Ho Chi Minh City Customs Department focuses on retrieving tax debts

Ho Chi Minh City Customs Department’s officials guiding traders to undertake Customs procedures. Photo: T.H.

Settlement of tax debts valued at over 1,300 billion vnd are difficult to collect

According to Ho Chi Minh City Customs Department, there have been more than 1,300 billion vnd out of 1,600 billion vnd of the total tax debt which are unlikely to be collected. Of these, the largest amount is equivalent to over 752 billion vnd caused by escaping or missing tax-payers, companies out of business. The remaining amount of the tax debts comes from the following: tax–payers having dissolved decisions issued by competent authorities: 38.6 billion vnd; tax-payers having bankruptcy decisions by competent authorities; tax-payers who are being prosecuted and investigated: over 40 billion vnd; tax-payers who received tax assessment and arrear collection decisions by competent authorities: 34 billion vnd; other tax debts valued at more than 432 billion vnd…

From the source of Ho Chi Minh City Customs Department, tax debts before 1999 were 143 billion vnd and arising tax debts before the time when the Law on Tax Management took effect were 526 billion vnd. To treat the tax debts, Ho Chi Minh City Customs Department proposed not to fully apply compulsory measures to collect taxes because there had not been regulations on 7 measures before the Law on Tax Management’s became effective. Tax debts, fines for delayed payment, fines of over 10 years since the expiry date of tax payment are entitled to be cleared. Therefore, the General Department of Customs under the Ministry of Finance received proposals to accept dossiers for tax debt clearance.

Arising debts since July 1st 2007 (The Law on Tax management’s effectiveness date ) to July 1st 2013 (The amended Law on Tax Management’s effectiveness date) were 735 billion vnd. These debts lasting at least 10 years must undergo 7 compulsory measures to collect taxes and then are deleted. Ho Chi Minh City Customs Department supposed that most tax debts during that period were due to escaping or missing tax-payers or business closure or suspended business. Therefore, except for suspending Customs procedures, the 6 remaining measures could not be taken. Ho Chi Minh City Customs Department shared that these were tax debts impossible to be collected so the department would coordinate with the Tax Department, the Planning and Investment Department in Ho Chi Minh City and local Police to receive the units’ assistance. If the units can produce the certifications of tax-payers’ business closure, bankruptcy, insolvency, tax codes closure, or no business activities in localities, Ho Chi Minh City Customs Department would propose the General Department of Customs, the Ministry of Finance to approve the accomplishment of 6 measures for producing tax debt deletion dossiers as regulated.

Urge individual enterprises to pay taxes

According to Ho Chi Minh City Customs Department, the entire amount of tax debts between July 1st 2013 and December 31st 2015 has been 188.456 billion vnd by September 1st 2016. Its Customs branches have directed duty collection divisions to come to individual enterprises to collect duties and taxes by plans. For traders who attempt to delay payment, escape from or leave their business locations, Customs branches will send documents to local tax authorities for blocking VAT invoices; requesting the provincial planning and investment department not to conduct enterprise insolvency procedures and reporting to Ho Chi Minh City Customs Department the trader list for coordination with the Police to certify and investigate cases. The Customs Branches have to urge the retrieving of duties and taxes with the target of 50% tax debts to be collected for the State revenue. The rest of tax debts worth 80 billion vnd are targeted by December 2016.

For arising tax debts from July 1st 2013 until now, Ho Chi Minh City Customs Department proposes to only clear goods of the tax debtors if the traders complete their tax obligations without the grace period of 30 days. The reasons for this proposal are that the tax debts may increase and be impossible to be collected because of the fact that processed goods, goods manufactured for exportation and duty free goods must be registered in the list of traders having no liquidation and no final accounts by the end of the fiscal year.

Some cases raised difficulties to Customs such as: Goods was cleared and after that Customs conducted consultation, issued decisions of post clearance audit – and assessed taxes and duties. However, the traders had dissolved or were still on business but attempted to avoid tax payment. Fines for delayed payment cases on the findings of post clearance audit at enterprises’ premises have not been collected whilst the amount of tax debts worth 100 billion vnd have not been collected by Ho Chi Minh City Customs Department. In many cases, traders brought home their goods for preservation while waiting for specialized inspection results but they immediately sold all the goods and were dissolved.

Ho Chi Minh City Customs Department revealed since April 1st 2015 (the effective date of Circular No. 38/2015-BTC), tax debtors are often new companies importing a series of consignments with very low declared prices and then they ask permission to dissolve before Customs authorities conduct the post clearance audit. Thus, Customs can not retrieve duties and taxes from the aforesaid debtors when they issue duty determinations. Against the background, Ho Chi Minh City Customs Department proposed the General Department of Customs to regulate a security equivalent to referred prices for below 2-year traders or traders having committed customs offences.

Enterprises which have not run for 2 years or ever broken Customs legislation are allowed to bring home their goods for preservation while waiting for specialized inspection findings (not cleared or released). Before transporting cargoes out of Customs operational areas, the traders have to pay an amount of taxes equivalent to declared prices and a security for Customs valuation.

In order to accomplish the task of handling tax debts of 316.661 billion vnd under Decision No. 1382/QD-TCHQ dated May 13, 2016, Ho Chi Minh City Customs Department asked its Customs branches and post clearance audit branches to direct duty collection divisions in reaching the targets set by the Customs Department.