Recent Incidents

In the past month, the customs offices under the Ho Chi Minh City Customs Department have issued decisions to temporarily suspend the exit of 12 individuals who are legal representatives of businesses with tax debts. It is noteworthy that the temporary suspension of exit is applied to cases of tax debts with significant differences. Regardless of the severity, a typical example is the case of Mr. Le Huy Binh, the director and legal representative of Khai Dang Chemical Trading Limited Company. The customs office at Saigon Port, Zone 4, has sent a notification to the Immigration Management Department of the police about the temporary suspension of Mr. Binh's exit because his company has not fulfilled tax obligations amounting to 977.2 million Vietnamese dong.

Similarly, Mr. Nguyen Huu Huynh, the director and legal representative of the branch of An Thai Food Technology Limited Company, was also temporarily suspended from exiting due to the company's tax debt of nearly 290 million Vietnamese dong. The case of Mr. Tran To Quyen, the director and legal representative of Ngoc Dieu Trading and Services Limited Company, was also suspended from exiting due to a tax debt enforcement of over 10.2 million Vietnamese dong. Not only in Ho Chi Minh City, but also the tax offices in Bien Hoa and Vinh Cuu districts under the Dong Nai provincial tax department have sent notifications to the Immigration Management Department of the Ministry of Public Security to temporarily suspend the exit of 64 individuals who are legal representatives of businesses with tax debts. Previously, in October 2023, the tax office in District 7 and Nha Be district under the Ho Chi Minh City tax department had also requested the competent authorities to prohibit the exit of 11 individuals who are legal representatives of 11 tax debt businesses.

Additionally, there are cases where many people only find out about their temporary exit suspension due to tax debts when they arrive at the airport. For example, in October 2013, Ms. LTV, the legal representative of Baby Care Trading Limited Company in District 1, Ho Chi Minh City, submitted a petition to the customs office at Saigon Port, Zone 1, regarding the notifications of exit suspension, even though she had never been a director and knew nothing about Baby Care Company. She claimed that her information was stolen to establish the company with the malicious intent of tax evasion and requested the licensing agency to work together to provide Baby Care Company's documents to the police for verification. The falsification of the business registration certificate of this company was exposed. At the same time, the exit suspension notice for her was revoked.

According to Mr. Nguyen Tien Dung, Deputy Director of the Ho Chi Minh City tax department, the law allows the tax sector to send notifications to the Immigration Management Department to temporarily suspend the exit of tax violators. Mr. Dung also affirmed that once these individuals fully pay their taxes, the tax authorities will inform the Immigration Management Department to lift the temporary exit suspension.

Are there other measures?

Although the temporary exit suspension is applied to businesses with tax debts, there is a significant difference in the amount of tax debts between cases, with some businesses owing tens of billions of dong, while others owe only a few hundred thousand dong. A prominent example is the case of the director and legal representative of Gia Thang Chemical Trading Limited Company, who was requested to temporarily suspend exit because the company owed over 997 million dong in taxes, not including late payment penalties.

According to the perspective of businesses, the ultimate goal of applying sanctions to businesses with tax debts is to recover the owed amount for the state budget. Therefore, enforcing measures on business accounts should be a top priority. A business director in District 7 shared that in 2023, he received a notification from the tax office in District 7 about his company's value-added tax debt of around 10 million dong. The tax authority required the company to pay the tax within 5 days from the issuance date of the notification. Failure to do so would result in sanctions, including requesting a temporary exit suspension. The director mentioned that the company's accountant had completed the tax report but forgot to pay the tax.

Upon receiving the notification, we immediately paid the tax and the fine. The director expressed that they did not intend to evade taxes but it was a mistake by the specialized department, which was rectified promptly after receiving the tax notice. However, through this incident, he realized that the tax authority could choose a different approach to recover tax debts and support businesses more effectively. For example, instead of a 5-day deadline, businesses should be given 30 days to verify and fulfill their tax obligations. This 30-day period would allow financially struggling businesses to manage their finances and pay taxes. The business owner also added that in cases where a business is temporarily suspended from exiting due to negligence, the process of lifting the exit suspension would be time-consuming and bureaucratic.

