Temporary postponement of exit - a tough measure to collect tax debt effectively

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Passengers entering and exiting through Noi Bai international airport. Illustration photo: N.Linh

Only pay tax when receiving a Notice of temporary exit suspension

Last weekend, Trung Nam Construction Investment Joint Stock Company paid over VND 31 billion in tax debt and late payment fines to the state budget. Thus, after nearly 1 month of receiving a notice of temporary exit postponement by the Customs authority to the Chairman of the Board of Directors, the company had fulfilled its tax payment obligation to the state budget.

According to Ninh Thuan Customs Branch (Khanh Hoa Customs Department), Trung Nam Construction Investment Joint Stock Company has incurred tax debt since 2023 through post-clearance inspection by the Customs agency, but the company has not fulfilled their obligations despite different enforcement measures from the Customs agency according to the provisions of the Law on Tax Administration. Therefore, in order to recover tax money for the state budget, Khanh Hoa Customs Department must apply measures to issue a Notice of temporary exit delay to the Chairman of the Board of Directors of Trung Hoa Investment and Construction Joint Stock Company.

Not only the above case, in recent times, many businesses have been delinquent in tax debt for many years, even decades. In spite of many enforcement measures of the Customs authorities, they have not fulfilled their tax payment obligations. Only when the legal representative was suspended from leaving the country did the business pay taxes.

According to officials working on tax debt collection, when applying the enforcement measure to temporarily postpone exit from the country, a new business representative appeared after "disappearing" for ten years. Typically, a Vietnamese woman married a Taiwanese man and acted as the legal representative to establish a business for her husband. After the business incurred tax debt, the two had left for Taiwan for nearly 10 years. Only when receiving a Notice of temporary exit suspension, did the above woman - the legal representative of the new business – contact the Authority to pay more than 600 million VND in tax debt and more than 1 billion VND in late tax payment.

Another tax debt example belonged to Han Dynasty Decoration Import-Export Production Trading Company Limited, whose tax debt occurred since 2010. The female Director of this enterprise had left the country since 2012. In early July 2022, after issuing the enforcement decision against the business, through many sources, the Tax Management Team obtained information that this business was a family company founded by this female and her younger brother. After issuing the notice to postpone exit, the Customs agency asked the younger brother to persuade the older sister to pay taxes to the state budget. As a result, the Customs Branch succeeded recovering over 100 million VND in tax debt and late payment fines.

Tough measures to collect tax debt

To recover tax money for the state budget, in addition to enforcement measures as prescribed in Clause 1, Article 125 of the Law on Tax Administration No. 38/2019/QH14, recently, the Customs agency has also applied temporary measures to top leaving the country for legal representatives of businesses with tax debt (according to Article 66 of the Law on Tax Administration No. 38/2019/QH14 and Article 21 of Decree 126/2020/ND-CP dated October 19, 2020 of the Government Detailed regulations on a number of articles of the Law on Tax Administration). This tough measure has recovered tens of billions of dong from the state budget.

At Saigon Port Area 1 Customs Branch alone, in 2023, over 220 exit suspension notices were issued for legal representatives of businesses that owe taxes. In particular, nearly 40 cases of businesses paying taxes after the director's exit was postponed, with a total tax amount recovered of nearly 12 billion VND.

According to the Deputy Director of the Investment Goods Management Customs Branch - Ho Chi Minh City Customs Department, following the Law on Tax Administration, the unit has screened businesses with tax debt to apply enforcement measures according to regulations. Through enforcement measures, some cases have been contacted to fulfill tax obligations to State agencies. For example, in the case of a foreign business owner, after information about the suspension of exit from the country was published on the Customs website and on the mass media, this business contacted the Customs authorities to pay taxes to the state budget, although the Customs authorities had urged many times before, no movement had been carried out.