Difficulty in collecting tax debts

	Customs sector has decreased 45 billion VND of tax debts
	The General Department of Vietnam Customs amends the management process of tax debts
	Vietnam Customs requests to strictly handle tax debts

Difficulty when tax debtors left their residence and disappeared

According to the statistics announced by the leader of the Import – Export Duty Department under the General Department of Customs at the press conference on 30th November 2017, of VND 5,406 billion of the current tax debts of the Customs VND 3,770 billion, are subject to bad tax debts. This is bbecause the enterprises with tax debts no longer operate and have left their registered addresses. Most of the debts were raised before 1st July 2013 when the Law on Tax Administrative took effect.

Mr. Le Manh Hung, Deputy Director of Import-Export Duty Department gave an example. Gia Lai-Kon Tum Customs Department had a case of an enterprise that imported eucalyptus wood to be produced for export, which was subject to tax exemption, but the enterprise did not directly manufacture these goods, only sold them out to the market. Thus, the Customs needed to inspect and collect a tax arrear of VND 1.3 billion. However, when the Custom authority sent its officers to inspect the enterprise, it had left the registered business address.

During the collection of tax debts, Gia Lai-Kon Tum Customs Department investigated and found that the owner of the enterprise had registered a new identity card, new household record and established a new enterprise in Binh Duong province. Hence, the Customs authority sent the case to a competent authority for prosecution for the tax evasion.

Another case in Ho Chi Minh City Customs Department, was where an enterprise imported a shipment to Tan Son Nhat border gate. With suspicion of low value declaration, the Customs authority examined and requested the enterprise for an explanation, but the owner did not respond. When the Customs inspected the registered business address, they discovered that the registered business address was different from the address declared on the certificate of business registration.

When the Customs came to the owner’s address to transmit the decision on tax payment, the owner was a woman and she did not know and have any relationship with the above mentioned enterprise as well as the import shipment. Through the investigation, the Customs discovered that earlier, the woman applied for a job in a spa but failed the recruitment. Her profile was transferred to the business registration authority for establishing the enterprise. The Customs sent the case to the Ho Chi Minh City Department of Planning and Investment for clarification.

They are the typical examples of hundreds of cases where taxpayers owe taxes and ran away. According to the local Customs, most of the debts (currently classified by the customs authorities into bad debts) are derived from import-export enterprises running away from their business addresses.

Difficulty in collaboration

Not only facing difficulty in applying debt enforcement measures, the municipal and provincial Customs authorities are facing difficulty in recovering and writing off debts due to lack of collaboration of the competent authorities. In many cases, the Customs has sent written requests to the Tax Departments, the Planning and Investment Department, the Public Security, the Banks and the People's Committees for coordination to implement coercive measures such as announcing bills with no invalid bills and revoking business registration certificate etc. However, they have not received any feedback, causing difficulties in the tax debt enforcement and fulfilment of tax debt dossier.

For example, the revocation of a business registration certificate is one of the coercive measures that the Customs has to perform for some enterprises with tax debts. However, some municipal and provincial Customs Departments have not been able to implement this measure due to the lack of coordination of the Department of Planning and Investment.

Specifically, at the Binh Dinh Customs Department, this unit has proposed the coercive measure to revoke business registration certificates for 10 enterprises in the provinces of Binh Dinh, Phu Yen, and Ho Chi Minh City. But the Department of Planning and Investment of Ho Chi Minh City and Phu Yen province gave the Customs a feedback on not revoking the business registration certificate or only warning on the national business registration system.

Similarly, the case of WorldVina Co., Ltd., a 100% South Korean invested company, still owes tax on 45 Customs declarations opened at Hanoi Customs Department. In 2005 and 2006, the total tax amount and late payment was over VND 3 billion. Hanoi Customs has repeatedly sent a notice urging the tax payment, but the company has failed to pay tax. In 2006, the People's Committee of Phu Tho Province issued a decision to terminate the operation of the company. However, at that time, the Customs authority was not informed of the decision on terminating the operation of the company and the legal representative of the company had left Vietnam, while its tax debts at the Customs have been existed.

As reflected by Hai Phong Customs, for enterprises to be subject to possible coercive measures, the Customs authority needs to receive the active cooperation from the competent authorities. According to Hai Phong Customs Department, when the Department proposed to the Department of Planning and Investment for the collaboration in applying coercive measures to revoke the business registration certificate, enterprise registration certificate, establishment and operation certificate and practical license, the Department of Planning and Investment only warned on the national business registration system without revoking the business registration certificate. On the other hand, they also explained that if they revoked the business registration certificate, if the enterprises paid the tax debts, the Department could not recover the certificate because there were no provisions on recovery of business registration certificate.

Dong Nai Customs also complained about that because the competent authorities such as Tax Authority, Bank, and the local People’s Committees also did not give their feedback on the proposal on coercive measures by the Customs, so that the fulfilment of dossiers to manage and write off tax debts was difficult. For cases of "asset distrainment, auction of distrained assets" or "collection of money and other assets of tax debtors," the Customs cannot get information about the assets of the enterprise, when the verification of information has not been documented yet.

Persistently collecting and writing off debts

Despite difficulties, during the past time the Customs has actively and drastically handled and collected debts. The General Department of Customs has regularly synthesised, analysed and assessed the situation of tax debts. It has determined the causes and reduces tax debts at local Customs departments and directed and urged the units to collect the tax debts under the assigned targets. Accordingly, the units have been required to send the report of tax debts in time, so that the General Department could give timely guidance to urge the tax debt collection.

Mr. Le Manh Hung said that the General Department of Customs has assigned the target of tax debt collection and handling in the whole sector for receivable debts (VND1,307 billion). At the same time, the General Department of Customs has sent working groups to local Customs departments to guide and inspect the management of tax debts. Such as to the Customs Departments of Ho Chi Minh City, Hai Phong, Hanoi and Lang Son, which are localities with high tax debts, new debts, complicated Customs regimes and a lot of sensitive items, thereby requesting the localities to proactively implement measures to prevent tax losses.

Quang Ninh Customs: Facing with difficulties in implementing tax enforcement measures VCN - Quang Ninh Customs Department is facing with difficulties in implementing tax enforcement measures to recover ...

For enterprises that are involved in tax debts but no longer in operation at their registered business addresses, or are self-dissolved and have signs of tax evasion, the provincial and municipal Customs Departments shall transfer the cases to the police offices for investigation to collect tax debts.