Strongly handle tax debt

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People pay tax at Thu Duc City Tax Department, Ho Chi Minh City Photo: T.D
People pay tax at Thu Duc City Tax Department, Ho Chi Minh City Photo: T.D

The collection of tax debt is estimated at VND 29,416 billion

Right from the beginning of 2022, the General Department of Taxation has developed a plan to implement the management, assign the target of collecting at least 80% of tax debts that can be collected, and attach responsibility for debt collection and settlement of accrued liability to each unit. At the same time, the Tax Department also determines the tax debt that is not eligible for tax payment extension, taxpayers are not (or are less) affected by the Covid-19 epidemic to expedite and encourage taxpayers to perform their obligations.

According to the latest report of the General Department of Taxation, accumulated to the end of November 2022, tax debt collection is estimated at 29,416 billion VND, reaching 70% of the target of debt collection in 2022. Of this amount, 26,996 billion VND was collected through debt management measures, and 2,420 billion VND was collected through debt enforcement measures.

Notably, the total amount of tax debt by November 30, 2022 is estimated at VND 126,642 billion, an increase of 0.5% compared to the time of October 31, 2022, up 10.1% compared to December 31, 2021, and up 3% over the same period in 2021. According to the General Department of Taxation, the tax debt in November 30, 2022 increased partially compared to December 31, 2021 due to the impact of the Covid-19 epidemic along with natural disasters, storms, and floods causing difficulties in production and business, partly due to a lack of raw materials and high costs, so companies had no ability to pay the state budget on time. In addition, fines and late payment interest increased compared to December 31, 2021 because of the arising of late payment interest calculated at 0.03%/day of the total tax debt.

The Tax sector has always focused on developing a plan to handle and collect tax arrears to have an effective and reasonable debt collection and handling solution, ensuring that the management, enforcement, and collection of accrued liability are synchronized and consistent, meeting the goal of social justice among taxpayers in fulfilling their obligations to the state budget. Tax departments also closely monitor debts, especially those that have been extended, regularly monitoring the results of implementing measures to collect debt and enforce tax debt, coordinating synchronously many measures to urge right from the time a new tax debt arises and continuously implementing until the debt is reduced.

Particularly for extended debts before the due date of 15 days, the tax departments will send a letter to each business so that taxpayers can prepare the money and not be passive, leading to tax debt. With debts over 90 days, the unit will continue to take appropriate coercive measures to encourage taxpayers to pay tax debts to the state budget. For cases of large and prolonged debt, inefficient production, and business, tax departments will have to apply the final coercive measure, which is to request the Department of Planning and Investment to revoke the business registration certificate.

Use strong measures

One of the new points of the Law on Tax Administration No. 38/2019/QH14 is the addition of a measure to suspend exit for the legal representative of an enterprise that is being coerced due to not fulfilling its tax payment obligation. Specifically, the Law stipulates that “the individual who is the legal representative of the taxpayer must fulfill the tax payment obligation of the enterprise that is being forced to execute an administrative decision on tax administration before leaving the country and may be temporarily suspended from exit according to the provisions of the law on exit and entry”.

Applying this provision, many tax departments have been “aggressive” in enforcing tax debt and obtained certain results. For example, the Nghe An Tax Department has issued a number of notices about the suspension of exit for legal representatives of enterprises in the case of being forced to execute administrative decisions on tax administration and not fulfilling the tax payment obligation.

Recently, in Ha Tinh, representatives of 11 businesses in this province were suspended from entry and exit by the Ha Tinh Tax Department because they have not fulfilled their tax obligations. According to information from this unit, among the above 11 businesses, there are units that owe a large amount of tax, no longer conduct business activities at the registered tax address, but every month, they still declare zero tax. When the tax agency requests enterprises to cooperate in providing information to freeze and delete debts according to Resolution No. 94/2019/QH14 on tax debt freezing, debt deleting of late payment fines, and late payment interest if taxpayers are no longer able to pay the state budget, enterprises did not cooperate. However, right after the Tax Department proposed to apply the measure of suspending exit for individuals who are legal representatives, the enterprises seriously cooperated. This shows that this is a strong measure, which is expected to bring positive effects to tax debt collection.

In the opinion of some experts, suspending exit is a very effective measure to collect bad debts for businesses that have dispersed their assets or disappeared from their business locations. This is also in line with international practice. Specifically, the legal representative is the person who decides on important issues of the enterprise and must be present in Vietnam or authorize another person when leaving the country. In cases where enterprises are being forced to execute administrative decisions on tax administration, their exit will affect the interests of the State (the tax collection cannot be done), so it is aimed at enhancing efficiency in tax administration and combating loss of budget revenue. This regulation is necessary.

Experts note that businesses should proactively comply with the provisions of the law, avoid damage to reputation and economic interest once being applied coercive measures and the measure of suspending exit according to the Law on Tax Administration and the Law on Entry and Exit.

The result of debt settlement according to Resolution No. 94/2019/QH14 in 2022 is estimated at VND 2,757 billion. In which, tax authorities at all levels have frozen tax debt with a total amount of VND 1,030 billion; canceled late payment fines and late payment interest with a total amount of VND 1,727 billion.
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