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Difficult to collect tax debt in the field of export processing, manufacturing

08:05 | 05/10/2022

VCN – Most exporting processing enterprises (EPEs) owing tax have ceased operations and no longer operate at the registered business addresses, making it extremely difficult for the Customs agency in debt collection.

Applying coercive measure for one enterprise owing tax of nearly VND100 billion Applying coercive measure for one enterprise owing tax of nearly VND100 billion
Two companies’ owners suspended from exit for owning tax debts Two companies’ owners suspended from exit for owning tax debts
A company enforced to block account for tax debt of over VND185 million A company enforced to block account for tax debt of over VND185 million
Big tax debt dossiers at HCM City Customs Department. Photo:T.H
Big tax debt dossiers at HCM City Customs Department. Photo:T.H

Persistent to collect bad debts

Mr. Le Hoang Minh, Leader of the Tax Management Team of the Processing and Investment Customs Branch under the HCM City Customs Department, said that after exploiting many information sources, the branch has recovered tax debts that have been delayed for more than ten years and have been identified as absconding or missing.

For example, for the tax debt of Han Dynasty Decoration Import-Export Trading Production Co., Ltd., which owed tax since 2010, the female director of this company exited the country in 2012. At the beginning of July 2022, after issuing a coercive decision on the company and collecting information from many sources, the tax management team found that this company is a family company established by the director and her younger brother, but the customs could not exploit information about this brother.

However, with professional skills, customs officers knew that the female director has a younger sister living in HCM City. Accordingly, the customs contacted this woman and sent the coercive decision and asked the woman to encourage her elder sister to pay taxes to the state budget. As a result, the Customs branch has recovered over VND100 million of tax debt and fines for late payments.

According to Mr. Le Hoang Minh, this is one of more than a dozen cases where the Customs branch has recovered the tax debt after issuing a notice of enforcement to suspend exit for the company’s legal representative. Besides, there are tax debts for nearly 20 years, but the branch has collected them. That is the debt of over VND235 million of a footwear processing facility in Tan Binh district since 2003.

From the end of 2021 to September 5, 2022, the Processing and Investment Customs Branch issued a notice to suspend exit for legal representatives of 65 tax debtors. On September 5, 2022, the Customs Branch issued a Notice on the suspension of exit for the legal representative of Nhat Lam Co., Ltd.

Previously, Mr. G.T., Director of Nguyen Giang Garment Company Limited (at 2836 Phan The Hien, Ward 7, District 8, Ho Chi Minh City) was also temporarily suspended from leaving the country because his company has not complied with the Notice of tax debt and late payment interest. Nguyen Giang Garment company imported materials for export processing and production and has owed nearly VND100 million in import tax and VAT since 2012. Although the Customs Sub-Branch has asked the company to fulfill tax obligations to the state, the company refused the payment and has stopped operation at the business registration office.

In addition to coercion by means of temporary suspension of exit, from the beginning of 2022, the Customs branch has also implemented many coercive measures such as issuing nearly 200 notices of deduction of the bank accounts of tax debtors; and requests to revoke the business registration certificates.

Many difficulties in debt collection

According to the Processing and Investment Customs Branch, at the beginning of 2022, there were 431 tax debt records with a total debt of over VND408 billion, but as of August 31, 2022, the unit only had to handle 401 tax debt records, 30 tax debt records have been solved. Most of the tax debts arose many years ago, the businesses stopped operating at the registered business address. There are tax debts arising since 1992, such as the debt of nearly VND17 million of Dong Nai Import-Export CB Cultivation Investment Company, which is a bad debt.

Ms. Ly Hien Hoa, Deputy Director of the Processing and Investment Customs Branch, said to collect tax debts, the Customs Branch has offered many solutions, the Tax Management Team has actively studied records and solutions to collect debts and bad debts.

The number of tax debt records decreased by 30 cases compared to the end of 2021, and nearly VND2.5 billion was collected. Notably, most of the debts recovered by the Customs Branch are bad debts, arising from more than a decade ago. "All tax debtors regardless of if they are big or small, have been enforced, including the suspension of the exit of the legal representative of the enterprise," said Ms. Ly Hien Hoa.

According to leader Le Hoang Minh, among more than 400 tax debt records at the unit, each record is a debt, with dozens of documents, verification results through many stages of tax debt associated with different policies, the debt management and collection is extremely difficult. However, with the determination to collect tax arrears for the State budget, the team members always try their best and find information sources to get the best results.

Through the tax debt collection, the customs branches of the HCM City Customs Department identified problems. The current Law on Tax Administration stipulates seven coercive measures to recover debts, however, the Customs authority only implements four, including deducting money from the account; stop doing customs procedures; notifying the invoice is no longer valid and revoking the certificate of enterprise registration. The remaining three coercive measures have not been implemented because it is difficult to determine information about income and assets of enterprises; deduction of part of salary or income; and property distraint and auction.

Reasons for increase of tax debt Reasons for increase of tax debt

VCN – In the last six months of 2022, the tax sector has focused on implementing measures ...

In case a debtor no longer operates at the registered business address and is unable to determine a new business address, the customs agency shall work with relevant agencies (Police, Tax Department, Department of Planning and Investment) for verification and investigation.

By Le Thu/ Huyen Trang