion and fraud becomes easier and the scope and scale are larger, as transnational companies will have the opportunity to fully exploit the advantages of transfer pricing to evade taxes and calculate taxes. In addition, the competition and the race in tax competition along with many incentive measures to attract and gain competitive advantages bring about negative or positive externalities to other countries in this socio-economic condition, which has raised the increasing demand for the need to adjust VAT laws, especially the mechanism to ensure VAT implementation, in which the human factor is put first; the expertise and knowledge of tax management experts cannot be ignored and paid more attention. Because globalization itself, along with the development of information technology, on the one hand opens up opportunities for effective international cooperation in the field of taxation, on the other hand, requires tax management to reach a new level. This requirement cannot be separated from the training of a team of tax experts with international skills and knowledge. This is also a requirement in the process of perfecting VAT law and the mechanism to ensure implementation.

Furthermore, the development of information technology, especially Internet technology, from a management perspective has both advantages and disadvantages. First of all, the development of network technology will rapidly increase the integration of business functions of an enterprise. The issue of intranet has become an indispensable means in multinational companies in this era. Therefore, the intranet is where business operations are internalized at a high level. This means difficulties in determining business functions, so this issue poses new challenges to tax authorities as well as lawmakers in determining appropriate regulatory mechanisms for VAT.

Exploiting tax incentives between countries will intensify tax competition between countries and this is also an issue that needs to be considered when perfecting VAT laws as well as mechanisms to ensure implementation.

Globalization with the help of information technology will increase indirect investment activities, foreign exchange transactions and especially transactions through financial instruments such as futures contracts, options to buy, sell or transfer, etc. In the institution, these transactions are not subject to VAT, so when perfecting the VAT law, should it be regulated whether or not to tax these provisions and if so, how to tax them? How to manage them? The emergence and rapid development of e-commerce has posed a difficult problem for legislators and tax administrators in controlling commercial transactions as well as distinguishing between commercial transactions and taxable transactions and non-commercial transactions. If these problems are not solved, the opportunity for tax avoidance and tax evasion will be greater. Thus, the progress of science and information technology has posed great challenges to management work, but it has created conditions to provide useful means for the process of applying VAT law in our country today.

Based on the issues raised by the current situation of adjusting VAT law and the requirements for perfecting VAT, perfecting VAT law in our country is inevitable. In fact, after more than 4 years of implementing VAT law, the results are too little compared to the requirements, and the situation of violating the law to evade this obligation is still too much. Therefore, reality has proven that no tax has advantages without disadvantages and vice versa. The problem is to find solutions to facilitate the "smooth" operation of VAT in the actual conditions of Vietnam. Therefore, amending and supplementing the current VAT law is considered a stepping stone to the birth of a modern VAT law in the near future.

2. Directions for perfecting VAT law

First of all, the VAT law must fully recognize the main contents of tax law adjustment, at the same time accurately and scientifically reflect the nature of VAT, ensuring that VAT is an indirect tax with a continuous nature and high neutrality, levied on the transfer of goods and provision of services calculated on the added value of goods and services in the production and circulation process according to the deduction method. Therefore, one of the leading criteria to evaluate the normative nature of a legal document is whether the document correctly reflects the inherent nature of things and phenomena or not? And only when correctly reflecting the nature of things and phenomena, will the law have enough power to regulate the social relations that need to be regulated.

The improvement of VAT law must be closely linked to and based on the improvement of VAT policy. In general, the tax law system in general and VAT law in particular have an organic relationship with tax policies and economic and financial policies of the state. Tax law reflects, expresses and aims to implement the economic and financial policies of the state.

Tax law reflects, expresses and aims to implement tax policies, contributing to ensuring the objectives and functions of tax such as ensuring revenue for the state budget, performing the function of macroeconomic adjustment of the economy through income regulation and production regulation. Therefore, perfecting VAT law cannot be separated from and must be based on perfecting VAT policy.

