Measures to enforce tax payment obligations under Vietnamese law

business at the tax office but upon arrival, the police confirmed that the business was no longer operating at the address.

Although previously, some tax authorities still confirmed that the enterprise was operating normally. For example, the case of EP Import-Export Joint Stock Company. According to the tax authority's announcement, the enterprise's business registration address is No. 34 Nguyen Huy Tu Street (Hai Ba Trung, Hanoi). At the end of 2013, when the customs authority came to the enterprise's address to collect taxes, the enterprise did not exist at the registered business address.

On April 15, 2014, the tax authority notified the customs authority that the enterprise had abandoned its business address. Similarly, in the case of Dai Long Trading and Export Joint Stock Company (registered address: No. 25 Ngo Sy Lien Lane, Tran Quy Cap, Hanoi), on March 14, 2013, the customs authority verified that the enterprise was not operating at the registered business address. However, in October, the tax authority notified the customs authority that the enterprise was no longer operating at the registered business address.

Tracing the whereabouts of businesses that owe taxes but are no longer operating at their registered business addresses takes a lot of time, due to the lack of coordination information from relevant agencies. However, according to Ms. Nguyen Thi Minh Hue, the difficulty for customs agencies in recovering tax debts from these businesses is applying tax debt collection measures.

Meanwhile, Deputy Head of the North Hanoi Customs Branch Nguyen Thi Thanh Huong said that there are many cases where taxpayers with debts at the North Hanoi Customs Branch are no longer operating at the registered business location, have stopped or temporarily stopped business activities, and are classified as difficult-to-collect debts.

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However, determining the permanent address of the legal representative of a taxpayer with debt does not mean finding the debt.

because in many cases the permanent address (debt of household registration) is not the same as the residential address, so finding the legal representative of the taxpayer will be difficult and time-consuming.

In addition, there is a problem that if the legal representative of the taxpayer is found, will the Customs authority continue to implement enforcement measures according to the provisions of Decree 127/2013/ND-CP or how will it be implemented? Because normally in cases where the enterprise no longer operates at the place of business registration, stops or temporarily suspends business activities, the assets of the tax-indebted enterprise will also no longer exist. On the other hand, applying enforcement measures such as: Stopping procedures for import and export goods; Notifying invoices are no longer valid; Revoking business registration certificates... will not affect the enterprise, so they are not effective in tax debt collection.

According to the provisions of Clause 2, Article 35 of Decree 127/2013/ND-CP, in case the taxpayer has not complied with the tax administrative decision but has committed acts of absconding or dispersing assets, the person with the authority to issue the enforcement decision has the right to decide to apply appropriate enforcement measures to ensure timely collection of tax and fines for the State Budget, without having to apply them sequentially.

With such regulations, Ms. Nguyen Thi Thanh Huong said that the customs authority is having difficulty determining which cases will issue appropriate enforcement decisions. Enterprises must have sufficient signs of absconding and signs of asset dispersion as prescribed in Article 34 of Circular 190/2013/TT-BTC dated December 12, 2013 of the Ministry of Finance. Only the person with the authority to issue enforcement decisions has the right to decide to apply appropriate enforcement measures or enterprises only need to have one of the two signs of absconding or asset dispersion to be able to apply

apply appropriate coercive measures to recover tax debts. “In cases where both signs of absconding and asset dissipation must be met, the customs authority does not yet know what records and documents are used to prove that the enterprise has signs of asset dissipation,” Ms. Huong said.

*In Ho Chi Minh City:

As of June 30, 2014, the total amount of tax and fines owed at the Ho Chi Minh City Tax Department was VND 18,111 billion, an increase of 10.3% (equivalent to an increase of VND 1,691 billion) compared to December 31, 2013. Of which, bad debt increased by over 5%, equivalent to an increase of VND 150 billion, pending debt increased by nearly 37%, equivalent to an increase of VND 116 billion; collectible debt was VND 14,536 billion, an increase of nearly 11%, equivalent to an increase of VND 1,425 billion [38].

Some units with high tax debt increase compared to the same period in 2013 include: Tax Inspection Department No. 2 increased by nearly 70.5% (equivalent to an increase of 403 billion VND), Cu Chi District Tax Department increased by over 28%, District 12 Tax Department increased by over 24%, District 2 Tax Department increased by nearly 21%, Tan Phu District Tax Department increased by over 20%, Binh Thanh District Tax Department and Nha Be District Tax Department increased by over 18%.

