Quang Ninh Customs: Facing with difficulties in implementing tax enforcement measures

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Customs operation at Cam Pha Customs Branch, Quang Ninh Customs Department. Photo: Q.H

Until the end of the third quarter of 2017, the total amount of overdue tax debt in Quang Ninh Customs Department was 112 billion VND, in which 110.9 billion VND of bad debts, 774 million VND of recoverable debts and 941 million VND of frozen debts.

According to analysis of the Import and Export Duty Division of Quang Ninh Customs Department, outstanding tax debts are debts arising due to former policies (law on import and export duty) which allows businesses to be graced tax (to extend the time of tax payment) so businesses disappeared from their business addresses or dissolved to establish new businesses after importing and exporting goods. On the other hand, although some businesses with tax debts are operating, they are not the ability to pay the tax due to suffering from losses, financial difficulties, and mortgaging assets. Some businesses owed tax in a long time (from 10 to 20 years) and no longer existed in the system of tax administration and were not subject to debt clearance.

After receiving document of the General Department of Vietnam Customs (Official letter 8955/TCHQ-TXTN dated 19 September, 2016), Quang Ninh Customs Department sent guidance document to sub-departments to accurately classify and determine each type of tax debt under process of debt administration (enclosed with Decision 1074/QD-TCHQ dated 2 April 2014 of the General Department of Vietnam Customs) to provide proper measures for handling tax debts. Accordingly, in order to strengthen the management and recovery of outstanding tax debts, the Department held a conference to implement the task of revenue collection, in which divisions consulted and Customs Branches drastically deployed measures to recover tax debts. At the same time, the Department also issued the plan on implementing the estimate of revenue collection and handling and recovering tax debts in 2017. Assigning target of debt recovery to Customs branches and post-clearance audit branch; Issuing guidance on tax debt administration (under Official letter 2150/TCHQ-TXNK dated 31 March, 2017 of the General Department of Vietnam Customs; Closely monitoring and evaluating strong points, weak points and shortcomings in management of outstanding tax debt recovery in 2017, as well as developing specific plans on tax debt recovery for each business.

Specifically, total business with tax debt in Quang Ninh Customs Department is 71 businesses. Of which 2 businesses are being prosecuted by Police authority (Bai Loa Co., Ltd and Attar processing and Manufacturing Company); 1 business is being frozen debt (Vinh Thang Co., Ltd); 5 businesses committed to paying tax (paying nearly 1.18 billion VND); 2 businesses dissolved but their decision on dissolving have not been yet verified. Besides, the Department applied enforcement measures to 59 businesses of which business registration certificates were recovered (27 businesses were recovered by provincial and municipal Investment and Planning Departments, 17 businesses are being recovered and 15 businesses have not responded); 2 businesses with tax debts due to imposed tax in 2016).

The leader of Import and Export Division said that some State-owned enterprises want to be cleared tax debts, they must have dissolution decisions. However, through a collection of information related to dissolution decisions, the Customs detected that these enterprises disappeared from business registration addresses. Although the Customs discussed with the provincial People's Committee (the unit was in charge of storage) on providing dissolution decisions, these decisions were not found. Specifically, 2 State-owned enterprises with tax debts no longer operated including Quang Ninh Materials Company and Maritime Service and Trading Company. From 2015 up to now, Quang Ninh Customs repeatedly sent verification documents and directly worked with relevant agencies but it only received official letters that dissolution decisions were not found or no feedback.

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In addition, the Department faced with difficulties in implementing measures for tax debt recovery and applying enforcement measures such as deduction from salary or income, distraint asset, asset auction and etc. The reasons were that the Customs had no basis to determine the salary, income, and assets of subjects who were enforced. The Law on Tax Administration did not stipulate that the competent authority was responsible for providing information on assets of enterprises. On the other hand, many enterprises owed tax for a long time and were recovered business registration certificates and dissolved. Thereby, the Customs could not implement enforcement measures. The deduction from salary or income was only applied to an individual with tax debt and not applied to the enterprise with tax debt.

Currently, Quang Ninh Customs Department has proposed the General Department of Vietnam Custom to consider and approve to clear tax debt for 8 enterprises with overdue tax debt more than 10 years and were recovered business registration certificates. In the coming time, the Department will complete and transfer dossiers of 8 enterprises with tax debts to Police authority for investigation.