General Department of Taxation speaks out about temporary suspension of exit due to tax debt of enterprises

At the press conference of the Ministry of Finance on September 27, Mr. Dang Ngoc Minh - Deputy General Director of the General Department of Taxation said: The regulation on temporary suspension of exit for people with tax debts has been in place for many years. The Law on Tax Administration 2020 and the Law on Exit and Entry of Vietnamese Citizens (effective from July 2020) also stipulate temporary suspension of exit for people with tax debts.

Accordingly, taxpayers with debts over 90 days will be subject to enforcement. The Law does not specify whether a tax debt is small or large. Taxpayers (including individuals and businesses) who are subject to tax enforcement must fulfill their tax obligations before leaving the country.

For legal entities that are being forced to pay taxes, legal entities that have not yet fulfilled their tax obligations, the legal entity's representative will be temporarily suspended from leaving the country. "Temporary suspension of departure is just one of many enforcement measures of the Tax Authority. Temporary suspension of departure for individuals and legal entities with tax debts is implemented by the Tax Authority after reviewing, comparing, and accurately determining the tax payment obligations of individuals," said Mr. Dang Ngoc Minh.

The Tax Authority directly managing the taxpayer shall make a list of individuals subject to temporary suspension of exit and send a document to the immigration authority; at the same time, send it to the taxpayer to inform them to fulfill their tax payment obligations before leaving the country.

Mr. Dang Ngoc Minh emphasized: Tax debtors must be responsible for fulfilling their tax obligations. The tax authority will consider solutions to comply with legal regulations, ensuring budget collection for the State. "For each specific case, the tax authority will consider and consider the most appropriate solutions," said the Deputy Director of the General Department of Taxation. According to the leader of the General Department of Taxation, temporary suspension of exit is not the most 'strong' measure in tax debt collection. The tax authority will base on the actual situation and not apply it rigidly and widely during the implementation process.

In response to some opinions that the measure of temporarily suspending exit from the country is "heavy-handed" towards business leaders, while many directors are just employees, Mr. Dang Ngoc Minh said: "The opinions of some businesses have been recorded during the process of building the Tax Administration Law, however, the National Assembly has passed the Law with such provisions, we must implement it."

The provisions of the Law state that an individual is responsible for representing and managing a legal entity. When a legal entity owes taxes, that individual must be temporarily suspended from leaving the country until the legal entity fulfills its tax obligations. Tax authorities are tax law enforcement agencies and must comply with the law until there are additional or amended regulations.

“While collecting tax debts, tax authorities also base on the actual situation, not applying it rigidly and widely. Normally, if an individual is not a business person, tax authorities are very limited in applying the measure of temporarily suspending exit from the country. Of course, those with large debts of up to billions of dong, at risk of budget loss - must also apply it,” Mr. Dang Ngoc Minh emphasized.

From 2023 to August 2024, the Tax Department announced temporary suspension of exit for 17,952 cases with tax arrears of VND 30,388 billion. Of which, 10,829 cases were taxpayers abandoning their business addresses with tax arrears of VND 6,894 billion. In 2023, the Tax Department announced temporary suspension of exit for 2,411 cases with a total tax arrears of VND 6,719 billion.

On February 6, 2024, the General Department of Taxation issued Official Dispatch 511 directing tax departments to consider applying temporary exit suspension measures for cases of tax arrears, especially focusing on cases of abandoning business addresses but still owing taxes.

In 2024, there were 1,424 cases of tax payment out of a total of 6,539 cases of temporary exit suspension notices, accounting for nearly 21.8%. The total amount of tax debt paid accounted for 7.04% of the total amount of tax debt in decisions to temporarily suspend exit. Of the 9,002 cases of temporary exit suspension notices for enterprises abandoning their business addresses, 5.65% of cases paid the tax debt.

According to recent statistics from the Tax Industry, the total amount of tax debt collection in August 2024 is estimated at 3,244 billion VND; accumulated to the end of August 2024, it is estimated to collect 53,771 billion VND, an increase of 29% over the same period last year (of which, 50,458 billion VND is collected by debt management measures; only about 3,313 billion VND is collected by debt enforcement measures).

According to the General Department of Taxation, this year's tax debt collection work has many innovations. In particular, the General Department of Taxation has applied many new technological solutions such as artificial intelligence (AI) in processing business processes, supporting tax officers to carry out enforcement on time, thereby contributing to increasing the efficiency of tax debt collection for the State.

In the context of businesses facing many difficulties after COVID-19, and having just been hit by storms and floods, the State has applied many solutions to extend, postpone, and delay tax payment obligations for individuals, business households, and enterprises. "In cases of difficulties due to natural disasters and epidemics, if there are records of exemption, postponement, or reduction according to the provisions of the Law on Tax Administration, the Tax sector will support immediate resolution," said the leader of the General Department of Taxation.

Article 66 of the Law on Tax Administration stipulates: “Taxpayers who are subject to compulsory enforcement of administrative decisions on tax administration, Vietnamese people leaving the country to settle abroad, Vietnamese people settling abroad, and foreigners must fulfill their tax payment obligations before leaving Vietnam; in case they have not fulfilled their tax payment obligations, their exit will be temporarily suspended according to the provisions of the law on exit and entry”.

Clause 5, Article 36 of the Law on Entry and Exit stipulates: “Taxpayers, legal representatives of enterprises being forced to execute administrative decisions on tax management, Vietnamese people leaving the country to settle abroad, Vietnamese people settling abroad who have not fulfilled their tax payment obligations before leaving the country according to the provisions of the law on tax management”.

Source: https://doanhnghiepvn.vn/doanh-nhan/tong-cuc-thue-len-tieng-viec-tam-hoan-xuat-canh-vi-doanh-nghiep-no-thue/20240928060316777