Importantly, the decision to temporarily suspend exit will become a stain on the entrepreneur's and business's record. According to a tax inspector in Ho Chi Minh City, the temporary exit suspension of legal representatives of businesses due to tax debts is the result of a prolonged process over several months. The reason is that besides intentional tax evasion, many businesses face difficulties in operations, leading to tax debts. In these cases, the tax authorities always communicate and work with businesses, listening to their proposals and commitments regarding tax payment within a specific period.

Only when businesses fail to fulfill their commitments will the tax authorities resort to enforcement measures. Initial enforcement measures include freezing bank accounts and rendering invoices invalid if businesses still do not pay taxes after these measures. The tax authorities must apply various other measures, including requesting an exit ban for the legal representatives, who are legally responsible for the business, if the business owner is prohibited from exiting the country.

Regarding businesses with only a few million dong in tax debts being prohibited from exiting, the tax inspector stated that a crucial task of the tax sector is to focus on recovering tax debts to ensure revenue for the state budget. Therefore, the tax authorities must enforce measures to ensure that businesses fulfill their tax obligations. Failure to do so would raise questions about why the tax authorities are not enforcing legal provisions. However, the tax inspector also believes that flexible exit bans for businesses with tax debts require state policies and adjustments to tax laws.

Tax Debt, Even a Single Dong is a Violation

Lawyer Nguyen Quoc Toan, the director of IAM Law Firm in Ho Chi Minh City, affirmed that any amount of tax debt, even a single dong, is a legal violation. Individuals and businesses involved in overdue tax debts must be treated equally according to legal regulations. Taxes do not differentiate between rich and poor, or between small and large debts; any overdue debt is a violation. Lawyer Toan cited a story about an American man who, due to a $500 house tax, paid but forgot about the accumulated interest during the payment review period, resulting in an $8.41 interest charge. As a result, his house worth $60,000 was auctioned off three years later. Lawyer Toan emphasized that debts exceeding $8 could lead to asset seizure.

The principle of US law is that failing to pay taxes in the previous year will result in the property owner being considered as having tax debts. Applied to businesses, Lawyer Toan stated that a tax debt of nearly 1 million dong may seem small at first glance, but if the overdue interest for the past 11 years is calculated, the debt is likely to exceed 1 million dong. Associate Professor Dr. Dinh Trong Thinh, from the Academy of Finance, an expert in economic and financial matters, stated that taxes are the highest legal regulations contributing to the state budget, and every individual or business with revenue and profit must pay taxes. In principle, businesses and their legal representatives must calculate, declare, and comply with tax payment obligations.

Associate Professor Dr. Thinh explained that the decisions to temporarily suspend exit or enforce customs measures related to tax debts aim to ensure the legal integrity of businesses and entrepreneurs who have established businesses and act as legal representatives. The tax debt enforcement notices are sent to businesses multiple times during that period. The legal representatives of the units cannot claim ignorance or consider small amounts insignificant. He believes that there should be no differentiation or leniency for cases of delayed tax debts like these.

Who is Responsible for Late Tax Payments?

In the current context of increasingly stringent tax regulations and handling tax debts, many businesses believe that tax authorities should also be held accountable for late tax payments. Recently, the Vietnam Rubber Investment Limited Company stated that the company has been late in tax payments for about 2 years, with an amount close to nearly 70 billion dong. The current amount of late tax payments exceeds the company's charter capital, forcing the business to suspend operations due to a lack of capital for circulation. A company representative mentioned that despite facing many difficulties, the company cannot dissolve because if it does, the procedures to receive tax refunds in the future will become increasingly challenging. Being detained for tens of billions of dong in value-added tax has caused the business to lose financial resources, making it unable to fulfill export orders and continuously losing customers.

Users who liked