Recent incidents
Within the past 1 month, customs branches under the Ho Chi Minh City Customs Department have issued a decision to suspend exit for 12 individuals who are legal representatives of businesses due to tax debt. It is worth noting that the temporary exit is applied to cases of tax debt with a significant difference in amount. Regardless of severity, a typical example is the case of Mr. Le Huy Binh, director and legal representative of Khai Dang chemical trading limited liability company. The Saigon Port Border Gate Customs Branch, Area 4 sent a notice to the Immigration Department of the Ministry of Public Security about temporarily postponing Mr. Binh's exit because his company has not fulfilled its tax payment obligation of up to 977.2 million VND.
Similarly, Mr. Nguyen Huu Huynh, director and legal representative of the branch of An Thai Food Technology Company Limited, was also temporarily suspended from leaving the country because his company owed nearly 290 million VND in taxes. In the case of Mr. Tran To Quyen, director and legal representative of Ngoc Dieu Construction Trade and Service Limited Liability Company, his exit was also postponed due to being forced to pay more than 10.2 million VND in taxes. Not only Ho Chi Minh City, the Bien Hoa and Vinh Cuu regional tax departments under the Dong Nai province tax department also sent a notice requesting the Immigration Department of the Ministry of Public Security to postpone the exit of 64 individuals who are legal representatives of businesses that owe taxes. Previously, in October 2023, the regional tax department of District 7, Nha Be district under the tax department of Ho Chi Minh City also requested the competent authority to ban the exit of 11 individuals who are legal representatives of 11 businesses with tax debt.
Besides, there are some cases where many people upon arriving at the airport find out that their exit has been delayed due to tax debt. For example, in October 2013, Ms. LTV, legal representative of Baby Care Commercial Goods Limited Liability Company, District 1, Ho Chi Minh City, sent a petition to the Saigon Port Area 1 Border Gate Customs Branch because of the notices of temporary exit from the country while she had never worked as a director and knew nothing about the Baby Care company. She confirmed that her information was stolen to set up a company with the bad intention of tax evasion and asked the business registration licensing agency to coordinate work to provide the baby care company's records to the police for verification. The falsification revoked the business registration certificate of this company. At the same time, cancel the temporary exit notice for her.
According to Mr. Nguyen Tien Dung, Deputy Director of Ho Chi Minh City Tax Department, the law allows the tax industry to send a notice requesting immigration management to temporarily postpone exit for tax violators. Mr. Dung also affirmed that after these individuals pay their taxes in full, the tax authority will notify the Immigration Department to remove the exit suspension.
Are there any other measures?
Although the suspension of exit is applied to businesses that owe taxes, reality shows that there is a big difference in the amount of tax debt between cases where businesses owe taxes up to tens of billions of dong while there are also businesses that only grow a few hundred thousand dong. A typical example is the case of the director and legal representative of Gia Thang chemical trading limited liability company, who was asked to postpone his exit because the company owed more than 997 million VND in taxes, not including late payment fines.
From the point of view of businesses, the ultimate goal of applying sanctions to businesses that owe taxes is to recover the amount owed to the State budget. Therefore, enforcement of business accounts should be a top priority. A business director in District 7 shared that in 2023 he received a notice from the District 7 tax department about his business owing about 10 million VND in value added tax. The tax authority required the business to pay tax within 5 days from the date of issuance of the notice. If not, sanctions will be applied, including a request to postpone exit. This director said that the company's accountant had completed the full tax report but forgot to pay the tax.
As soon as we received the notice, we immediately paid taxes and fines. He also expressed his opinion that we did not intentionally evade taxes, but due to the negligence of the specialized department, which was corrected immediately after receiving the notice from the tax authority. However, through this incident, I realized that tax authorities can choose other methods to collect tax debt and support businesses more effectively. For example, instead of the 5-day notification time to make a decision, which is too short, businesses should be given 30 days to check and fulfill tax obligations. This 30-day period is enough for businesses facing financial difficulties to manage and pay taxes. This businessman also added that in the case of a business being temporarily suspended from exit due to negligence, removing the decision to temporarily postpone exit will take a lot of time and procedures.