As of June 30, 2014, Ho Chi Minh City Tax Department has recovered 12,180 billion VND in tax debt, of which over 7,000 billion VND was collected by debt management measures and 5,171 billion VND was collected by enforcement measures.

According to the Ho Chi Minh City Tax Department, debt collection at the unit has encountered many difficulties since the beginning of the year because some businesses are still facing difficulties in production and business. The number of businesses submitting applications to stop operations, abscond or incur losses is increasing.

Besides, there are some businesses that owe taxes or are being charged large amounts of tax and are unable to pay, so they leave their business locations and then establish other companies.

In addition, coordination in debt management between the Tax Department and sectors such as the Department of Finance, Treasury, Bank, and Department of Planning and Investment in some cases still faces difficulties. The application in debt management is slow to process and has many errors, which does not really support data reconciliation with taxpayers.

In addition, the Ho Chi Minh City Customs Department also pointed out some limitations and difficulties in implementing tax debt management and tax debt collection enforcement such as: information technology infrastructure has not met the requirements. For example, the connection of information between tax agencies, customs and treasury has not been well implemented, leading to one-sided management of business information, not fully assessing the law compliance process of enterprises in import-export activities as well as domestic production and business activities, causing difficulties for customs officials in monitoring tax debts, and difficulties in coordinating with functional units in tax debt enforcement.

Furthermore, the updating and exchange of information database systems supporting tax debt management are still weak and unreliable. Although the law specifically stipulates the responsibilities of relevant organizations and individuals in coordinating the provision of information and exchanging work in tax management, in the early stages of implementation, there were no specific sanctions on the responsibilities of relevant individuals and organizations.

There is a company that imports a shipment of national security goods and is currently completing the procedures for tax exemption. However, because the tax exemption procedures have not been completed, the customs website still shows that the company owes tax and is subject to tax enforcement. The company imported the shipment at Tan Son Nhat airport, but because the website shows that the company is subject to tax enforcement, the customs office at Tan Son Nhat airport does not agree to inspect the goods and clear customs.

Although the declaration has been opened and the declaration number is available, the company requested to pay tax immediately for the shipment at the airport, but the customs did not accept it and required a letter of forced release before customs clearance. So is it correct that the airport customs did not approve immediate tax payment? How can the company clear customs except for the tax exemption letter, which the Ministry of Public Security is currently processing the application.

In addition, businesses with import-export activities are often forced to pay taxes by mistake by customs. When forced to pay taxes, businesses will not be able to complete import-export procedures. If the goods have arrived at the port, they will have to wait, incur additional fees for container storage, warehouse storage, and many other damages due to incorrect delivery times... To remove the forced payment, businesses must spend time traveling between the border customs office and the local customs department, comparing documents to verify that taxes have been paid in full. Usually, it takes at least 1 day, and businesses in remote provinces will have even more trouble.

According to the Ho Chi Minh City Customs Department, there are many reasons for mistaken enforcement, meaning that businesses have paid taxes but are still considered to have tax debts. Objectively, it usually takes 2-4 days for tax payment documents to be transferred from the bank to the treasury and customs. Before the documents reach customs, the tax payment deadline has expired. To overcome this problem, Mr. Uyen said that despite having very limited capital, businesses still have to pay taxes at least 5 days before the deadline, but are still subject to enforcement. Therefore, Mr. Uyen believes that the main reason for mistaken enforcement is the handling by customs officers and employees.

There are many cases where businesses are forced to pay taxes due to minor mistakes such as tax payment documents with incorrect declaration numbers, confusing border gate names, or paying taxes by bank transfer but recording incorrect accounts or incorrect tax details. There are cases where businesses only owe a few hundred thousand dong in taxes.

also received a notice of enforcement, while according to the regulation, only those with tax debt of over 10 million VND will be subject to enforcement.

*In Nghe An province:

According to the first quarter report of 2014, the budget revenue was 1,498.7 billion VND but the accumulated debt was more than 854 billion VND, an increase of 17% compared to the same period last year, of which nearly 50 enterprises accounted for 30% of the total debt of the whole industry. Many of these enterprises were reported in the media at least 5 times, accompanied by late payment fees, written notices, reminders via EMS messages or enforcement through bank accounts, and in some cases, the use of invoices had to be suspended but there was still no end in sight.

