Quang Nam finds it difficult to reduce tax debt to below 5%

Promoting disbursement of public investment capital is also one of the measures to help tax authorities recover outstanding debts from basic construction enterprises.

Debt increases but is still difficult to recover

Quang Nam Tax Department announced that in the first 6 months of 2024, it had recovered VND 3,071 billion in tax debt (including VND 581 billion in debt from the previous year and VND 2,490 billion in newly incurred debt), through measures such as withdrawing money from bank accounts, notifying invoices that are no longer valid, revoking business registration certificates, and collecting money and assets through third parties. However, tax debt remains high.

The total debt/total budget revenue ratio as of December 31, 2023 increased from 11.7% to 13.48% as of June 30, 2024. Total debt as of June 30, 2024 was more than VND 2,742 billion, an increase of VND 233 billion (equivalent to an increase of 9.3% compared to December 31, 2023).

A debt list has been sent to the Provincial People's Committee and announced in the media. The majority of this list are projects with debt for land use and land rent, with 21 famous projects from the coast, the plains to the mountains. The debt of these projects, at least more than 10 billion, at most up to more than 200 billion VND...

Not only owing land use fees and land rent, Quang Nam Ethanol Production Joint Stock Company or Duong Dong Quang Nam has a large tax debt that has not been recovered for many years to the state budget.

Mr. Nguyen Van Tiep - Director of the Tax Department said that the real estate market is frozen. Many projects are auctioned but there are no buyers. Some enterprises have large tax debts, debts that are subject to collection, and fines when implementing enforcement measures, but their bank accounts do not have enough money for enforcement, all assets have been mortgaged or the value of the assets is not large, and they are unable to pay money to the state budget.

Some small and micro businesses that are losing money, inefficient and still owe taxes have stopped operating and abandoned their business addresses. This long-standing debt will lead to late payment penalties, which is also one of the reasons for the increase in tax debts.

Collecting tax debts from individuals and business households is also difficult. Mr. Nguyen Van Nguyen - Head of Debt Management and Tax Debt Enforcement Department said that for this group, there are no specific, clear sanctions, and they are not strictly bound by full legal regulations like debt management for businesses.

Promoting the increase in production and business of enterprises, strong growth in budget payments will indirectly reduce the tax arrears ratio to below 5% of total budget revenue.

The total debt of individuals and small businesses (equal to 12% of total corporate debt), but the number is 14 times the number of businesses with tax debts, so managing and urging debt collection takes a lot of effort and time.

Debt collection for non-agricultural land use is difficult because landowners are everywhere, have no address, it is very difficult to contact, urge, send notices, reminders or when individual business households change location, there is no information to urge debt collection...

It is not easy to lower tax debt to 5%

Tax debt recovery to compensate for budget deficit has been regularly carried out by tax authorities through tax management measures such as: urging, enforcing tax debt, publicizing information on tax-debt-paying enterprises on mass media, no tax-debt-paying enterprises are missed through 100% tax debt and late payment notifications...

These methods have been implemented by the tax authorities since the beginning of the year and continuously, but the results are still not positive. According to many analyses, once a business reaches the point of being forced to pay taxes and cannot pay, most of them are in real difficulty, so it is not easy to recover.

It is not easy to recover land use debt from real estate projects, so Quang Nam will find it difficult to reduce the tax debt ratio to below 5% by the end of this year.

Reducing tax debt to below 5% of total state budget revenue has become a key task of tax authorities at all levels. This ratio is one of the targets set by the General Department of Taxation as a basis for assessing the quality of tax management of tax authorities. If the debt ratio is equal to or less than 5% of total tax paid to the state budget, it means that the tax debt is acceptable.

According to Mr. Luong Dinh Duong - Deputy Director of the Tax Department, in a broader sense, the large debt ratio, in addition to assessing the quality of tax management, also shows that the state budget revenue has not been mobilized in a timely manner (because taxpayers appropriate tax money instead of having to borrow, which is more difficult and costly).

Prolonged tax arrears can easily lead to overdue debt. Taxpayers lose their ability to pay their debts, their licenses are revoked, and the state budget loses this tax.

“The high tax debt also shows that taxpayers are facing financial difficulties, and tax debt enforcement measures are affecting production and business activities. This means that future revenue generation is affected, leading to impacts on the local economy and budget,” said Mr. Duong.

Vice Chairman of the Provincial People's Committee Tran Nam Hung requested departments, branches, localities, and tax agencies to promptly remove and handle obstacles and difficulties, promote management and collection of budget arrears, enforce tax debts, publicize tax debt information, limit newly arising debts, and handle irrecoverable arrears.

Conduct review and analysis of tax data, propose the establishment of an interdisciplinary working group, regularly inspect and urge the collection of tax arrears of each investment project, remove obstacles for investors to fulfill financial obligations regarding land, and propose definitive solutions.

The current tax debt ratio accounts for 13.48% of total budget revenue. Reducing the debt ratio to below 5% by the end of this year is not easy. Mr. Luong Dinh Duong analyzed that the current debt structure of Quang Nam is mostly land use fee debt. Land use fee depends on the real estate market.

However, from now until the end of the year, there will still be difficulties. It will be even more difficult when the related laws take effect from August 1, 2024. On the other hand, resolving local problems will not be quick. Debts for use will be very difficult to collect because investors are forced to pay taxes, are charged late payment fees, cannot borrow capital, cannot extend progress...

Source: https://baoquangnam.vn/quang-nam-kho-keo-no-thue-ve-duoi-5-3140568.html