What does the General Department of Taxation say?

Recently, the unexpected travel bans imposed on leaders of many large businesses in Vietnam due to tax arrears have sparked debate about the role of travel bans in tax debt recovery. In some exceptional cases, even business leaders with very small tax debts, ranging from a few hundred thousand to a few million dong, have been prohibited from leaving the country.

Some argue that strong measures are necessary for businesses that deliberately delay or refuse to pay taxes. However, many businesses are upset that their executives are being denied exit from the country despite owing only a small amount of taxes.

Mr. Dang Ngoc Minh, Deputy Director General of the General Department of Taxation, answers questions at the press conference. (Photo: DM/General Department of Taxation)

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Regarding this issue, Mr. Dang Ngoc Minh, Deputy Director General of the General Department of Taxation, affirmed that the law does not define what constitutes a small or large tax debt.

Regulations on temporarily suspending exit from the country for individuals with outstanding tax debts have been in place for many years. Most recently, the 2020 Tax Administration Law and the Law on Exit and Entry of Vietnamese Citizens (effective from July 2020) also include provisions on temporarily suspending exit from the country for individuals with tax debts.

Mr. Minh stated that, according to current law, taxpayers with outstanding tax debts exceeding 90 days will be subject to enforcement measures, regardless of the size of the debt.

Furthermore, according to regulations, the application of a temporary travel ban means that the taxpayer (including individuals and businesses) is subject to tax enforcement. For legal entities subject to tax enforcement, if the legal entity has not yet fulfilled its tax obligations, the legal representative will be subject to a temporary travel ban.

Commenting on opinions that the measure of temporarily suspending exit from the country seems too harsh on business leaders, given that many directors are merely employees, the head of the General Department of Taxation said that these opinions were taken into account during the drafting of the Law on Tax Administration.

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"The law already stipulates this. If an individual is responsible for representing and managing a legal entity, and that entity owes taxes, that individual must be temporarily suspended from leaving the country until the legal entity fulfills its tax obligations," Mr. Minh said.

Temporary travel bans are one of the measures used to collect tax debts, but it's only a minor measure and not the strongest one. The measure most frequently applied by tax authorities is suspending the use of invoices. This measure is much more powerful. Many large businesses and systems are immediately affected when their invoice usage is suspended. It's a tool the state provides to the tax sector to protect the interests of the national budget.

Source: https://www.congluan.vn/tong-cuc-thue-bat-ke-no-thue-lon-hay-nho-deu-bi-tam-hoan-xuat-canh-post314209.html