Looking at the list of 44 enterprises with large tax debts managed by the Tax Department Office posted on April 18, the total debt is 263.7 billion VND. There are many reasons for debt, first of all financial difficulties, limited financial resources leading to lack of payment capacity stemming from the consequences of the previous economic downturn, but that is only part of it. Mostly it is due to the sense of responsibility for tax debts to the state of some enterprises.

Through the debt settlement report of the Debt Management Department, it is also worth noting that some enterprises have been in trouble for several years because the real estate business sector has been "frozen" at times, or investment capital has been limited, misappropriated, leading to no money to pay, but the enterprises have not only paid tens of billions in tax debts but also paid salaries and social insurance for employees. In the case of Hanoi Housing Investment and Development Joint Stock Company No. 30, at the end of 2012, the tax debt alone was 17.3 billion VND, by April 2014, it was only over 5 billion VND; Joint Stock Company 473 owed 14.07 billion VND at the end of 2012, and now it is only over 3.5 billion VND... in which the majority is new taxes arising in 2014 that are due for payment. There are enterprises

Enterprises with large tax debts such as Construction Joint Stock Company 16 - Vinaconex, Central Consulting and Construction Joint Stock Company have agreed with the bank that when money is transferred to the unit's account, 40% will be immediately deducted to pay tax debt, the remaining 60% will be divided to pay off loans, pay insurance and the enterprise will use.

The Tax Department also supports this approach, so it has harmoniously resolved many benefits and reduced the burden during difficult times. However, there are also many businesses with "huge" debts that have lasted for a long time but have paid only a few times, such as the Vietnam-Laos Investment and Development Corporation Limited. At the end of 2012, the debt was 19,973 billion VND, and by April 2014, the debt had increased to 29,592 billion VND (an increase of 48%), with some debts dating back to 2006. With such a large debt, in 2012, they only paid 207.6 million VND, in 2013 they paid 1.3 billion VND, and in the first 4 months of 2014, they only paid 3 million VND in business license tax. Or, some companies are not currently in the "huge" debt category but their debt keeps increasing every month without any sign of stopping. The tax authority has repeatedly invited the director to discuss solutions but only received the answer "The director is on a business trip" such as Him Lam Joint Stock Company which owes 4.27 billion VND, Minh Khang - Thanh An Minh Khang Trading Company Limited Branch still owes 4.97 billion VND or Construction Joint Stock Company No. 9.1 (renamed from Vinaconex 20 Construction Mechanical Joint Stock Company) owes 12.2 billion VND...

Enterprises and business households managed by the Tax Department also owe more than 420 billion VND in taxes, accounting for 50% of the debt of the whole industry. At the Vinh City Tax Department, tax enforcement measures have been implemented to collect 11 billion VND in tax debt. However, it can be seen that tax debt is a heavy burden for this department. Talking about the reason for this rapid increase, Mr. Hoang Pham Quang - Head of the Debt Management and Tax Debt Enforcement Team said: due to changes in State policies such as reduction, extension, extension, quarterly declaration, ... so the collection

old debts but new debts arise [35]. The economy is in recession, production and business enterprises have low efficiency, banks tighten lending so they cannot borrow capital to invest in expanding production and business and circulating capital. Enterprises operating in the construction sector have not received full investment capital from the State budget, so they have long-term tax debts. In addition, commercial banks are stepping up the recovery of loans, so the amount of cash on the market is scarce, enterprises are forced to pay through bank accounts, but banks always prioritize paying overdue loans before taxes.

In addition to Vinh Tax Department, some other departments also have large debts such as: Hoang Mai Department 25.1 billion VND, Quy Hop Department 23.2 billion VND; Nghi Loc Department and Quynh Luu Department each owe over 18 billion VND...

One of the most obvious signs is that large enterprises also have large debts and are very difficult to collect. While small and medium enterprises are often urged to collect tax debts, often receive notices inviting them to work with tax authorities and implement debt enforcement measures more easily, large enterprises still do not have strong measures to handle tax debts. Although the Tax Department has posted a list of enterprises with tax arrears on the mass media, it seems that these enterprises are still complacent and do not react. Some enterprises sell land, rent out premises to make a profit, and appropriate wages and insurance of employees but do not pay taxes. Some others, although customers have paid money to investors to buy land, still owe the State land use tax for many years and cannot be recovered.

Among them, many measures have shown effectiveness such as inviting businesses to work, imposing fines for late payment, issuing decisions to enforce tax debt collection by deducting money from taxpayers' deposit accounts, and seizing assets.

Measures to enforce tax payment obligations under Vietnamese law - 9

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