Principles of handling tax debts meeting requirements and objectives

	Tax debt settlement: Enterprises, taxpayers and management agencies all benefit
	Difficulties in tax debt management
	Create a legal mechanism to handle irrecoverable tax debts

Lawyer Ha HuyPhong.

These are lawyer Ha HuyPhong’s opinions, Director of Inteco Limited Law Company (Hanoi Lawyer Association).

The National Assembly has officially passed a Resolution on the freezing of tax debts and eliminating fines for late payment of taxpayers who are no longer able to pay the state budget. What do you think of this issue?

I think that the passing of this Resolution by the National Assembly is very important because when taxpayers do notexist, the ability to pay taxes no longer exists, so it is impossible to hang figures on the books to raise the state budget. The handling of this tax debt is consistent with reality, it doesn’t erase the taxpayer's obligations and responsibilities.

The handling of tax arrears, including the elimination of fines for late payment and irrecoverable late payment interest, thus helping to keep the virtual debt do not increase.That helps tax authorities and customs agencies reduce administrative management costs, better centralization of resources and management, enhanced anti-revenue loss for the budget, while also reflecting the true nature of the tax debt situation of the economy, and transparency of building of revenue and expenditure plans of the state budget, ensuring practicality and high feasibility. Therefore, it is necessary to have a resolution of the National Assembly, the highest legislative authority. Although the Law on Tax Administration 38/2019/QH14 has a provision on this issue, it will not take effect until July 1, 2020, so the issuance of a separate National Assembly resolution is needed, creating a legal basis for the handling of tax debt.

It must be affirmed that the deletion of tax debts due to late payment and fines for late payment are not contrary to the laws and regulations of the Constitution. Therefore, the issuance of this resolution by the National Assembly does not create any contradiction to the current regulations in the legal system. In addition, the issuance of resolutions is based on management practices and reflects the objective existence of society and the economy. If we try to hold on to the virtual numbers, it will cause misunderstandings about the ability to collect the budget, the financial picture of the economy as well as distort the state budget revenue and expenditure plans.

What do you think about the content of the Resolution?

Firstly, in principle, the handling of tax debt has met the requirements and objectives.

Secondly, in terms of subjects, the Resolution provides seven cases of handling the tax debt. In general, this group can be considered as no longer existing or no longer able to pay taxes. Therefore, the retention is only a number on the books causing virtual phenomena, which does not accurately reflect the general situation and environment of the economy.

Thirdly, regarding the authority to write off tax debt, the Resolution stated that it is applied in accordance with Article 84 and Article 87 of the Law on Tax Administration 38/2019/QH14. Accordingly, the debt freezing competence is assigned to the heads of tax administration agencies directly managing taxpayers to decide on debt freezing. As for the remission of debts for enterprises and organizations, the Prime Minister decided to write off the debts for late payment penalties and late payment interest of VND15 billion or more;Minister of Finance decided to write off VND10-15 billion debt; The General Director of the General Department of Taxation, the General Director of the General Department of Customs decide to write off debts of VND5-10 billion; Chairman of the Provincial People's Committee decided to delete less than VND5 billion. For debt write-offs for individuals, business individuals, households and business households, the Resolution proposes the Chairman of the provincial People's Committee to decide to write off debts on the basis of the tax administration's request. This decentralization has concretized the principle of competence and order of handling to ensure transparency and anti-negative effects in dealing with tax debt.

According to the Resolution, in case the debt has been written off, if it is found that the write-off is not in compliance with the regulations, or the taxpayer returns to production and business, he must pay back to the budget. How do you evaluate this regulation?

I think this is a regulation that prevents fraud and negativity, as well as anticipating a likely fact. In other words, it is a preventive measure to avoid tax evasion. When an enterprise is in difficult circumstances, completely suspended, submitted an application for dissolution, even had a decision to revoke the certificate of enterprise registration, but after that, it is still possible to returnto normal operation.

If returning to operation, the status of the taxpayer still exists and will not fall into the case of tax debt relief. This provision is necessary and there must be such preventive and predictive provisions in the law.

Thank you, Sir!