Reasons for increase of tax debt

The tax management and debt recovery are implemented by the tax authority. Photo: TCT

Issuing more than 21.5 million notifications on tax debt, monetary penalties and fines for late tax payment

The tax management and debt recovery are implemented by the tax authority, despite the negative consequences of Covid on the economy, people and enterprises. The impact of price increases on most fields causes difficulties in business operation, resulting in the increase of tax debts in each month. It posed a negative impact on the implementation of tax debt recovery.

The tax authority at all levels has set a series of key task; removing difficulties, supporting taxpayers to maintain business and production, facilitating taxpayers extend tax debt, tax payment in installments, and tax cancellation in accordance with Law on Tax Management and Government’s Decree and Resolution.

Also included is implementing tax debt settlement, charges off, tax cancellation which is not able to pay into the state budget; strengthening the management of tax debt recovery and reducing newly arising tax debt to a minimum.

The General Department of Taxation also assigned a target of tax debt collection to local tax departments, so that they can proactively develop a plan both monthly and quarterly and attached responsibility to the unit’s leader with the task of tax debt recovery.

The tax sector focuses on issuing notification of tax debt by electronic method and sends to the taxpayer to urge and remind them, as well as to provide warnings about the debt situation. According to the statistics, in the first six months, 21,507,451 notices of tax debt, fines, and late payment interest have been issued, reaching 100% of the number to be issued.

At the same time, the tax sector resolutely applied debt enforcement measures to cases of intentionally delaying payments, showing signs of property dispersal or absconding. In the first six months of the year, the whole sector issued 100,700 coercive decisions to deduct money from accounts, block accounts; 7,524 decisions to coerce invoices; 248 decisions on enforcement of property distraint and collection of money hold by third-party; 7,677 decisions on the revocation of business registration certificates.

With the drastic implementation of many solutions, in the first six months of the year, the tax sector recovered VND16.2 trillion of tax debt. The estimated total amount of tax debt managed by tax sector as of June 30, 2022 was VND132,460 billion, rising by 15.2% compared to December 31, 2021, an increase of 9.7% over the same period.

In particular, recoverable debt is VND67,809 billion; monetary penalties and fines of late payment that is recoverable is VND22,389 billion; irrecoverable debt is VND24,582 billion; the tax debt being processed is VND7,909 billion; and the tax debt that is being complained, sued, expired is VND9,770 billion.

Striving to reduce the outstanding debt ratio to below 5%

According to the General Department of Taxation, the reason for this increase in tax debt compared to December 31, 2021 is due to debts of land use fees, land rents and fees for granting mining rights of projects face problems and have not yet been put into operation. However, by the law, the tax authority calculates the debt following the notice of payment of land use levy, land rent, and mineral mining rights.

Another reason is that the tax payment extension period of some taxes and land rents has expired. Implementing the Government's decrees and decisions to remove difficulties for people and businesses to encourage the collection, taxpayers still face difficulties in cash flow and have not yet paid tax despite the extension.

In addition, there is a situation where some taxpayers make tax declarations on arising payable taxes, who are not directly affected by the Covid-19 epidemic. Instead, they take advantage of the pandemic to intentionally delay.

In the future, the whole tax sector will continue to effectively implement debt collection management. As well as solutions, such as standardizing and classifying debts, and implementing measures to handle and collect tax debts in accordance with the regulations, tax authorities at all levels will continue to promote more effectively the role of the provincial Steering Committee on revenue loss prevention and collect outstanding debts; closely coordinate and enlist the support of local Party committees and authorities in the area so that tax authorities and other sectors can cooperate in the collection of tax arrears; and focus on recovering land-related debts of projects managed by local authorities.

In addition, continuing to direct the entire sector to effectively implement debt settlement in accordance with Resolution No. 94/2019/QH14 of the National Assembly and striving to reduce the outstanding debt ratio to less than 5% of total state revenue.