What are procedures for tax enforcement by deducting money from the taxpayer’s salary or income in Vietnam?

What are measures for enforcing tax debt collection according to the latest tax debt collection enforcement procedures in Vietnam?

Based on Section 2 Part B in Decision 1795/QD-TCT of 2022 regarding Tax Debt Collection Enforcement Procedures, the General Department of Taxation has issued measures for enforcing tax debt collection, including:

- Deduction of money from accounts, freezing bank accounts of taxpayers opened at the State Treasury, commercial banks, other credit institutions.

- Deduction of a portion of salary or income.

- Proposing customs to stop customs procedures for exported and imported goods.

- Suspension of invoice usage.

- Inventory and auction of seized assets.

- Collection of money and other properties of taxpayers held by other organizations and individuals.

- Revocation of business registration certificates.

What are procedures for tax enforcement by deducting money from the taxpayer’s salary or income in Vietnam?

According to Subsection 2 Section 2 Part B of the Tax Debt Collection Enforcement Procedures attached to Decision 1795/QD-TCT, the enforcement by deducting a portion of salary or income is carried out as follows:

(1). Prepare a List of Taxpayers (taxpayer) Subject to Enforcement

- Basis for preparing the list of taxpayer subject to enforcement:

taxpayer are individuals who have outstanding tax debts and receive salaries, wages, income from agencies, organizations where the individual is employed or has signed labor contracts for six months or more, or agencies, organizations paying retirement, disability allowances, falling under one of the following cases:

+ Individuals not having accounts at the State Treasury, commercial banks, other credit institutions, or the tax agency has sent a verification document regarding the account information but the taxpayer subject to enforcement, State Treasury, commercial banks, other credit institutions do not provide or provide insufficient information.

+ Individuals with accounts at State Treasury, commercial banks, other credit institutions, the tax agency has issued enforcement decisions to deduct money from the account but by the date of list preparation, the tax debt subject to enforcement has not been fully paid into the state budget.

+ Individuals are subject to one of the following enforcement measures by the tax agency:

- Suspension of invoice usage;

- Inventory and auction of seized assets;

- Collection of money and properties held by other agencies, organizations, individuals;

- Or the taxpayer is in the period when the tax agency has written to request the business registration agency to revoke the business registration certificate but the business registration agency has not yet issued the revocation decision.

+ Individuals with outstanding tax debts, showing behavior of dispersing assets or fleeing from debts.

- Preparation of the list:

Monthly, officials review the database of the tax agency and documents provided by related organizations, individuals to update into the list of taxpayer subject to enforcement by the deduction of a portion of salary or income (form No. 02-1/DS-TL attached to these procedures).

Based on the list of taxpayer subject to enforcement (form No. 02-1/DS-TL), the tax debt enforcement department can cooperate with the inspection department, the revenue management department, and other related departments to review and accurately determine the tax debt of taxpayer.

(2) Collecting and Verifying Information of taxpayer Subject to Enforcement

- Information to be collected and verified:

+ Name, tax code, address of the paying agency, organization;

+ Name, tax code, salary, income of the individual subject to enforcement.

- Methods of collecting and verifying information:

+ Officials exploit the tax agency’s database and update it into the list of taxpayer subject to enforcement (form No. 02-1/DS-TL).

+ For cases with incomplete information:

- Request related departments of tax declaration and accounting or inspection departments to provide (if necessary).

- Send a written request to taxpayer subject to enforcement, paying organization to provide information according to form No. 02/XM-TL attached to this procedure.

Upon receiving information from organizations, individuals, officials must update the information into the list of taxpayer subject to enforcement (form No. 02-1/DS-TL) on the same working day.

(3) Preparation of the List of taxpayer Subject to Enforcement

- Based on the list of taxpayer subject to enforcement (form 02-1/DS-TL) and the collected, verified information, officials prepare the list of taxpayer to be enforced by deducting a portion of salary or income (form No. 02-2/DS-TL attached to these procedures).

- If, after the deadline for providing information, the paying organization does not provide sufficient information, officials will apply other suitable enforcement measures.- If the agency managing the salary, income of the enforced taxpayer notifies that the labor contract has ended, officials prepare a proposal and a dossier to present to the unit leadership to switch to other suitable enforcement measures as prescribed.

