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For a long time, the unrecoverable tax debthas not been removed, so it became a big debt. Photo: T.Linh.

The Ministry of Finance’s draft of the Resolution on clearing tax debts that are unable to be collected, has been publicized for public comment. According to the National Budget and Finance Committee, in recent years, the National Assembly has amended, supplemented and promulgated the Law on Tax Administration and other tax laws, leading to changes in tax policies. However, there are no regulations on resolving outstanding tax debts in the long run.

Mr. Vu Duc Hai, Chairman of the Finance-Budget Committee of the National Assembly, said that many businesses and individuals register to participate in business activities every year. Besides this, there are individuals who are unable to pay, or stop doing business but have not yet completed procedures for dissolution, bankruptcy, and many cases of private enterprise owners due to being considered dead, missing or losing their civil act capacity, but the debt cannot be erased due to failure of ensuring the conditions specified in the current Tax Administration Law.

At the same time, because the provisions of the law on business registration are lax, the coordination between agencies in management and licensing business registration is not really effective, leading to many businesses abandoning their business address and then re-registering a new business, is also the cause of large tax debt.

Therefore, tax debts of organizations and individuals that are no longer in business have not been resolved over the years, leading to an increase in the ratio of tax debts that are unable to be collected and account for nearly 44.9% of the total amount of tax debt as of the end of 2017. Therefore, Mr. Vu Duc Hai said that the issuance of the Resolution on handling tax debts is necessary to timely institutionalize the policy and views of the National Assembly and the Government for the Law on Tax administration in general and the law on tax debt management in particular.

However, the representative of the Finance-Budget Committee also said that this is a specific and sensitive resolution to policies promulgated but not yet stipulated in the current Law on Tax Administration, with a wide scope and big impact on the state budget revenues, therefore, we must ensure fairness among the objects, psychology of taxpayers and the seriousness of tax law.

Therefore, Mr. Vu Duc Hai proposed to review and study carefully the contents of the draft Resolution such as: Scope and subjects of adjustment; criteria and principles for handling tax debts; time for deletion of late payment debt or late payment fine prescribed in Article 2 of the draft Resolution. Besides, it is necessary to clarify the responsibilities of the relevant agencies.

According to Associate Professor, Dr. Dinh Trong Thinh, Senior Lecturer of the Academy of Finance, most of the countries in the world do tax debt eradication. Every year, countries have a certain amount of tax that has not been collected, some of them can be recovered after 1-5 years but some of them are determined to be irrevocable.

“For developed countries, they have a legal mechanism that allows state management agencies to write off tax debts. Of course that is not a tax agency but a state management agency. In addition to the Ministry of Finance, the Tax Agency has other components such as business associations and related ministries. This agency will determine the subject of tax debts can not be collected due to force majeure conditions such as death, bankruptcy or dissolution,” Associate Prof. Dr. Dinh Trong Thinh explained.

According to Mr. Thinh, obviously, many tax debts cannot be obtained. In particular, Vietnam and some countries have a so-called late payment penalty. Therefore, in addition to tax liabilities, the penalty for late payment will increase. Enterprises are not able to do business and go bankrupt, but the tax debt still exists, so in principle, enterprises still have to pay late payment penalties because they have not been delineated or deleted. This debt is very large and could not be solved because the owners are unidentified or unable to repay.

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"We have not been able to erase tax debts that cannot be collected for a long time, so it has become a large debt, last year it was VND 26,500 billion, currently VND 27,700 billion. These tens of thousands of billion dong must be removed," said Mr. Dinh Trong Thinh.

Many economic experts also affirmed that the deletion of debts will make the business environment better, helping investors to be completely responsible for bankrupt enterprises since creating a new way to recover to re-start businesses. That is very essential for a good business environment.