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It needs to have a “matrix” to classify tax debts

Summary

Currently, Tax debt is a “concern” for Tax sector in the context that the debt is still quite high, especially bad debts; Economy faces difficulties and a series of enterprises have huge debts, affecting the task of tax collection for the tax sector. The Customs Newspaper reporter has interviewed Prof. Dr. Le Xuan Truong- Head of Faculty of Tax and Custom, Academy of Finance about this issue.

Updated on : 16-09-2018

Over the past time, the Tax sector always considers the tax debt management as a key task and continuously takes many drastic measures for tax debt collection. However, in order to obtain the target of reducing tax debt to less than 5% of the state budget structure, it is still a difficult task. In your opinion, what is the cause for this situation?

The difficult economic conditions, and high interest rates have lead to a number of businesses suffering from difficulties in finance and delaying paying taxes. A number of enterprises have huge tax debts due to investment in construction of state-owned projects which require large capital. Meanwhile, the disbursements for these enterprises is slow, leading to the late payments.

Besides, a number of businesses, economic organizations and individuals have not complied with the law and broken the law for their own interests.

Also, a number of state-owned enterprises have operated ineffectively and suffered from prolonged losses. The ineffectiveness of SOEs is one of objective reasons for the high tax debt rate of this sector and accounts for a large proportion of total tax debt over the past time.

It is said that currently, besides enterprises having tax debts due to their actual difficulties, but there are many enterprises that are delaying in tax payment due to many reasons such as the fine for late payment is lower than interest rate of banks; the Tax sector does not have enough strict sanctions to enforce enterprises to implement tax payment… Is it correct or not, Sir?

It is partly correct. In fact, the rate of late payment is lower than the average lending rate from the banks. Thus, some enterprises that are facing difficulties in capital, have accepted to implement late payment to use capital with the lower cost than bank loans, and much lower than loans from individuals or other organizations.

If saying that the sanction is not strict enough is not completely correct. The law on Tax Administration provides for strict measures to enforce tax debts and if these measures are implemented well, they are strict enough. Are the property distraint and auction, announcement of invalid invoices and recovery of tax code and business license or business registration certificate not strict enough? The problem is that the persistence in implementing tax enforcement measures and the coordination with the relevant state agencies to enforce tax debt in some localities is not effective.

In addition, it is noted that besides taxpayers who are facing difficulties in capital, so that they appropriate tax amount, a large part of tax debts belong to enterprises which vacate their business registration address, and are “bogus” enterprises. They deliberately establish their companies for tax fraud, buying and selling invoices. They have revenue but deliberately owe taxes and then vacate for tax evasion. This debt amount is almost impossible to be recovered.

Thus, in order to effectively manage tax debts, what does the tax sector have to change, Sir?

In order to effectively manage tax debts, the Tax sector have to implement many key tasks as follows:

The Tax sector needs to study to amend the law on Tax administration to be close to reality. Accordingly, increasing the rate of late payment and adjusting conditions and the implementation of measures for tax debt enforcement.

The “matrix” for classification of tax debt with many different criteria needs to be established, not only recoverable tax debt, bad debt and debt waiting for handling as per current regulations. Tax debts need to be classified under other criteria such as: Debt collection ability, characteristics of tax debtors, enterprise model, taxes, debt ages, and causes for tax debts… The diversification of debt classification criteria in this process helps officers in charge of managing tax debt to have a multi-dimensional view on the causes of debts, characteristics of debts, characteristics of tax debtors. Thereby, being able to take the most appropriate measures to urge and handle tax debts or propose the higher level tax agencies to handle tax debts.

General Department of Taxation "urge" to recover debt VCN- Ensuring the prompt receipt of the new arising tax arrears and reduce the amount of tax ...

Currently, the set of criteria for evaluating the efficiency of tax debt enforcement has not been issued. Therefore, there is no basis for evaluating the quantity and efficiency of working performance of each tax debt enforcement officer, unit in charge of managing and enforcing tax debts, as well as the implementation of tax debt enforcement of each tax authority. Criteria for evaluating the efficiency of tax debt enforcement of each tax authority are the basis for studying and proposing measures to improve tax debt enforcement activities of each tax authority.

Especially, it is necessary to intensify the inspection and coordination with relevant State agencies in implementing tax enforcement, because the tax sector cannot implement alone. Thus, the tax debt enforcement will be really effective.

Thank you Sir!

Source: Customs News