Customs handles tax debt: From flexibility to rigour – Final part: Putting tax debt to the lowest rate

Mr .Nong Phi Quang, Deputy Director of the Import-Export Duty Department, General Department of Vietnam Customs

Guiding specific Processes in the direction of on-job training

To help customs units understand the Process of managing tax debt and other receivables for import and export goods (referred to as the debt management process) when implementing, Customs Magazine interviewed Mr. Nong Phi Quang, Deputy Director of the Import-Export Duty Department, General Department of Vietnam Customs.

Could you please tell us the purpose of the General Department of Vietnam Customs when promulgating the Process of managing tax debts and other receivables for import and export goods together with Decision No. 2317/QD-TCHQ dated October 24, 2022?

First, the Debt Management Process was promulgated to provide specific instructions on the sequence of steps and professional operations so that Customs can classify, fully monitor, urge to timely recovery of debts, and handle tax amounts and other receivables of taxpayers paid to the state budget following the provisions of the Law on Tax Administration 2019, Decree 126/2020/ND-CP and related legal documents. At the same time, taking coercive measures to implement administrative decisions to recover tax debts as described.

Accordingly, the Debt Management Process is applied to Customs at all levels when performing tasks related to the management of tax debt and other receivables for import and export goods.

In addition, the purpose of the Debt Management Process is to regularly review debt groups to ensure that the nature of the debt group follows the classification of debts and that the implementation of coercive measures to collect tax debts has complied with regulations.

How is the management of tax debt and other receivables for import and export goods of the Customs sector carried out following the Debt Management Process, sir?

The debt management process consists of three parts, three chapters with 29 articles specifically guiding the classification of debts, making documents and urging debt recovery, and implementing coercive measures to implement administrative decisions on tax administration.

According to the Debt Management Process, arising debts classified based on the criteria will be put into groups of recoverable debts, and the Customs will summarize, monitor and urge for a timely recovery.

For overdue debts such as 90 days overdue, overdue for payment of administrative fines, etc., the customs authority shall summarize to implement appropriate coercive measures.

In your opinion, what are the benefits of managing and handling tax debts of the Customs sector when implementing the Debt Management Process?

Over the past time, local Customs units have encountered many difficulties implementing coercive measures and handling tax debts. In particular, many cases and debtors have complicated factors. Therefore, the General Department of Vietnam Customs issued the Debt Management Process to replace the Process issued with Decision 1503/QD-TCHQ dated May 18, 2018, to "on-job training" for provincial and municipal customs departments to implement following the provisions of the law.

In particular, the Debt Management Process stipulates the responsibilities of debt management officials at all levels from when the debt is incurred until the final step, which is completely handling the debt (recovery or debt relief, debt cancellation). Along with that, the Debt Management Process also helps the Customs units to perform management well, monitoring, urging and applying appropriate debt handling measures. In particular, the Debt Management Process also aims not to generate additional administrative procedures for taxpayers.

Thank you!

Ha Nam Customs officers check goods at business headquarter. Photo: H.Nụ

Tax debt will be cleared on a case-by-case basis

Facing difficulties and problems of many units related to tax debt settlement and cancellation, to help units to have grounds for implementation, the General Department of Vietnam Customs is studying regulations and guidelines for each specific case. Recently, the General Department of Vietnam Customs has instructed Hai Phong Customs Department and Ba Ria - Vung Tau Customs Department to cancel tax debts for arising cases.

Regarding the problems of Hai Phong Customs Department about tax cancellation, according to the provisions of Clause 1, Article 152 of the Law on Tax Administration 2019: "Remission, cancellation of tax granted before July 01, 2020, shall be handled following the Law on Tax administration No. 78/2006/QH11, which is amended by the Law No. 21/2012/QH13, the Law No. 71/2014/QH13 and the Law No. 106/2016/QH13".

