Increased tax debts due to traders’ difficulties

Tax officials receiving declarations by enterprises. Photo: Thu Hang.

The amount of tax debts to August 31, 2016 has slightly increased due to many enterprises’ difficulties in finance, inefficient manufacture and sale, even losses leading to their being unable to pay.

The tax administration has conducted tax debt management measures to collect 23,042 billion vnd, performing compulsory measures to collect 5,243 billion vnd, an increase of 26.5% compared to the same period in 2015.

According to the General Department of Taxation, despite certain significant achievements in tax debt management during the first months and the fact that tax debts in some areas went down by 5% of the total amount collected, the tax debt has slightly increased in comparison with the end of 2015. The absolute amount of tax debt is still high.

The General Department of Tax’s statistics shows that until August 31, 2016, the entire tax debt nationwide (excluding debts to be adjusted or treated) was 74.806 billion vnd, increased by 991 billion vnd compared to December 31, 2015. Of these, tax debt unable to be collected was 14,813 billion vnd (making up 18.7% of the total amount of tax debt).

Besides, fines and deferred payments were 25,941 billion vnd, accounting for 34.7% of the total amount of tax debt. The number of fines and deferred payments have been increasing and are unlikely to be collected. Tax debts up to 90 days and beyond 90 days (possible to be collected) totalled 34,052 billion vnd, accounting for 45.5% of the total tax debt. The proportion of the total debt of the entire collection estimate was at 4.2%.

Representatives from the General Department of Taxation said that the amount of tax debt until August 31, 2016 increased slightly and the absolute number was still big because many enterprises faced financial difficulties, inefficiency in production and trading, even losses, which made them unable to pay taxes.

In some cases, enterprises suffered losses so were dissolved, quit their production and trading addresses and did not re-declare before tax authorities, even though they were still in debt. In parallel, compulsory measures in the light of the Law on Tax management seemed not to be feasible and efficient, not providing sufficient information and accounts which showed arising flows of money. Compulsory measures relating to invoices had impacts on traders’ operations and brought about the possibility of failing to collect taxes. A small number of tax-payers have not complied with regulations on taxes, attempting to delay payment or prolong tax debt. The fact that tax authorities impose fines and calculate amounts for deferred payment on tax-payers resulted in increasing fines for deferred payment.

In this context, the General Department of Tax directed provincial tax departments to review, classify debts and monitor declaration management so that authorities could detect and handle cases in a timely way for avoiding wrong or illusory debts. The tax administration will drastically speed up and supervise tax collection and impose compulsory measures on debtors as regulated. At the same time, the General Department of Tax has directed its provincial tax departments to review and collate tax debts for timely solutions before issuing notifications of tax debt and publishing tax debt information via mass media.

Representatives from the General Department of Tax revealed it would classify debt under the light of the process of tax debt management and the nature of tax debt and strictly control debt classification on the Tax management system (TMS) in the last months of 2016.

The General Department of Taxation requested provincial tax departments to review and identify exactly the amount of tax debt. If they detect any illusory or wrong debts, they will have to immediately adjust the figures before issuing notifications of tax debt, compulsory collection and making debt information public via mass media. The local tax departments should tightly control the tax declaration database, tax-payers’ bills as well as quickly identify wrong declarations, tax payments on wrong tax codes or wrong budget annexes…for timely prevention and treatment of illusory debts…

The General Department of Taxation confirmed to support local tax authorities in addressing obstacles during the review and adjustment of the tax debt database. Synchronously, it is necessary to develop and publish an operational process to clearly regulate the responsibilities of tax authorities’ leaders at all levels in undertaking tax debt collection management and compulsory measures.