More importantly, the decision to postpone exit will become a black mark on the record of entrepreneurs and businesses. According to an inspector of the Ho Chi Minh City Tax Department, the fact that the legal representative of the business was temporarily suspended from leaving the country because the business owed taxes was the result of a process that lasted for many months. The reason is that besides the units that intentionally evade taxes, there are many businesses that have difficulties in business, leading to tax debt. In these cases, tax authorities always notify and work with businesses to listen to their proposed options and commitments to pay taxes within a certain period of time.
Only when businesses fail to comply with their commitments will tax authorities conduct tax enforcement. Initial tax enforcement measures include freezing bank accounts and notifying invoices that are no longer valid if the business still does not pay taxes after applying these measures. The tax authority is forced to apply many other measures, including requesting a ban on leaving the country for the legal representative of the tax authority, which is the unit responsible before the law for the business owner being banned from leaving the country.
Regarding the fact that businesses that only owe taxes of a few million VND are banned from leaving the country, the inspector said that one of the important tasks of the tax industry is to focus on collecting tax debt to ensure revenue for the State budget. Therefore, tax authorities must apply enforcement measures so that businesses are responsible for completing their budget payment tasks. If not, superiors will ask questions about why tax authorities do not comply with the provisions of the law. However, the inspector also said that the flexible ban on exit for businesses with tax debt requires state policy and tax law adjustments.
Owing tax, even one penny, is a violation
Lawyer Nguyen Quoc Toan, director of IAM Law Firm in Ho Chi Minh City, affirmed that owing even one dollar in tax is a violation of the law. Individuals and businesses involved in overdue tax debt are subject to the same handling according to the provisions of law. Taxes do not discriminate between rich and poor, there is no such thing as little or much debt, only overdue debt means a violation. Lawyer Toan cited the story of an American man who paid $500 in house tax but forgot that the accumulated interest during the time the payment was sent was $8.41. As a result, three years later, his house worth $60,000 was foreclosed. Lawyer Toan emphasized that debts of more than $8 can also result in assets being distrained.
The principle of US law is that if the property owner does not pay enough taxes in the previous year, he or she will be considered a tax debtor. Applied to the case of a business, the tax debt is nearly 1 million VND. Lawyer Toan said that this number may seem small at first, but if you include overdue debt with interest over the past 11 years, the debt certainly does not stop at 1 million VND. Viewpoint Associate Professor Dr. Dinh Trong Thinh, Academy of Finance, financial economist, believes that tax is the highest legal legal regulation, contributing to the state budget that every individual business with revenue and profit is required to pay. In principle, businesses and their legal representatives must calculate, declare and pay taxes themselves.
Associate Professor Dr. Thinh simply explained that decisions to postpone exit or customs enforcement related to tax debt are aimed at ensuring the legality of businesses and that entrepreneurs who have established a business and are the legal representative of the business must put the rule of law first. Tax enforcement tax debt notices were sent many times by management agencies to businesses during that time. The legal representative of the unit cannot help but know or think that the small amount of money is not worth paying attention to. I think there should be no distinction or distinction between late tax debt cases like this.
Who is responsible for late tax refunds?
In the context of the increasingly tightening tax industry, tax payment and tax debt settlement, many businesses believe that tax authorities also need to be responsible for late tax refunds. Recently, Vietnam Rubber Investment Limited Liability Company said that the business has been delayed in tax refund for about 2 years with an amount of nearly 70 billion VND. Even the amount of delayed tax refund is currently larger than the charter capital of the company and the enterprise is forced to temporarily suspend operations because it has no capital to turn around. The company representative said that despite many difficulties, the business cannot be dissolved because if dissolved, carrying out procedures to receive tax refunds in the future will become more and more difficult. The temporary detention of tens of billions of dong in value-added tax causes businesses to lack financial resources, unable to fulfill export orders and continuously lose customers.