A pilot scheme allowing citizens to pay their taxes via automatic teller machines (ATMs) will kick off next month, said the General Department of Taxation (GDT).

A briefing will be organised later this month to proviude the public with information on the payment method and launch the trial run, said Nguyen Thi Hoc, deputy director of GDT’s Department of Tax Declaration and Accounting.

Research on how to reduce risks for tax collectors and save time in the tax payment and collection process has been carried out during the last three months by GDT, in co-operation with the State Treasury and the Viet Nam Joint Stock Commercial Bank for Industry and Trade (Vietinbank).

"This is a move to limit cash transactions among public offices and is part of a larger plan to modernise operations of the Department and the State Treasury in the long run," said Hoc.

Vietinbank’s Hai Phong branch is the first financial institution involved with this trial project, and starting in March has provided customers with the tax pay service.

Deputy CEO for Vietinbank Pham Anh Tuan said that the project would benefit taxpayers in many ways, if it is applied on a wider basis.

"Instead of going to the taxation department’s collection points which are few in number and paying in cash which is not convenient, taxpayers can do their duty at numerous bank branches or via ATMs," Tuan said.

"And we have mobile collection teams to serve taxpayers. More importantly, taxpayers don’t have to pay any service charges," he added.

Statistics at four of Vietinbank’s Hai Phong branches Hong Bang, Ngo Quyen, Le Chan and Do Son, showed that taxes collected via these branches accounted for 40-85 per cent of the total taxes due.

All commercial banks in Viet Nam are encouraged to join in the tax pay via ATMs project, so they should actively get in touch with GDT and the State Treasury to ensure their IT systems are compatible, according to Nguyen Thi Hoc of the taxation department.

"I am optimistic that many commercial banks will be interested in this project, because it’s a good opportunity for them to promote the use of their bank cards and attract a large volume of cash transacted through their banks," Hoc said.

The scheme will be expanded nationwide next year, starting with the northern provinces of Quang Ninh and Vinh Phuc, as well as HCM City and Vung Tau City in the South.

But the method will only work as an additional channel to collect taxes in the near future, given that ATMs can only transfer money for the categories of taxes that have been entered in the system’s database.

"There are hundreds of different kinds of taxes in Viet Nam and possibly many more are to be applied so commercial banks and their ATM systems may not be able to keep themselves up to date, if they are not equipped with strong IT and database systems," Hoc said.

Corporate income tax, value-added tax, special consumption tax and personal income tax, especially from landlords and people with a variety of income streams will be among the first types of taxes that can be paid via ATMs. Taxation offices will then send a letter of receipt to the taxpayers.

"It sounds like a good idea, because it helps cut lots of administrative procedures involving cash transactions and paperwork," said Khuong Lan Chau who often has to queue to pay her company’s taxes.

Pham Thanh Son, director of Thao Chi Company in Hai Phong’s Ngo Quyen District said time-saving was the best reward coming out of this method. Son said he used to have to queue for many hours at a collection point just to pay taxes.

But the scheme to collect taxes via ATMs will be confined to major cities where the number of ATM users is high.

The Viet Nam Banks’ Association statistics show that commercial banks operating in Viet Nam have issued 17 million bank cards for use at28,000 ATM booths throughout the country by the end of July, 2009.

But the association is concerned that ATM receipts, which are normally printed with poor quality ink, will fade within a few days and make it difficult for taxpayers to use them as a legal evidence of having made payments.

The GDT claims that it is willing to produce official receipts for taxpayers on request, but this would mean another time-consuming step is added to the process.