Accordingly, at Point b, Clause 3, Article 2 of Law No. 21/2012/QH13 amending and supplementing some articles of Law on Tax Administration No. 78/2006/QH11 stipulating one of the cases of debt cancellation: "The tax debts and fines of state-owned enterprises that competent agencies have dissolved; the tax debts and fines of state-owned enterprises that have been equitized or of which the owners have been converted, and the new legal persons are not liable for such tax debts".

In addition, at Point c, Clause 1, Article 55 of Decree No. 83/2013/ND-CP stipulates one of the cases of debt cancellation: "State-owned enterprises that have been equitized following the Government's Decree No. 44/1998/NĐ-CP dated June 29, 1998, the Government's Decree No. 64/2002/NĐ-CP dated June 19, 2002, the Government's Decree No. 187/2004/NĐ-CP dated November 16, 2004, are issued with certificates of business registration and establishment of new legal entities, and still owe tax and fines incurred before July 01, 2007, which are not recorded as a reduction in the state capital during the equitization".

In Clause 1, Article 2 of Decree 187/2004/ND-CP dated November 16, 2004, of the Government on the conversion of state-owned companies into shareholding companies, it is stated: "This Decree shall apply to State-owned companies, not in the category of those in which the State must hold 100% of charter capital which shall undergo equitization, comprising: State corporations...; and dependently accounting affiliates of State corporations".

Point a, Clause 3, Article 2 of Decree 187/2004/ND-CP also stipulates that the equitization of dependently accounting affiliates of State corporations prescribed in Clause 1 of this Article may only be carried out when: "The dependently accounting affiliate of an enterprise satisfies all conditions for maintaining an independent cost accounting system."

The General Department of Vietnam Customs said that according to the search data at the Centralized Tax Accounting System, the Branch of Trading and Manufacturing Materials and Commodities Company owes the tax amount of VND 36,960,000, which is overdue 90 days after declaration No. 9330/NKD dated November 8, 1999 - Compulsory debt (overdue 90 days).

Compared with the regulations, tax debt status, and the application file for debt cancellation provided by Hai Phong Customs Department, the General Department of Vietnam Customs found that the above debt belongs to the branch of Trading and Manufacturing Materials and Commodities Company. However, the profile does not show the branch information. Therefore, the General Department of Vietnam Customs requested Hai Phong Customs Department to supplement and complete the debt cancellation dossier as prescribed.

As for the problems of Ba Ria - Vung Tau Customs Department in the Process of handling tax debts, according to the General Department of Vietnam Customs, Article 4 of Resolution 94/2019/QH14 stipulates: " A taxpayer that is unable to pay the outstanding tax, late payment interest or fine that is incurred before July 1, 2020, will be eligible for debt settlement if:... 4. the taxpayer no longer does business at the registered address; the tax authority and the People's Committee of the commune have confirmed that the taxpayer is no longer present at the registered address.

In Clause 5, Article 5 of Resolution 94/2019/QH14 also stipulates: "Regarding the debts that are not governed by this Article shall comply with the Law on Tax Administration No. 38/2019/QH14".

Through a search of the Centralized Tax Accounting System, the General Department of Vietnam Customs found that Tan Trung Automobile Co., Ltd. owes a compulsory debt with an amount of VND 210,173,820, in which declarations No. 569/NKDO dated August 14, 2001, VND 104,925,680 - tax arrears (import duty was VND 23,200,400; excise tax was VND 81,725,280); declaration No. 688/NKDO dated October 26, 2001, was 105,248,140 VND - tax arrears (import duty was VND 23,271,700; VAT was VND 81,976,440).

Accordingly, the General Department of Vietnam Customs said that for the debt of Tan Trung Automobile Co., Ltd. incurred before July 1, 2020, Ba Ria - Vung Tau Customs Department should consider handling tax debt relief, tax cancellation of late payment fines and interest as prescribed in Resolution No. 94/2019/QH14; applications and procedures for debt settlement follow the instructions in Circular 69/2020/TT-BTC dated July 15, 2020, of the Ministry of Finance.