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Finance ministry proposed to clear over US$1 billion of tax arrears
Minh Tam 07:04, 2018/03/04
The Ministry of Finance (MoF) recently proposed the National Assembly to clear over VND26.5 trillion (US$1.16 billion) of tax arrears, which accounted for nearly a third of total tax debt, late payments and fines managed by the tax agencies.
Specifically, MoF recommended removing tax arrears for enterprises providing goods or services which are paid with state budget or haven't paid yet. The amount of the tax arrears is estimated at more than VND542 billion ($23.87 million).
 
Total tax arrears amounted to over VND73 trillion (US$3.2 billion) by the end of last year
Total tax arrears amounted to over VND73 trillion (US$3.2 billion) by the end of last year
In addition, taxpayers who encounter natural disasters, fires, unexpected accidents or unforeseeable circumstances before 2018 are also under consideration for tax clearance. Such exemption only applies to late payments not exceeding the paid value and the suffered damage, which the MoF estimated to be around VND1.7 trillion ($74.89 million) in total, as of the end of 2017.
Another proposal is to clear debts of those who have terminated their production and business activities for more than one year, and the business registration certificates have been revoked. The estimated uncollected tax amount of this particular group is now more than VND24.3 trillion ($1.08 billion).
According to the MoF, by the end of 2017, total tax arrears, late payments and fines managed by central and local tax authorities had amounted to more than VND73 trillion (US$3.2 billion).
In particular, tax debt exceeding the 90 days payment window accounted for more than VND26 trillion ($1.15 billion); overdue fines were more than VND15.6 trillion ($694 million); while irrecoverable tax from deceased or incapacitated people accounted for over VND31.4 trillion ($1.39 billion), up to 43 per cent of total tax debt and 3.2 per cent of total domestic revenue in 2017.
Meanwhile, the total amount of tax arrears, late payments and fines under the management of the customs sector in 2017 was more than VND5.4 trillion ($240 million) - 70 per cent of which is deemed irrecoverable - having increased by 23.5 per cent from the end of 2016.
The combined amounts of tax loss under tax and customs agencies in 2017 amounted to almost half of the national tax debts.
Unrecoverable debt levels have been high in recent years, prompting tax authorities to implement drastic measures to speed up enforcement and recovery of tax debts.
In 2017, the entire tax branch scrambled to collect VND44.7 trillion ($1.9 billion) in debt, equal to 89.9 percent of outstanding tax debt from 2016.
In order to reach the 2018 tax debts collection goal, the General Department of Taxation (GDT) has recently charged provincial tax departments with the arduous task of resolving pending tax amounts and outstanding debts.
Local tax departments are asked by the GDT to reduce their current tax debts to less than 5 per cent of the State budget in 2018, as well as retrieving at least 97 per cent of overdue tax payments since 2017.
According to the GDT, the tax branch will implement changes in tax debts management in order to improve State budget’s revenues in 2018, by associating tax recovery with administrative reforms for taxpayers across all economic sectors.
The application of information technology in all aspects of debt management and tax debt enforcement will be a priority, as the GDT and local tax offices closely coordinate with state treasuries, commercial banks, credit institutions and investment planning agencies using online platforms.
Besides, the GDT will also review debts that are possibly no longer subjected to collection, thereby proposing appropriate remedial measures and reducing tax arrears.
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