How does Hanoi Tax Department coerce tax debt of VEC?

VEC was coerced with the amount of VND 1,033 billion. Source: Internet

According to Hanoi Tax Department, in recent times, there was information that VEC “reeled” from the application of coercive measure conducted by Hanoi Tax Department with the amount of payment over VND 5,000 billion. VEC said that, regarding to this amount of over VND 5,000 billion, most of activities relating to cash flow of VEC had “freezed”.

Responding to this information, Hanoi Tax Department said that implementing the regulation of Tax Management Law about refunding input VAT for investment project, from July 1st 2016 to 2017, Hanoi Tax Department conducted VAT refund for VEC nine times, the total amount of VAT refund was VND 949.7 billion under the form of VAT refund before post audit.

In inspection of after VAT refund for VEC, Hanoi Tax Department discovered VEC did not meet conditions to be eligible for a VAT refund on the investment project.

Therefore, based on provisions of the Tax Management Law and the inspection results after tax refund, Hanoi Tax Department issued Decision No. 14022/QD-CT-TTr4 dated April 3, 2018 and Decision No. 14356/QD-CT-TTr2 dated April 4, 2018 about recovery of VAT refunds for VEC with the amount of VND 949.7 billion which had already refunded to the VEC. Along with that, the amount of late payment was VND 83.4 billion. Therefore, the total amount of tax that must be recovered and the amount of late payment were VND 1,033 billion.

According to the Hanoi Tax Department, in the process of urging the recovery of the amount of tax refunds and late payment, the Hanoi Tax Department provided support, guidance and facilitated VEC to contact the management ministry to correct errors as well as arrange financial sources to return money to the State budget, but so far VEC has not implemented the decision of tax authorities.

Therefore, on May 28, 2019, the Hanoi Tax Department issued a decision to enforce tax administrative decisions by drawing out money from VEC's accounts at five commercial banks. The enforcement period started from June 4, 2019 to the end of July 3, 2019 (30 days), the coercion amount was VND 1,033 billion.

Hanoi Tax Department affirmed that besides the application of coercive measures by deduct money from bank accounts, Hanoi Tax Department did not ask banks to freeze accounts or deduct salary or income of workers.