(4) Issuance of Enforcement Decisions

- Based on the list of taxpayer subject to enforcement (form No. 02-2/DS-TL), officials:

+ Draft the enforcement decisions (form No. 02/CC), accompanied by:

- Proposal for applying enforcement measures, clearly stating the process of urging and applying enforcement measures;

- Notice of tax debt (form No. 01/TTN) at the nearest time or other administrative tax decisions;

- Verification documentation (if any);

- Information provided by the paying organization, enforced individual (if any);

- Documentation proving the taxpayer's dispersal of assets or absconding (if any);

- Issued enforcement decisions (if any);

- Other related documents (if any).

+ Report to the department/section leader for the head of the tax agency to sign, issue enforcement decisions.

- Upon receiving the draft enforcement decisions with complete documentation, the head of the tax agency signs and issues enforcement decisions at the specified time:

+ Immediately after the expiration of the enforcement decision deducting money from accounts or freezing the account of the enforced individual.

+ Immediately after receiving information for applying this enforcement measure or applying it simultaneously.

(5) Sending and Publicizing the Enforcement Decision

- The enforcement decision is sent to the enforced individual; the salary or income-paying organization; related organizations on the issuance day.

The sending method follows the provisions at point c clause 3 Article 32 of Decree 126/2020/ND-CP.

- The tax agency must publish enforced taxpayer information on the tax sector's website:+ If the enforcement decisions is signed electronically, the tax management system automatically publicizes the information according to form No. 01/CKCC attached to these procedures.+ If not signed electronically, officials enter the enforcement decisions information into the tax management system for publication.

(6) Enforcement Organization

While the enforcement decisions is effective, officials monitor its implementation. Specifically:

- On the same working day of receiving information that the enforced taxpayer or paying organization has fully paid the tax debt stated in enforcement decisions; or the enforced debt has different adjustments like installments, tax extension, or penalty forgiveness:Officials prepare a proposal with the entire dossier for the department/section leader to present to the head of the tax agency to issue a decision to terminate the effect of the enforcement decisions (form No. 08/CC), which is sent to taxpayer and the paying organization to cease enforcement.

- If the enforcement decision becomes ineffective without fully collecting the enforced tax, officials will apply other suitable enforcement measures.

What are Procedures for tax enforcement by deducting money from the taxpayer’s salary or income (Image from the Internet)

What are Principles to Ensure in Enforcing Tax Debt Collection Measures in Vietnam?

Based on Section 1 Part B of the Tax Debt Collection Enforcement Procedures attached to Decision 1795/QD-TCT of 2022, the principles to ensure in enforcing tax debt collection measures include:

- For measures of deducting money from accounts or freezing accounts of taxpayers at State Treasury, commercial banks, credit institutions; Deducting a portion of salary or income; proposing the customs agency to enforce by stopping customs procedures for exported and imported goods, the application of these measures is as follows:

+ Deducting money from accounts or freezing accounts of taxpayers applies to those with accounts at State Treasury, commercial banks, other credit institutions.If the taxpayer is an enterprise or organization, but the tax agency's database lacks account information or inaccurate account information, the tax agency must verify account information to enforce.

+ Deducting a portion of salary or income only applies to individuals receiving salary, wages, or income from:- Agencies, organizations where the individual is employed;- Agencies, organizations where the individual has signed labor contracts for six months or more;- Agencies, organizations paying retirement, disability allowances.

+ Stopping customs procedures for exported and imported goods applies only if the tax agency has sufficient information and documents to determine the taxpayer has export or import activities or has engaged in such activities at least once in 12 months.

+ The tax agency applies enforcement measures accordingly and effectively based on the taxpayer’s actual situation.

- Measures d, đ, e, g in clause 1 Article 125 of Tax Management Law 2019 must follow the sequential order.

- enforcement decisions for each taxpayer must be continuously issued in succession.

For measures d, đ, e in clause 1 Article 125 of Tax Management Law 2019, if there’s more effective measure or information, the tax management agency applies it simultaneously.

- From the date the tax agency proposes revoking the business registration certificate until a decision or a non-revocation notice, the tax agency can apply suitable enforcement measures for effective tax management.

- If a taxpayer disperses assets or flees, the enforced amount corresponds to the total tax debt.