Vietnam's draft tax on unexplained incomes could lead to money laundering: legislators

By Hoang Thuy   March 11, 2018 | 02:04 am PT
Unexplained assets should be seized from civil servants instead, some legislators say.

Some members of Vietnam's legislative National Assembly have expressed concerns about a proposal to slap a heavy tax on officials with unexplained incomes or assets, saying it could be used to launder money.

Under an amendment to the Anti-Corruption Law drafted by the Government Inspectorate, if authorities confirmed that a civil servant's assets or incomes were greater than the values they declared, or they failed to provide valid explanations where they came from, they would face a 45 percent personal income tax bill.

National Assembly delegate Truong Trong Nghia said: “We should not impose a personal income tax on civil servants who fail to provide valid explanations for their assets, because the tax would only be levied on their legal incomes.”

“The proposal made by the Inspectorate could pave the way for money laundering,” he said, explaining that the tax payments could help civil servants launder money earned from illegal activities such as the trade of drugs and smuggled goods, corruption and stealing public assets.

Violators would be willing to pay the 45 percent tax and keep the rest, Nghia said.

If civil servants fail to explain the illegal sources of their wealth, authorities should seize the assets, he added.

Agreeing with Nghia, delegate Luu Binh Nhuong said the proposal was groundless and infeasible. Tax rates should be regulated under the tax law, he stressed.

Head of the Institute of Legislative Study Nguyen Dinh Quyen said misdeclared assets should be resolved by a court to ensure legitimacy. Vietnam should study the UN Convention on Corruption Prevention, which includes regulations on illegal enriching, to deal with the matter.

In addition to the much-debated measures, the bill would involve the Government Inspectorate being directly responsible for monitoring the assets and incomes of officials in leading and managerial positions. In the draft, the Government Inspectorate also suggested making it mandatory for civil servants to make all major payments via bank transfers to control their incomes.

The National Assembly is scheduled to hold a final discussion on the bill before voting at a session in May.

Vietnam's sweeping corruption crackdown spearheaded by General Secretary of the Communist Party Nguyen Phu Trong has ensnared scores of high-profile officials.

The Party has pledged to step up its fight against corruption even further this year to filter out corrupt officials and tackle violations committed at local levels.

The Corruption Perceptions Index (CPI), released by Transparency International in February, ranks Vietnam 107th out of 180 economies based on perceptions of experts and businesspeople.

Vietnam scored 35 on a scale based on 0 for deep-rooted, systemic corruption and 100 for a very clean environment. Last year, it was ranked 113th out of 176 countries and territories with a score of 33, an improvement from 31 in 2012.

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