Strong measures are needed for real estate firms to pay tax debts

	Thousands of enterprises “handle bad debts of hundreds of billions” at Hai Phong Customs Department
	Difficulties in Uber debt collection
	Ho Chi Minh City: Bad tax debts of more than VND 1,500 billion

Publicity of real estate tax debt is necessary. Photo: Nguyen Hien.

Tax debts on purpose

Currently, tax debtors are from two main areas: production and business tax debts, and land use tax debts. In particular, the amount of land use tax debts of enterprises is not small.

According to data of Hanoi Taxation Department, the Department is currently controlling many businesses owing land use fees from year to year with the amount of up to hundreds of tens of billion of VND. Typically, Song Da - Thang Long Joint Stock Company has a tax debt of nearly VND 355 billion; Vietnam Mechanical and Construction Joint Stock Company has a tax debt of more than VND 61.8 billion; Song Da 9.06 Joint Stock Company has a tax debt of nearly VND 40 billion; Power and Water Equipment Assembly Joint Stock Company No. 1 has a tax debt of more than VND 36.6 billion; Water Equipment and Construction Joint Stock Company No. 2 has a tax debt of VND 34.3 billion; Jikon Foundation Joint Stock Company has a tax debt of VND 34.2 billion; Urban Infrastructure Investment and Trading Company Ltd. has a tax debt of nearly VND 30 billion.

As for Song Da - Thang Long Joint Stock Company, from 2015 to now, the Hanoi Taxation Department repeatedly sent notices, then applied drastic measures such as account processing enforcement, invoice enforcement, and the business license revoking. However, with weak financial capacity together with the problem of CT2-105 UsilkCity project (it is an investor, which has been delayed and has not been handed over to customers since 2010). Song Da - Thang Long Joint Stock Company is still a "hot spot" which can not be collected tax debts by the Hanoi Taxation Department with the amount of tax debts of hundreds of billion of VND.

With other land use levies in the area, Hanoi Taxation Department has implemented all coercive measures in accordance with regulations. However, to date, this unit is still calling for businesses to pay taxes.

Over the past time, the whole Tax sector has continuously established inter-sectoral missions to implement the task of combating tax losses. The tax authorities have also applied coercive measures to debtors such as: Coercive measures on invoicing; enforcement of property distraint (for business households); measures for the withdrawal of permits, business registration certificates for enterprises to urge tax debts on the mass media to tax-liable enterprises. However, many businesses still deliberately delay, "hanging debts" from year to year.

Penalty is not enough

In practice, in the management of tax debts, the Tax sector has applied a series of coercive measures to handle businesses which still owe taxes. However, the effectiveness of these measures has not really been improved.

According to the provisions of the Law on Tax Administration, tax-suspension measures must be implemented in the right order, from the smallest measure of deduction to two highest measures including revoking the tax code, suspending the use of invoices and the business certificate. This provision is making it difficult for local tax authorities, as it would take time for coercive measures to take place.

On the other hand, the main cause of the tax debts is due to enterprises having to face difficulties in production and business so they do not have the financial capacity to fulfill their tax obligations. Moreover, many enterprises are occupying capital from each other and delay payment, which leads to tax arrears.

According to a real estate expert, real estate businesses are always in shortage of capital so tax debt is understandable. "Particularly, interest rates on bank loans require collateral assets of over 11% per year. If businesses owe tax, businesses will not have to mortgage. As a rule, the penalty for late tax payment is 0.03% per day calculated on the late payment, equivalent to about 11% per year, lower than the interest rate of investment. The amount of penalties was not enough to warn enterprises that have not complied with the fulfillment of the State budget obligations. That is one of the reasons for increasing the number of real estate companies owing taxes", he said.

Many people said that to limit the tax arrears of real estate business, tax authorities should publicize the names of these businesses so that the market is transparent, and people can consider the financial capacity of the investor before deciding to buy land and houses of a project. At the same time, enterprises that have owed taxes are not to be assigned to carry out a project. For projects that are "hanging", it is necessary to recover to avoid the situation of outstanding debts.

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The urge of taxpayers is essential to ensure equity as well as increasing revenues to the State budget. In addition to enhancing collection solutions, strong measures should be taken for businesses to pay tax. In particular, raising the level of sanctions or forms of accompanying is an important basis to focus on solving the current debt situation.