The arduous process of recovering import and export tax debts – Part 4: There should be a mechanism for tax debt remission

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Although Customs authorities regularly review and urge companies to pay tax, it has not collected the debts. In the photo: Operations at Vinh Phuc Customs Department, Hanoi Customs Department. Photo: T.Trang.

Tax debts can not be removed due to the impossibility of application of coercive measures

Referring to procedural difficulties to get rid of tax debts, Le Chien Thang, Deputy Director of Customs Branch of Saigon port zone 4, said that most irrecoverable debts are of enterprises which were going to be dissolved or had been dissolved. Debt remission only applies to bankrupted and dissolved state-owned enterprises. There are no mechanisms applicable to limited companies or private enterprises, causing many difficulties for Customs in handling and recovery.

Clause 3, Article 65 of the Tax Administration Law is amended and supplemented in Clause 20, Article 1 of the Law amending and supplementing a number of Articles of the Tax Administration Law No. 21/2012 / QH13; Article 32 of Government Decree No. 83/2013 / ND-CP stipulates cases of remission of tax debts, late payments and fines for debts which are in excess of ten years since the payment deadline, but incapable of recovery. However, actually, in order to meet the conditions for debt remission, Customs has encountered many difficulties such as: Verification of business address, because many enterprises did not notify the change of business addresses to Customs and Tax agencies for updating to the system, so that when Customs officers visited the former business addresses to urge the tax payment, the enterprises no longer operate there. In addition, Branches have not taken coercive measures such as wage deduction or distraints of assets, because of failure to verify the addresses of enterprises, and there are no assets for distraint. In many cases, enterprises sell goods without invoices, so it is impossible to apply the measure notifying that invoices are no longer valid. Therefore, it is not possible to fully implement the coercive measures when compiling the debt remission dossiers as prescribed. In many cases, enterprises are no longer operating under the verification by a Tax agency, but under verification by the Department of Planning and Investment, those enterprises are still operating and have not carried out procedures for dissolution.

Regarding the management of tax debts, many Customs Departments said that although the Law on Tax Administration stipulates a number of cases subject to tax debt remission, but also it does not cover all cases arising in reality. There are cases where enterprises have tax debts of more than 10 years, but Customs can not apply all coercive measures in accordance with the law, because these enterprises have been decided by competent agencies (such as the Department of Planning and Investment, the Management Board of Industrial Zones, the Provincial People's Committees, etc.) on termination of operation or dissolution before the effective date of the Law (1 July 2006). There are cases where many foreign enterprise owners fled to their countries while they have not fulfilled their tax obligations.

Proposals on amending regulations on debt remission

During implementation of measures to urge the recovery of tax debts, the Customs Departments have encountered difficulties and failed to apply coercive measures (deduction of wages, income, distraints of assets, auction for distrained assets, the collection of money and other assets of the persons subject to enforcement of the administrative decision held by another organizations or individuals). This is because the Customs has no basis to determine the wages, incomes and assets of the person subject to enforcement, and the Law on Tax Administration does not stipulate competent authorities in charge of providing information on assets of enterprises. On the other hand, many enterprises have had tax debts from long ago, have been revoked the Certificate of business registration and were dissolved, so the above coercive measures cannot be carried out. Moreover, the deduction of wages or income only applies to individual debtors but does not apply to organization debtors.

From the above reality, the Customs units recommended that it should build an appropriate mechanism for tax debt remission, simplify the procedures for remission of tax debts, fines for late payment or fines for enterprises that have fled way, disappeared and were dissolved, in order to avoid loss of state revenue and reduce pressures, time and efforts for tax administrators.

Hai Phong Customs proposed that for enterprises which are no longer operating at their registered addresses or enterprises which have delayed tax payment, it should not implement coercive measures respectively, which are ineffective, it should take appropriate coercive measures immediately to improve the efficiency of debt recovery. Regarding the coercive measure to revoke the Certificate of business registration, Hai Phong Customs Department proposed that the General Department of Customs should suggest to the Planning and Investment Departments to take coercive measures in compliance with regulations.

For enterprises having both tax debts and overpaid tax amounts (for other import and export declarations) at Customs offices, Hai Phong Customs proposed that basing on data on the centralized tax accounting system, the Customs authority shall send written notification to enterprises; Upon the expiry date of notification, if the enterprises do not carry out customs procedures, basing on Customs dossiers, tax payment receipt saved at Customs authority or copy tax payment receipt certified by State Treasury or banks or restored receipt (in cases of electronic payment) the Customs authority shall issue a decision to refund the overpaid tax amount to the enterprises and making the collected State budget revenue reimbursement order to send to the State Treasury and notify enterprises to reduce their tax debts.

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All local Customs units said that the Ministry of Finance and the General Department of Customs should make recommendations to amend the case that enterprises have arising tax debts, fines for late payment and fines less than 10 years, but Customs has taken all coercive measures for enforcement of tax administrative decisions, but it has still not collected money, while the enterprise owners have fled away or disappeared or enterprises have been revoked the certificates of business registration, licenses of enterprise establishment and operation, etc. It is proposed a debt remission dossier be made (it is not required for 10 years) .