Quang Nam finds it difficult to reduce tax debt to below 5%

Accelerating the disbursement of public investment funds is also one of the measures that helps tax authorities recover outstanding debts from construction companies.

The increasing debt remains difficult to recover.

The Quang Nam Tax Department announced that in the first six months of 2024, it recovered 3,071 billion VND in tax arrears (including 581 billion VND from the previous year and 2,490 billion VND in newly incurred arrears) through measures such as deducting money from bank accounts, declaring invoices invalid, revoking business registration certificates, and collecting money and assets through third parties. However, the amount of outstanding tax arrears remains high.

The ratio of total debt to total budget revenue increased from 11.7% as of December 31, 2023 to 13.48% as of June 30, 2024. Total debt as of June 30, 2024 exceeded VND 2,742 billion, an increase of VND 233 billion (corresponding to a 9.3% increase compared to December 31, 2023).

A list of outstanding debts has been submitted to the Provincial People's Committee and published in the media. The majority of this list consists of projects owing land use fees and land lease fees, including 21 once-high-profile projects, spanning from coastal and lowland areas to mountainous regions. The debts of these projects range from less than 10 billion VND to over 200 billion VND...

In addition to owing land use fees and land lease fees, Quang Nam Ethanol Production Joint Stock Company, or Duong Dong Quang Nam, has a large tax debt that has remained unrecovered for many years.

According to Mr. Nguyen Van Tiep, Director of the Tax Department, the real estate market is frozen. Many projects are being auctioned but there are no buyers. Some businesses have large tax debts, are subject to back taxes and penalties, and when enforcement measures are implemented, their bank accounts do not have enough money for enforcement, their assets have been mortgaged, or the value of their assets is not significant enough to pay the money into the state budget.

Some small and micro-enterprises that are losing money, inefficient, and in arrears on taxes have ceased operations and abandoned their business addresses. This prolonged debt will lead to late payment penalties, which is one of the reasons for the increase in tax arrears.

Collecting tax arrears from individuals and household businesses is also difficult. Mr. Nguyen Van Nguyen, Head of the Debt Management and Tax Enforcement Department, said that this group lacks specific and clear sanctions, and is not as tightly bound by comprehensive legal regulations as debt management for businesses.

Promoting increased production and business activities of enterprises, and strong growth in budget contributions, will indirectly bring the tax arrears rate down to below 5% of total budget revenue.

The total debt of individuals and small business households (equal to 12% of the total corporate debt) is 14 times greater than the number of businesses owing taxes, making debt management and collection a time-consuming and laborious process.

Debt collection for non -agricultural land use is difficult because landowners are scattered across locations, often without a fixed address, making it hard to contact them, send notices, or reminders. Furthermore, when individual business owners change locations, there is no information available to follow up on debt collection.

It's not easy to reduce tax debt to 5%.

Tax authorities have regularly recovered outstanding tax debts to compensate for budget deficits through tax management measures such as: urging and enforcing tax debt collection, publicly disclosing information about businesses that are delinquent in paying taxes through mass media, ensuring that no business with outstanding tax debts is overlooked through 100% notification of tax arrears and late payments…

These methods have been implemented by the tax authorities since the beginning of the year and continuously, but the results have not been promising. According to many analyses, once businesses reach the point where they are subject to tax enforcement and cannot pay, many are genuinely facing difficulties, making recovery difficult.

Recovering outstanding land use fees from real estate projects is not easy, making it difficult for Quang Nam to bring the tax debt ratio down to below 5% by the end of this year.

Reducing tax arrears to below 5% of total state budget revenue has become a key task for tax authorities at all levels. This ratio is one of the indicators set by the General Department of Taxation to serve as a basis for evaluating the quality of tax management by tax authorities. If the ratio of arrears is equal to or less than 5% of the total taxes paid to the state budget, it means the amount of tax arrears is acceptable.

According to Mr. Luong Dinh Duong, Deputy Director of the Tax Department, broadly speaking, a high debt ratio not only reflects the quality of tax management but also indicates that state budget revenue has not been mobilized in a timely manner (due to taxpayers misappropriating tax money instead of borrowing, which would be more difficult and costly).

Prolonged tax debt can easily lead to overdue payments. Taxpayers may become unable to repay their debts, have their licenses revoked, and the state budget may lose this tax revenue.

"The high level of tax debt also indicates that taxpayers are facing financial difficulties and are being affected by tax debt enforcement measures that impact their production and business activities. This means that future revenue generation is affected, leading to a negative impact on the local economy and budget," Mr. Duong said.

Vice Chairman of the Provincial People's Committee Tran Nam Hung requested that departments, localities, and tax agencies promptly resolve obstacles and difficulties, strengthen the management and recovery of outstanding budget debts, enforce tax debt collection, publicly disclose tax debt information, limit the 발생 of new debts, and handle outstanding debts that are no longer recoverable.

Conduct a review and analysis of tax data, propose the establishment of an inter-agency task force, regularly inspect and urge the recovery of outstanding tax debts for each investment project, resolve obstacles for investors to fulfill their financial obligations regarding land, and propose measures to definitively address these issues.

The current tax debt ratio accounts for 13.48% of total budget revenue. Bringing this ratio down to below 5% by the end of this year will not be easy. Mr. Luong Dinh Duong analyzed that the current debt structure of Quang Nam largely consists of land use fee debt. Land use fees, in turn, depend on the real estate market.

However, difficulties will not end until the end of the year. They may even worsen as related laws come into effect on August 1, 2024. Furthermore, resolving local issues will not be quick. Collecting outstanding fees will be very difficult because investors are facing tax enforcement, late payment penalties, inability to obtain loans, and inability to extend project deadlines.

Source: https://baoquangnam.vn/quang-nam-kho-keo-no-thue-ve-duoi-5-3140568.html