Publicity of tax liabilities creates equal business environment

Mr. Mai Son, Deputy Director of Hanoi Taxation Department

The announcement list of enterprise’s tax debt has resulted in certain achievements when recovering large amounts of State Budget debt in Hanoi. Could you explain more about this?

The Hanoi Tax Department identified the situation of tax debt as a big challenge that needed to overcome. To ensure fairness in the community of taxpayers, in 2016, the Hanoi Tax Department continues to coordinate with media agencies to post the list of tax debt publicly on the mass media as well as the on Tax Department website. As a result, in August 2016, the total amount of tax debt recovered was 8.481 billion VND. In particular, the result after eight times, there were 500 of 1,084 enterprises which paid tax of 349.38 billion VND.

In fact, announcing list of tax debt is considered to be an efficient and effective solution. Consequently, most enterprises which had a debt have actively paid tax to the State Budget. Otherwise, the enterprises prepare documents or directly contact the tax agency to guarantee and commit to the progress of lodging debt in land use and tax. Thus, the disclosure lists of tax debt has impacted positively on the tax debt owners in particular enterprises and community taxpayers in general.

Disclosing the information not only facilitates collection of tax arrears but also ensures transparency in the business environment; and protects the legitimate rights and interests of organizations and individuals. We hope that project owners and enterprises will arrange financing soon to pay outstanding tax amounts into the State budget before tax agencies apply more drastic measures.

Although the Tax department publicized the list of tax debt, the amount of debt is still quite high. What are your opinions on this issue?

Hanoi has the largest number of people and organisations in tax management and is one of two localities with the highest revenue collection nationally. Therefore, if we calculate the debt in absolute terms, the Hanoi Tax Department has the largest tax debt compared to other localities. However, if calculating in relative terms, the debt is among the list of localities with low percentage of debt.

Regarding debt management, in 2016, the Hanoi Tax Department identified it as one of the challenges in implementing the tasks. The Hanoi Tax Department has actively implemented drastic measures from the outset in 2016 as well as close guidance of the People’s Committee of Hanoi, the Ministry of Finance and the General Department of Taxation, and the participation of all levels of industry, and local governments, in debt collection. Thus we have achieved the above results and the debt has tended to decrease by month. Specifically, till 31^th May 2016 we had a decrease of 0.4%; a fall of 8.7% at 30^th June; to 31^th July down to 8.2%; down 9.1% by 31^th August. Generally, in the first 8 months of 2016, the total amount of the tax debt of the whole sector of Hanoi Taxation gained 9,368 billion VND.

After the implementation of tax debt recovery, if companies are still not compliant, what measures will be applied?

In that case, the Tax agency will continue to apply coercive measures more drastic like: Quote money from the taxpayer's account at the Treasury, and credit institutions, these units will have accounts frozen; contract notices will no longer be valid; property constraint, auction of assets under the law to collect tax debts; revocation of business registration certificates, permits established, licenses, etc.

With enterprises owed debt due to having difficult conditions in manufacturing, does the Hanoi Tax Department have any plans to classify and facilitate these enterprises?

The Hanoi Tax Department has identified key debt enterprises (accounting for over 80% of total debt), determined the level of non-compliance and lengthening debt; and analysed causes of tax debt of each person or organisation to have an appropriate solution within the limited contraints of the human resources of the Tax agency and ensuring efficient debt collection.

For the enterprise which are struggling, besides guiding the cases prescribed tax debt relief, the Hanoi Tax Department also made many recommendations on policies for late payment.

In addition, the proposal of deletion of tax arrears, late payment for any cases of enterprise with inability to recover and have left the business, dissolved, gone bankrupt is not the order of law; we propose a mechanism to consider debt relief to reduce the tax burden on agencies in tracking the amount of tax owed and the number of people actually owing taxes because in these case we do not have the ability to recover.

Moreover, the Hanoi Taxation Department proposes a mechanism to delete the deferred payment of troubled companies which submitted all objective and original tax debt prior to 31-12-2016. The remission of the deferred payment for businesses recognises their difficulties but manage to fully pay the principal balance, is necessary.

Thank you!