Expand and enhance the scope of the VAT law by incorporating some of the contents currently stipulated in the guiding documents for implementing the law into the VAT law, to ensure the principle that without a tax law there is no tax obligation, the tax law is the legal basis for the arising of the obligation to collect and pay taxes to be consistent with the authority of the National Assembly as stipulated in the Constitution as well as "ensuring the real power" of the National Assembly in deciding on national financial and monetary policies, amending or abolishing taxes while meeting the requirements of the VAT law adjustment mechanism in our country today. However, when perfecting the VAT law, it is necessary to take into account the objective aspect that always exists a contradiction between the need for adjustment and the actual adjustment ability of the law.

Perfecting the VAT law in the direction of simplicity, stability, fairness, efficiency and meeting the current trend of integration and globalization, while promoting the role of VAT in ensuring revenue for the state budget in the context of tariff reduction and the role of the state in adjusting the macro economy of the society in the direction of encouraging production development, especially encouraging export activities including goods and services, creating conditions for the development of the agricultural economy such as encouraging agricultural processing activities, outsourcing...

The completion of the VAT law must be associated with the completion of the entire legal system, especially the law on special consumption tax and the law on export and import taxes. The VAT law is a part of the legal system.

VAT tax and the scope of VAT include both import and export activities and production and trading activities of special consumption goods. Therefore, when perfecting VAT law, it is necessary to pay due attention to this issue to ensure consistency, synchronization and mutual "coverage" of the entire tax law system.

Expressing economic and financial concepts of tax in legal language in the provisions of VAT law, in which legal definitions are used, is extremely necessary and especially must properly respect the legal aspects of VAT to ensure the implementation of VAT obligations, while enhancing the value of preventing violations of VAT law.

To effectively apply VAT, in addition to continuing to improve the VAT law, it is necessary to continuously improve the mechanism to ensure VAT implementation on the basis of promoting tax administrative reform. Tax administrative reform is an objective necessity, because administrative reform is a factor and a fundamental driving force to promote socio-economic development in the context of international economic integration, and is a profound and comprehensive innovation to build a socialist rule-of-law state.

Firstly , reforming the tax administrative system: reforming the tax administrative system includes reforming the legal system and reforming tax administrative procedures. Reforming the legal system is reforming the process of developing and promulgating tax legal documents of the Government and the Ministry of Finance. Specifically: innovating the process of developing legal documents, expanding the organization of research and drafting of legal documents by interdisciplinary expert groups, strictly implementing the main provisions of the law on promulgating legal documents. Reforming tax administrative procedures is reforming the procedures for exercising authority in tax administrative activities. In other words, it is reforming the implementation procedures of all forms of tax agency activities, including the procedures for establishing tax agencies, the procedures for appointing, dismissing, and transferring tax officials, the procedures for formulating and applying regulations.

to ensure the rights of subjects and handle violations, the order of organizational activities and administrative operations.

Second , reforming the tax administration apparatus includes:

 Reforming the organizational model of tax administration

 Reform the management decentralization between tax agencies and the division of labor within each tax agency.

 Improve the direction, operation and management methods of the General Department of Taxation, Tax Departments and Tax Branches to improve the quality of operations to meet the fluctuations of the market mechanism and the challenging international integration process.

Third , building and perfecting the team of tax officials, in tax administrative reform, if reforming tax administrative procedures is a breakthrough, the focus is on perfecting the team of tax officials. Because it is possible to build a good institutional system on tax and design an optimal tax administrative organization model, but if there is no team of officials who are proficient in their expertise, professional, and dedicated to their work to meet the requirements of modernizing the administration, then all ideas of tax administrative reform cannot become reality.

Fourth , reform the salary regime, amend and supplement the policies for tax officials to encourage and motivate them to improve the quality of tax collection work.

1.2 Solutions to improve the mechanism to ensure the implementation of VAT law

1.2.1 Continue to improve the tax management system

In the world, due to different political, economic, social and historical characteristics, each country has a different form of tax administration organization. However, when building a tax administration system, states must solve the following basic problems:

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