Erasing more than 26 trillion VND in tax debt: Who is eligible?

Eliminate 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 the total tax, fee, and charge revenue in 2017 and accounts for nearly half of the tax debt.

Therefore, the Ministry of Finance submitted to the Government a report to the National Assembly to issue a Resolution on handling tax arrears, late payment fees, and irrecoverable fines.

Specifically, first, the Ministry of Finance proposed to cancel the late payment tax debt for enterprises providing goods and services paid by budget capital or having expenditure sources 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 have encountered 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 fact that the taxpayer has actually dissolved (except for cases of dissolution for separation, merger, conversion), gone bankrupt or terminated production and business activities, and actually ceased operations 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 24,000 billion VND (of which the taxpayer is an enterprise or organization about more than 22,200 billion VND, and the taxpayer is more than 2,000 billion VND).

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 authority to handle the case, the Ministry of Finance proposed that the Prime Minister decide to cancel the debt for cases of 10 billion VND or more. The Minister of Finance will cancel the debt for 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 the debt for 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 arrears who have ceased production and business activities for more than 1 year, and the business registration authority 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%/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 on the tax authority's records, increasing the burden of adjustment and handling for the tax authority," said the Ministry of Finance.