Shall owners of household businesses with tax debt be subject to exit suspension in Vietnam from January 1, 2025?

Shall owners of household businesses with tax debt be subject to exit suspension in Vietnam from January 1, 2025?

Pursuant to Clause 9, Article 6 of the Law amending the Law on Securities, the Law on Accounting, the Law on Independent Audit, the Law on State Budget, the Law on Management and Use of Public Assets, the Law on Tax Administration, the Law on Personal Income Tax, the Law on National Reserves, the Law on Handling of Administrative Violations 2024 (effective from January 1, 2025) stipulating amendments and supplements to several articles of the Law on Tax Administration as follows:

Amendments and Supplements to Several Articles of the Law on Tax Administration

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9. Amend and supplement Clause 1, Article 66 as follows:

“1. Individuals conducting business, owners of household businesses, individuals who are legal representatives of enterprises, cooperatives, cooperative unions subject to enforcement of administrative decisions on tax management, individuals who are Vietnamese citizens exiting for permanent residence abroad, overseas Vietnamese before exiting Vietnam must fulfill their tax payment obligations; if unable to fulfill tax obligations with respect to the tax debt amount and duration as per the threshold stipulated by the Government of Vietnam, they will be temporarily suspended from exit according to the legal provisions on exit and entry. The tax authority will notify the taxpayer in advance about the application of the exit suspension measure.”

Simultaneously, according to current regulations in Clause 1, Article 66 of the Law on Tax Administration 2019 concerning cases of exit suspension when tax obligations have not been fulfilled.

Additionally, Clause 1, Article 21 of Decree 126/2020/ND-CP stipulates the fulfillment of tax obligations in cases of exit as follows:

Fulfillment of Tax Obligations in Cases of Exit

1. Cases of exit suspension include:

a) Individuals or individuals who are legal representatives of taxpayers as enterprises under enforcement of administrative decisions on tax management have not fulfilled their tax obligations.

b) Vietnamese citizens exiting for permanent settlement abroad have not fulfilled their tax obligations.

c) Overseas Vietnamese citizens before exiting have not fulfilled their tax obligations.

d) Foreigners before exiting Vietnam have not fulfilled their tax obligations.

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Thus, the Law amending the Law on Securities, the Law on Accounting, the Law on Independent Audit, the Law on State Budget, the Law on Management and Use of Public Assets, the Law on Tax Administration, the Law on Personal Income Tax, the Law on National Reserves, the Law on Handling of Administrative Violations 2024 officially includes the object of owners of household businesses to be temporarily suspended from exit if they have not fulfilled tax obligations, effective from January 1, 2025.

Shall owners of household businesses with tax debt be subject to exit suspension in Vietnam from January 1, 2025? (Image from the Internet)

Who has the authority to decide on exit suspension for owners of household businesses with tax debt in Vietnam?

Pursuant to Clause 2, Article 21 of Decree 126/2020/ND-CP regarding the authority to decide on exit suspension, extension of exit suspension, and cancellation of exit suspension as follows:

Fulfillment of Tax Obligations in Cases of Exit

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2. Authority to decide on exit suspension, extension of exit suspension, cancellation of exit suspension

a) The head of the tax authority directly managing the taxpayer has the authority to base on the actual situation and tax management work on the locality to decide on selecting cases of exit suspension for those subjects stipulated in Clause 1 of this Article.

b) The person with the authority to decide on exit suspension also has the authority to decide on the extension and cancellation of exit suspension.

c) The person with the authority to decide on exit suspension is responsible for canceling the exit suspension no later than 24 working hours from when the taxpayer fulfills their tax obligations.

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Therefore, the authority to decide on exit suspension for owners of household businesses with tax debt will belong to the head of the tax authority directly managing the taxpayer.

Moreover, from when the taxpayer fulfills their tax obligations, the head of the tax authority directly managing the taxpayer is responsible for canceling the exit suspension no later than 24 working hours.

Vietnam: When shall the tax authority suspend these persons from exit after receiving suspension notice?

According to Point b, Clause 3, Article 21 of Decree 126/2020/ND-CP concerning the procedure for implementing exit suspension as follows:

Fulfillment of Tax Obligations in Cases of Exit

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3. Procedure and process for implementing exit suspension, extension of exit suspension, cancellation of exit suspension

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b) On the same day of receiving the exit suspension document from the tax authority, the immigration management agency is responsible for implementing the exit suspension according to regulations and posting it on the electronic portal of the immigration management agency.

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Therefore, after receiving the exit suspension document, the tax authority is responsible for implementing the exit suspension according to regulations and posting it on the electronic portal of the immigration management agency on the same day the document is received.