Urgently handle irrecoverable tax debts

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The General Department of Taxation must ensure the handling of irrecoverable tax strictly and correctly, avoiding profiteering and losses for the state budget. Photo: Thuy Linh.

Tax debt is complicated

According to the General Department of Taxation, in the first six months of 2020, the tax sector has urged to recover VND15,222 billion of debt. This figure is only 44.6% of the assigned debt collection target, up 10.4% compared to the same period in 2019.

According to Doan Xuan Toan, Deputy Director of the Department of Debt Management, General Department of Taxation, the situation of tax debt recovery in 2020 was slower than in 2019 due to the impact of the COVID-19 pandemicand the implementation of social distancing. Many taxpayers face difficulties in production and business as well as temporarily ceasing operations, thus the tax has been slowly paid to the state budget. In addition, the Government has issued Decree 41/2020/ND-CP extending the deadline for paying taxes and land rents to organizations and individuals affected by COVID-19.

In addition, according to the General Department of Taxation, the management and handling of bad debts is still difficult. Statistics of the General Department of Taxation show that, by the end of June 2020, the irrecoverable tax debt (wherethe taxpayer is dead, missing, lost civil act capacity, related to liability, criminal, self-dissolved, bankrupt, terminated production and business activities, no longer operating at the registered business address) is VND46,120 billion. This debt accounted for 44.9% of the total tax debt, up 4.7% compared to December 31, 2019, and up 15.6% compared to the same period in 2019.

For this group, the tax sector must coordinate with local authorities, departments, agencies and related sectors to apply urging and coercive measures as prescribed, and at the same time, manage and monitor the amount of tax debt and late payment interest. Therefore, these debts are hindering the tax agency's goal of reducing debts because the debts are no longer recoverable, there are no subjects to collect them or the subjects have no assets, and no ability to perform obligations to the state budget.

Localities quickly take action

From July 1, 2020,Resolution 94/2019/QH14 on the freezing of tax arrears, remission of fines for late payment interest, late payment interest for taxpayers who are unable to pay to the state budget officially has enforcement effect. Recently, Circular 69/2020/TT-BTC on dossiers, order and procedures for debt settlement under the National Assembly's Resolution 94/2019/QH14 was also issued with detailed provisions, specifically steps freezing and eliminatingtax debt.

Not waiting for the effective date of Resolution 94, from the beginning of the year, tax departments across the country have handled tax debts in the spirit the National Assembly has set. For example, at the Hanoi Tax Department, statistics show that from 2015 to 2019, the amount of unsolvable debt in this unit increased by 225% to VND6,052 billion and accounted for more than one-third of the total debt here.

Therefore, in order to ensure proactive implementation of fast, effective, accurate and correctsubjects when Resolution 94 takes effect, in April 2020, the Hanoi Tax Department established a Steering Committee for implementing Resolution No. 94/2019/QH14 led by the Director of Hanoi Tax Department as Head of the Steering Committee.

This unit has also actively advised and proposed to the Municipal People's Committee to issue official dispatches to departments, agencies and People's Committees of districts and towns in the area and closely coordinated in organizing the freezing of tax arrears, remission of fines for late payment and late payment interest for taxpayers unable to pay to the state budget.

Currently, the Hanoi Tax Department has developed a plan and roadmap to implement the resolution of debt settlement in the city. Accordingly, focusing on reviewing data, making a list of taxpayers eligible for debt freezing and debt write-off, determining the amount of tax debt subject to debt write-off and debt freezing, and at the same time build a process of steps to comply with the provisions of the Resolution and its guiding documents.

The representative of the General Department of Taxation affirmed that in the future, the tax sector will organize the implementation of debt settlement according to Resolution No. 94 and the guiding circular of the Ministry of Finance forthe entire tax sector, thereby ensuring the handling tax debts which are incapable of collection, avoiding profiteering and losses for the state budget.