Proposing the Tax Authority be flexible in applying tax debt enforcement measures simultaneously

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Amending and supplementing tax debt enforcement measures to ensure flexibility and suitability to reality. Photo: collection

Difficulty in implementing debt enforcement procedures

Information on tax debt management from the General Department of Taxation shows that tax debt collection in October 2024 reached VND 2,051 billion. Accumulated in the first 10 months of 2024, the collection was VND 58,143 billion, an increase of 33% over the same period in 2023.

To achieve the above results, the entire Tax sector has resolutely implemented solutions to recover tax debts, in which, Tax authorities at all levels have resolutely enforced tax debt for cases of procrastination, signs of asset dispersion, and absconding.

However, in reality, the amount of tax debt is still increasing. The reason is that according to the provisions of Article 125 of the Law on Tax Administration, measures to enforce tax debt must be implemented in order, including: withdrawing money from the account of the person being subject to tax debt enforcement at the treasury, bank or other credit institutions, blocking the account, stopping customs procedures for imported and exported goods, stopping the use of invoices; seizing and auctioning seized assets; collecting money and other assets of the person subject to tax debt enforcement held by the agency/organization/individual...

According to the Ministry of Finance, among the procedural enforcement measures, the measures of forcibly, seizing assets and collecting debts through a third party are not very effective and are very difficult to implement.

Specifically, the asset seizing measure usually only stops at the step of verifying information, while the collecting measure from a third party is only implemented in some cases because the third party has a debt due to the taxpayer. When the tax authority verifies the information, the taxpayer and related units do not provide information or provide information that there is no asset. In cases where there is information about assets, most of the taxpayer's assets are mortgaged at credit institutions. Thus, it is very difficult to determine the value of the assets and it is also very difficult to determine the ownership of the taxpayer's assets for enforcement.

In addition, due to the lack of valuation function, the Tax Authority can only determine the value of assets if the seized assets are cash (VND, foreign currency…), precious metals… Meanwhile, for assets such as factories, means of transport, machinery, equipment, raw materials, and goods, the Tax Authority cannot estimate the value, so it cannot determine whether the value of the seized assets is equivalent to the amount of tax debt of the taxpayer and the enforcement costs. Not to mention, the Tax Authority also needs to have warehouses and human resources to store and preserve the seized assets before auctioning them, handling loss, damage. Therefore, implementing this measure is very complicated and takes a lot of time, effort, and cost. In addition, current regulations do not have a principle for taxpayers who have acts of dispersing assets or absconding, they can choose to immediately apply appropriate enforcement measures among 7 enforcement measures to promptly collect tax debts for the State budget.

Need to be flexible and practical

Regarding this issue, Mr. Nguyen Van Duoc, Member of the Executive Committee of the Vietnam Tax Consulting Association, General Director of Trong Tin Accounting and Tax Consulting Company Limited, said that the key point making tax debt management not highly effective that comes from the policy mechanism on tax debt enforcement measures are still cumbersome, complicated, inflexible and not really suitable.

For example, the application of compulsory measures of asset seizure and third-party collection is very difficult to implement and ineffective because in order to have a basis for implementing this measure, it is necessary to verify not only the taxpayer's information but also information about assets, creditors, and debts. Not to mention, many taxpayers' assets are secured, pledged, mortgaged, or guaranteed at credit institutions or third parties, while according to the provisions of the 2015 Civil Code on the order of payment priority, the priority belongs to the secured party, meaning that tax obligations are not given priority in payment in this case....

Therefore, this expert believes that it is necessary to consider amending and supplementing tax debt enforcement measures to ensure flexibility and suitability to reality, thereby bringing efficiency and effectiveness to tax debt collection management.

According to the Ministry of Finance, stemming from these difficulties and problems, many opinions suggest that it is necessary to stipulate more clearly that the Tax authority must have full information and conditions before implementing measures to seize assets and collect from third parties to avoid wasting time, resources and enforcement costs, contributing to improving the effectiveness of tax debt enforcement work.

Accordingly, in the draft revised Law on Tax Administration, the Ministry of Finance proposes to amend and supplement Clause 3, Article 125 in the direction that the Tax authority is flexible in applying enforcement measures simultaneously. In cases where there is sufficient information and conditions, the enforcement measures of asset seizure and collection for third party shall be applied. In cases where the tax debtor has acts of dispersing assets or absconding, appropriate enforcement measures shall be immediately applied to ensure timely collection of tax debts to the State budget.

Clause 9, Article 6 of the draft Law on Tax Administration amends and supplements Points b, c and d to Clause 3, Article 125 of the current Law in the direction: “For the enforcement measures prescribed in Points d, đ, e and g, Clause 1 of this Article, in case the previous enforcement measure cannot be applied, the tax authority shall apply the following enforcement measure; the enforcement measures prescribed in Points đ and e, Clause 1 of this Article (seizure of assets, collection from a third party) shall be applied when the tax authority has sufficient information and conditions to carry out enforcement.

In case the enforcement decision has not expired but the tax authority has sufficient information and conditions to apply other enforcement measures prescribed in Clause 1 of this Article, it may simultaneously apply those enforcement measures. In case a taxpayer having tax debt has an act of dispersing assets or absconding, the competent authority shall decide to apply appropriate enforcement measures to the administrative decision on tax management to ensure timely collection of tax debt to the State budget.