The Ministry of Finance wants to add individuals and business owners to the list of subjects temporarily suspended from leaving the country due to failure to fulfill tax obligations.
According to the Law on Tax Administration, taxpayers include organizations and individuals. However, the temporary suspension of exit is currently only applied to individuals who are legal representatives of enterprises. According to the Ministry of Finance, this regulation is not suitable for practice.
“Temporary exit suspension should be applied to both individual taxpayers and other individuals who are legal representatives of tax-paying organizations,” the Ministry of Finance assessed.
Therefore, in the draft amendment to the Law on Tax Administration, this agency proposed to add subjects subject to temporary suspension of exit including individuals who are legal representatives of cooperatives, cooperative unions, household owners, and business individuals. These subjects are subject to the same regulations as individuals who are legal representatives of enterprises.
The country currently has about 5.5 million business households, of which about 3.5 million have been granted tax codes, according to the Ministry of Finance.
In the first half of the year, the tax authorities issued nearly 16,900 notices of temporary suspension of exit with tax debts of VND24,100 billion. They recovered nearly VND920 billion from 1,482 debtors through this form. This level is equal to 30% of the debt recovered through tax enforcement measures in the first half of the year (VND2,700 billion).
Security forces at Huu Nghi border gate are waiting to process exit procedures for people, April 2020. Photo: Giang Huy
Departure suspension is one of the debt enforcement measures applied by the tax sector to cases of procrastination, signs of asset dispersion, and absconding. Current regulations do not specify a specific debt threshold for consideration and application of this enforcement measure, meaning that even overdue tax debt of 1 dong must be forcibly recovered. Tax authorities have affirmed that the decision to suspend exit is made based on a strict process, considering each case’s records.
In addition to suspending exit, the tax sector applies many debt enforcement measures such as seizing assets and collecting through third parties in cases of procrastination, signs of asset dissipation, and absconding.
However, according to the Ministry of Finance, there are some shortcomings in the seizure of assets and collection from third parties. For example, tax officials find it difficult to determine the ownership of assets of taxpayers for enforcement purposes. It is also not easy to determine the proportion of tax debtors’ responsibility for the contributions of enterprises or their assets with co-owners. Not to mention, most taxpayers’ assets are mortgaged at credit institutions, and the useful life of the assets is low.
“Applying the above measures is very complicated and depends on many stakeholders,” the Ministry of Finance stated, adding that tax authorities do not have enough resources to promptly implement them with all subjects of enforcement.
Therefore, they proposed to add a regulation that tax authorities will only seize assets and collect from third parties when they have sufficient information and conditions. This measure also does not require compulsory enforcement on all. This helps tax authorities focus resources on key subjects with the ability to collect debts.
In addition, the tax authority also added a provision allowing immediate application of appropriate measures if a taxpayer embezzles assets or absconds. This is to promptly collect tax arrears into the state budget.