Erasing more than 26 trillion VND in tax debt: Who is eligible?
Along with soliciting opinions on increasing environmental protection tax on goods, including gasoline, to a maximum of 4,000 VND/liter, the Ministry of Finance has just issued a document soliciting opinions on the draft Resolution of the National Assembly on handling irrecoverable tax debts. The estimated amount of debt write-off is up to 26.5 trillion VND.
Clearing more than 26.5 trillion VND of tax debt of all kinds
According to the Ministry of Finance, the total tax debt, late payment fees, and fines managed by the tax sector as of the end of 2017 was more than 73 trillion VND, a decrease of more than 2.1 trillion VND compared to 2016. Of which, tax debt of taxpayers who died, went missing, lost civil capacity, or were involved in criminal liability, etc. accounted for the largest amount, at over 31.4 trillion VND (accounting for 3.2% of total domestic revenue in 2017).
The total tax debt, late payment fees, and fines managed by the Customs sector as of the end of 2017 was more than 5.4 trillion VND.
Thus, the total tax debt, late payment fees, and fines managed by both the Tax and Customs sectors is approximately over VND35.3 trillion. This amount accounts for approximately 2.75% of total tax, fee, and charge revenue in 2017 and accounts for nearly half of the tax debt.
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| Tens of thousands of billions of dong in tax debt cannot be recovered. |
Therefore, the Ministry of Finance submitted to the Government a report to the National Assembly to issue a Resolution on handling tax debts, late payment fees, and irrecoverable fines.
Specifically, first, the Ministry of Finance proposed to cancel late tax payment debts for enterprises providing goods and services paid for by budget capital or having expenditures from the state budget but not yet paid. The amount of late payment proposed to be canceled by the end of 2015 is estimated to be more than 500 billion VND.
Second, cancel the late tax payment fines and late tax payments of tax debts arising before 2018 of taxpayers who encounter natural disasters, fires, unexpected accidents or force majeure. The amount of late tax payment cancellation shall not exceed the value of the damage. The total debt that the Ministry of Finance wants to cancel is estimated at about 1,700 billion VND.
Third, cancel tax debts, late payment fees, and fines in cases where the taxpayer is no longer able to collect due to the taxpayer actually being dissolved (except for cases of dissolution for separation, merger, conversion), going bankrupt or ceasing production and business activities, and actually no longer operating before 2017. These entities are no longer able to pay the budget and have had their business registration certificates revoked by the business registration authority. The estimated amount is up to more than VND 24,000 billion (of which the taxpayer is an enterprise or organization about more than VND 22,200 billion, and the taxpayer is more than VND 2,000 billion).
Thus, the total amount proposed by the Ministry of Finance to be erased for the above cases is more than 26,500 billion VND.
Regarding the handling authority, the Ministry of Finance proposed that the Prime Minister decide to cancel debts in cases of 10 billion VND or more. The Minister of Finance will cancel debts in cases of 5-10 billion VND. The General Director of the General Department of Taxation and the General Director of the General Department of Customs will decide to cancel debts in cases of less than 5 billion VND.
For business households and individuals, the Chairman of the People's Committee of the provinces and centrally-run cities shall decide to cancel the debt based on the request of the tax authority after coordinating with the business registration authority, the People's Committee of the commune or ward, etc. to verify that the business household or individual "has terminated business activities at the business address", has revoked the business registration certificate, and has enforced tax debt collection according to the provisions of the Law on Tax Administration.
Debt relief for many subjects
The Ministry of Finance also proposed to freeze debt (temporarily not collect and not calculate late payment fees) for taxpayers with tax debts who have ceased production and business activities for more than 1 year, and the business registration agency has revoked the business registration certificate.
The reason is, according to the Ministry of Finance, those who pay taxes past the prescribed deadline will be charged a late payment fee of 0.03% per day until the full tax is paid, regardless of whether the debt is still collectible or no longer collectible. The amount of late payment in this case of "no longer collectible" is constantly increasing, specifically 200 billion VND/month (average 2,400 billion VND/year).
"The current regulation on calculating late tax payment fees increases the virtual debt figures in the tax authority's records, increasing the burden of adjustment and handling for the tax authority," said the Ministry of Finance.