Measures such as withdrawing money from bank accounts or other third parties should be given priority before considering measures to restrict people's right to movement.
VCCI: Exit ban should only be imposed in very or extremely serious cases
Measures such as withdrawing money from bank accounts or other third parties should be given priority before considering measures to restrict people's right to movement.
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| The threshold of tax debt to apply the exit ban measure is 10 million VND for individuals and 100 million VND for businesses according to VCCI, which is too low. |
These proposals have just been sent by the Vietnam Federation of Commerce and Industry (VCCI) to the Ministry of Finance, in a document providing comments on the Draft Decree detailing Clause 9, Article 6 of the Law amending and supplementing a number of articles of the Securities Law; Accounting Law; Independent Audit Law; State Budget Law; Law on Management and Use of Public Assets; Tax Management Law; Personal Income Tax Law; National Reserve Law; Law on Handling of Administrative Violations.
The threshold for applying an exit ban could be VND1 billion for businesses.
According to Article 1 of the Draft Decree, the threshold for tax debt to apply the exit ban measure is VND10 million for individuals and VND100 million for businesses. This level is too low, VCCI wrote in a document sent to the Ministry of Finance, citing the opinions compiled from businesses.
The viewpoint of the organization representing the enterprise is that the tax authority is taking many measures to enforce administrative decisions on tax management, such as withdrawing money from bank accounts, notifying invoices that are no longer valid, seizing and auctioning assets, etc.
“We believe that priority should be given to applying these measures, especially the measure of withdrawing money from bank accounts or other third parties, before considering measures to restrict people's right to travel,” VCCI recommended.
This proposal was made based on information showing that the tax sector is holding data on millions of taxpayers' bank accounts. With the rapid development of non-cash payments and data linkage as it is today, the measure of enforcing money withdrawal from bank accounts has become very effective and should be focused on in the near future.
Where bank account seizures are effective and thorough, other restrictive measures, such as invalidation of invoices or travel bans, should be reserved for very or exceptionally serious cases involving large tax arrears.
“In most cases, the legal representative of an enterprise goes abroad not to evade tax obligations but to conduct business transactions with partners. Such transactions can help the enterprise generate revenue, thereby enabling it to continue paying taxes to the State. If the exit ban is applied on a large scale, it could have a negative impact on production and business activities, cause general economic damage and reduce long-term revenue for the budget,” VCCI expressed its opinion and suggested that the drafting agency consider raising the threshold for tax arrears to require the exit ban.
This level can be 1 billion VND for businesses and 200 million VND for individuals.
In particular, VCCI discovered that the Draft does not have any provisions on lifting the temporary suspension of exit. This could be a legal gap that causes difficulties in the application process.
For example, when is the temporary exit suspension lifted? Does the tax debtor need to pay the entire tax debt according to the administrative decision on tax management or only pay a portion of the tax so that the debt is below the threshold prescribed in this Decree or any other level? How long after paying the tax will the temporary exit suspension be lifted?
"We propose that the drafting agency stipulate that as soon as the tax debtor has paid the tax, the temporary suspension of exit from the country will be lifted," VCCI recommended.
In particular, VCCI recommends that the drafting agency study a mechanism that allows people who are temporarily suspended from leaving the country to pay taxes or pay an advance amount equivalent to the tax debt right at the border gate. This measure helps the State collect money quickly, while also creating conditions for tax debtors to immediately have the temporary suspension of exit lifted so that they can travel normally.
An administrative decision on tax management is required when applying temporary exit suspension measures.
In the Draft, regarding the content of administrative decisions on tax management, the debt threshold and tax debt period are being defined differently for different subjects.
Accordingly, for individuals, simply owing overdue taxes and amounts will result in temporary suspension of exit from the country, without requiring an administrative decision on tax management.
As for enterprises, the measure of temporarily suspending exit of legal representatives is only applied after there is an administrative decision on tax management.
VCCI believes that this is not really equal.
Individual business owners, business households, enterprises, cooperatives, and cooperative unions are all taxpayers and are subject to similar tax management regulations. Individual business owners and business households can also be subject to tax violations and administrative decisions on tax management similar to enterprises, cooperatives, and cooperative unions.
The problem is, according to VCCI, determining whether an individual business or business owner owes tax as in the Draft is entirely based on information stored internally at the tax authority, and is not an administrative decision presented to the public.
“In fact, for many different reasons, there are many cases where information stored at tax authorities is incorrect, confusing or incomplete, leading to inaccurate determination of tax obligations,” VCCI clarified.
Therefore, in the document sent to the Ministry of Finance, VCCI stated that only when conducting tax inspection and examination activities and issuing tax administrative decisions, this information will be checked, compared and carefully considered according to a complete procedural order. The result of this order is a tax administrative decision which shows the amount of tax debt and the debt term.
“Restricting people's right to travel (exit) is a rather serious measure, so it needs to be implemented according to stricter procedures, that is, there needs to be an administrative decision on tax management signed and issued by a competent person to avoid unnecessary confusion,” VCCI recommended that the drafting agency amend Article 1 in the direction that the measure of temporarily suspending exit only applies after there has been an administrative decision on tax management.
Also related to the application of temporary exit suspension measures, VCCI also disagrees with the regulation that if an enterprise is no longer operating but has not fulfilled its tax obligations, the legal representative will be temporarily suspended from exiting the country regardless of the value of the tax amount.
"It is recommended that the drafting agency add regulations on the threshold of the amount of tax owed in this case, for example 3 million VND (equal to the highest business license fee in a year)," VCCI proposed.
In fact, there are cases where the tax arrears are very small, arising after the business has ceased operations (such as business license fees). With such a small value, the cost of collection will be greater than the amount collected.
Source: https://baodautu.vn/vcci-chi-nen-cam-xuat-canh-trong-nhung-truong-hop-rat-hoac-dac-biet-nghiem-trong-d232301.html
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