Tax debt tends to increase

Tax sector is implementing many flexible measures to manage debt. Photo: General Department of Taxation

The upward trend of tax debt

According to the report of the General Department of Taxation, the total amount of tax debt managed by tax sector as of July 31, 2022, is estimated at VND133,639 billion. This debt increased by 16.2% compared to December 31, 2021, and rose by 17% over the same period in 2021. Regarding the results of tax debt recovery, General Department of Taxation said that the debt recovered in July 2022 is estimated at VND3,600 billion. Accumulated by the end of July 2022, the sector has collected VND 19,845 billion (equivalent to 47% of the debt collection target in 2022).

According to the General Department of Taxation, the estimated total tax debt as of July 31, 2022 increased compared to December 31, 2021, partly due to a late payment interest calculated at 0.03%/day of the total amount of tax debt.

In addition, some taxpayers that are eligible for extending tax payment have not submitted a request for tax payment extension following Decree 34/2022/ND-CP, so they still have to monitor tax debt, resulting in an increase in the total tax debt. Besides that, some taxpayers also face difficulties in production and business due to the impact of the Covid-19 pandemic, resulting in delays in paying taxes to the state budget.

Notably, regarding the debts of land use fees, land rent and mineral exploitation rights of some projects, the main problem is that the projects have not been put into operation.

While according to the law, the tax authority has to calculate the debt following the payment notice of land use levy, land rent, and mineral mining rights, so taxpayers cannot fulfill obligations to the budget.

In addition, there is also the fact that some taxes and land rents have surpassed the time of tax payment extension. Tax authorities at all levels have taken measures to urge collection but taxpayers are still facing difficulties in cash flow and have not paid the tax amount that has been extended to the state budget.

According to the General Department of Taxation, subsequent coercive measures such as property distraint, auction of distrained properties, and seizure of assets of coerced subjects are also facing difficulties and are impossible to implement because taxpayers no longer have assets or collateral at credit institutions.

Tax debt will affect business operations and brands

According to the provisions of Articles 3 and 55 of the 2013 Law of land, land use levy is the money that a land user must pay to the State when they receive the land that is allocated by the State with the collection of land use levy and getting permits for the change of land use purpose, recognition of land use rights.

In particular, economic organizations are allocated land for implementation of investment projects on construction of houses for sale or for sale in combination with a lease are included in the group of land allocation with land use levy.

According to Article 14 of Decree 45/2014/ND-CP, within 30 days from the date of signing the notice of the tax authority, the land user must pay 50% of the land use fee following the notice. Within the next 60 days, the land user must pay the remaining 50% of the land use fee. Exceeding the prescribed time limit, if the land user has not fully paid the land use levy following the notice, the land user must pay late payment interest for the unpaid amount at the rate prescribed by law on tax administration, unless there is an application to apply for a debit of land use levy in cases where it is debited.

Along with that, Point I, Clause 1, Article 64 of the Law on land 2013 clearly states that land allocated or leased by the State for the implementation of investment projects has not been used within 12 consecutive months or the progress of land use is behind schedule of 24 months as stated in the investment project from the date of handover of land in the field, then the land will be recovered.

In case the land is not put into use, the investor may extend the use period for 24 months and must pay to the State an amount corresponding to the land use levy and land rent for the delay in project implementation; at the end of the extended time limit, if the investor still has not put the land into use, the State shall recover the land without compensation for the land and assets attached to the land, except in the case of force majeure.

According to financial experts, the State has very strict regulations on land use fees when assigning investment projects to economic organizations for implementing investment projects on housing construction for sale or for sale combined with rental. In any case, with these regulations, late payment of land use levy not only causes enterprises to face large fines for late payment but also threatens business operations and brand reputation.

However, in reality, the situation of enterprises intentionally delaying land use fees in many localities is still quite common.

An expert has "revealed" that, among many reasons why businesses are intentionally delaying tax appropriation, the appropriation to get capital for production and business is quite common. Most enterprises have difficulty in turning over capital to operate the business, leading to delays and owing tax arrears to have the capital to continue investing.

In addition, according to representatives of many businesses, except for the case of businesses intentionally delaying tax debt, in recent times, there are many cases of owing land tax debt due to problems in the appraisal stage. Although the determination of the land use levy was correct, the leaders did not dare to sign.

Regardless of the reason, tax debt is still a burden not only for the tax office but also for the state budget. Therefore, on the part of the Tax authority, besides flexibly implementing debt management measures associated with the situation at each enterprise, each unit must also voluntarily find ways to solve difficulties in implementing tax liability and fulfill obligations with the state budget.

It not only creates an equal business environment among enterprises but also helps to create a good reputation and image in the eyes of business partners in the marketplace. Accomplishing tax obligations means creating more business opportunities and further development.