Comments on the Law on Tax Administration (revised): measures to enforce and remove tax debts need to be further specified

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Operations at Yen Phong Customs Branch under Bac Ninh Customs Department. Photo: T.Trang.

Tax coercive measures

Coercive measures to implement tax administrative decisions in Clause 4, Article 127 are stipulated as follows; ‘Where a coercive decision on some measures has not expired but is not effective, the tax administration agency shall take previous coercive measures or following coercive measures if having sufficient information and conditions. Person who is authorized to issue coercive decision shall terminate the effect of the coercive decision being implemented to take effective coercive measures’.

According to Quang Ninh Customs Department, this content should be supplemented with the following provision: For import and export goods, the coercive measure "stopping customs procedures for import and export goods" shall be ineffective when the taxpayers have fully paid tax payables and late payment fines to the state budget. Because if the customs moves to another coercive measure and terminates the effect of the coercive Decision on stopping customs procedures for import and export goods, customs declarants may still carry out import and export procedures because they are not enforced by this method (In fact, in VNACCS, the organizations and individuals that have overdue tax debts of 90 days are unable to register customs declarations. If they want to continue to register the customs declarations, they must pay the tax debts, which is an effective measure to combat tax debts).

Regarding comments on other tax coercive measures, Point 3, Article 134 of the draft revised Law stipulates that the coercive measure by property distraint and auction of distrained properties states that "the value of distrained properties of the enforced party is equal to the tax amount mentioned in the coercive decision and the expenses for the organization of enforcement”. According to Hai Phong Customs Department, the coercive measures aim to collect maximum imported tax debts, it is difficult to implement the above decision because in many cases, the value of distrained properties is lower than the amount stated in the enforcement decision.

With regard to the coercive measure by stopping the use of invoices, Hai Phong Customs also said that this measure needs to be supplemented with the following content: "the head of the tax administration agency shall send a written request to the agency which is authorized to implement the coercive measure by stopping the use of invoices”.

Some local customs units said that Article 106 of the Law on Tax Administration does not provide for the blockade of property of persons subject to enforcement of tax administrative decisions with deposits at the State Treasury, commercial banks and the credit institution upon receipt of a document verifying the conditions for enforcement of the decision

According to the process of coercion by deducting money from the account of the person subject to enforcement of the tax administrative decision, before issuing a tax coercive decision, the competent agency has to verify the conditions to implement the decision. Consequently, there are many cases of the Customs verifying a subject’s account balance for an enforcement, but after a coercive decision is issued, the account balance is zero.

Therefore, the municipal and provincial customs units proposed to add more provisions on responsibilities of the State Treasury, commercial banks and credit institutions where subjects of enforcement of tax administrative decisions opened their accounts. State Treasury, commercial banks and credit institutions must block the account balance (if any) of subjects of enforcement of a tax administrative decision.

Tax payment

Regarding the tax payment deadline, Clause 4, Article 55 of the draft law stipulates: "If taxpayers make additional declarations to tax declaration dossier after Customs clearance, and the tax payable increases or Customs imposes tax after Customs clearance, the deadline for payment of additional tax and imposed tax is according to the tax payment deadline of the initial declaration. Taxpayers shall have to fully pay additional tax, imposed tax amounts and late payment amounts as from the date of customs clearance or release of goods to the deadline or be sanctioned according to regulations (if any)”.

However, Article 59 of the draft stipulates that when “taxpayers make additional tax declarations, increasing tax payable or tax agency or state competent authorities discover inadequate tax payable (out of period and scope of examination and inspection) through examination and inspection, the late payment fines will be calculated for additional tax payable since the following date of the tax payment deadline of wrong tax calculation period”. Therefore, Hải Phòng Customs said that the draft law should guide more clearly the handling of late payment fines.

In addition, the draft law should contain provisions on cases and procedures of gradual tax payment. Because although Clause 5 of Article 9 of the draft law provides the gradual tax payment, in the draft there is no provision on cases and procedures of gradual tax payment.

Also commenting on this content, Thua Thien-Hue Customs Department said that the current Law on Tax Administration has no regulations on the late payment fines for wrongly declared tax and exempted tax, so it needs to add a point in Clause 1 of Article 55 that taxpayers shall make additional declarations to tax declaration dossiers, thus reducing the exempted tax amounts, or tax authorities or competent state agencies through examination and inspection detect that the exempted tax amounts are lower than declared exempted tax (out of the period and scope of examination and inspection), the late tax amount shall be calculated for tax amounts which are not exempted since the following date of the tax payment deadline of wrong tax calculation period.

Tax refund

Regarding comments on the provisions of Clause 1, Article 73 on the classification of tax refund dossiers, in which cases are subject to inspection before tax refund, Quang Ninh Customs said that the draft Law needs to clarify which goods or which customs regimes are subject to inspection before tax refund, and whether imported and exported goods in point (a) to point (e) are subject to inspection before tax refund or not?

Regarding this content, Thanh Hoa Customs commented on this provision, Thanh Hoa Customs said that the provisions at Point (a), Clause 1, Article 73 on taxpayers who request for first time tax refund, has not clearly stated for first time tax refunds at revenue management agencies or first time tax refunds within the entire sector. Currently, the Customs system has not allowed the search of the history of tax refunds of enterprises outside the scope of the branch level.

According to Thanh Hoa Customs, point (a) should clearly define that taxpayers request for tax refund for the first time at the revenue management agency. The addition of this provision will facilitate customs officers in classifying tax refund dossiers and comply with the current professional system.

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Commenting on the tax refund, Hai Phong Customs Department said that the current provisions only provide for payment through the bank for cases subject to VAT refund, not for cases subject to import and export duties refund. This made it difficult to identify and prove the legality of the bank's source of funds without the bank's confirmation of international payment transactions. Therefore, Hai Phong customs proposed that the draft Law on Tax Administration (revised) should specify that for cases subject to import and export duties refund, enterprise tax must make payment via banks.