Many solutions offered to deal with increasing tax debts

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The Tax sector has strengthened tax debt management and collection from the beginning of the year. Photo: Thuy Linh
The Tax sector has strengthened tax debt management and collection from the beginning of the year. Photo: Thuy Linh

Tax debt ratio is still high

According to the report of the General Department of Taxation, in the first six months of the year, the whole tax sector collected VND16.2 trillion of tax debts.

The total tax arrears managed by the tax sector as of June 30, 2022 is VND132,460 billion, up 15.2% compared to December 31, 2021 and up 9.7% year-on-year. Of which, recoverable tax debts are VND67,809 billion; recoverable fines and late payment interests are VND22,389 billion; irrecoverable tax debts are VND24,582 billion; tax debts under processing are VND7,909 billion and tax debts that are being complained, sued, beyond the extension time are VND9,770 billion.

Notably, by the end of June, the whole tax sector issued 100,700 enforcement decisions on account deductions and blocks; 7,524 enforcement decisions on invoices; 248 enforcement decisions on asset distraint and collection of third-party assets; and 7,677 enforcement decisions on the revocation of business registration certificates.

This shows that the tax sector has been paying attention to tax debt management and collection since the beginning of the year.

At Hung Yen Tax Department, this unit has assigned debt collection targets to each unit and each officer and urged the units to strengthen debt collection and implement coercive measures for tax debts from the beginning of the year. By the end of May 31, 2022, the unit issued over 180,000 notices of tax debt, fines, and late payment interests; and 439 coercive decisions.

By May 31, 2022, there were more than 1,000 businesses owing taxes in the province. The large tax debtors on the list are Hung Yen Export Food JSC (over VND271 billion); Van Thuan Phat Real Estate JSC (over VND78 billion); An Phu Investment and Development LTD (over VND66 billion); and Phuc Hung Construction Investment JSC (over VND33 billion).

Hung Yen Tax Department said that, despite drastic solutions in tax debt management and collection, tax debt ratio is still high due to the impact of the Covid-19 pandemic from previous years, in which many enterprises faced difficulties, suffered losses and cannot make repayment and mortgage assets to the bank.

The total amount of tax debt managed by the Quang Ngai Tax Department is estimated at VND884 billion on June 30, 2022. This figure rose 12% compared to the beginning of 2022, and 11% year-on-year. Of which irrecoverable tax debts account for 65% and bad tax debts account for 35%.

Quang Ngai Tax Department said that in the first half of the year, although the department has urged and enforced debt collection in accordance with the Law on Tax Administration; established units to fight budget loss and tax debt collection at localities, worked with related units in tax debt collection, the amount of tax debts are still high compared to the beginning of the year, especially the recoverable tax arrears.

It is due to the impact of the Covid-19 pandemic, making taxpayers face many difficulties. The enterprises themselves developed remedial measures but they have still suffered serious damage and losses, have been forced to stop or terminate production and business activities, were dissolved or went bankrupt.

Since then, they have not been able to balance financial sources to make payments to the state budget. Along with that, some tax amounts and land rents have expired, and the tax department has taken measures to urge the collection, but taxpayers still have financial difficulties and have not yet paid extended taxes to the state budget. In addition, there are some taxpayers who take advantage of the impact of the pandemic and do not cooperate with tax authorities in tax debt collection.

Capture taxpayers’ information

In 2022, the tax sector aims to reduce the outstanding debt ratio to less than 5% of total state budget revenue. Achieving this goal is not easy because the current economic situation still faces difficulties.

Hung Yen Tax Department is reporting to the General Department of Taxation on removing problems with debt-related mechanisms and policies, especially land-related debts, and the goal of reducing the debt ratio by December 31, 2020; and making an effort to completely deal with existing debts.

Furthermore, this unit has also urged to collect extended amounts such as value added tax and corporate income tax for enterprises; value added tax and personal income tax of business households and land rent according to the prescribed time limit.

Quang Ngai Tax Department has also drawn lessons from the tax debt management in 2021 such as if you want to collect tax debts, you must remove difficulties and obstacles for taxpayers to stabilize production and business, without affecting the business investment environment, promptly detect problems from tax debt management practices of tax branches to report to competent authorities for consideration, revision and addition mechanisms and policies for tax debt settlement.

Tax authorities at all levels must capture taxpayers’ information in order to share and encourage them to fulfill their obligations to the state budget.

Tax departments must also attach importance to consulting work with the provincial People’s Committee to strengthen tax debt collection in their localities; request local authorities to closely coordinate with tax authorities in tax debt collection.

Moreover, debt management officers must regularly monitor debts to classify tax debtors; make books, keep diaries; coordinate debt reconciliation, urge deb collection and processing of debt cancellation and extension dossiers in a timely manner.

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For tax debts that taxpayers deliberately delay in repayment, tax authorities should apply coercive measures and focus on applying information technology to manage debts effectively.

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