What is the tax enforcement in Vietnam?

What is the tax enforcement in Vietnam?

According to Clause 13, Article 3 of the Law on Tax Administration 2019, tax enforcement is the application of measures as prescribed by the Law on Tax Administration 2019 and other relevant legal provisions to compel taxpayers to fulfill their tax obligations.

What is the tax enforcement in Vietnam? (Image from Internet)

When is the tax enforcement applied in Vietnam?

According to Article 124 of the Law on Tax Administration 2019, tax enforcement applies in the following cases:

- The taxpayer has overdue tax debt exceeding 90 days from the due date.

- The taxpayer has overdue tax debt upon the expiration of a tax payment extension.

- The taxpayer has overdue tax debt and engages in asset dispersal or absconds.

- The taxpayer does not comply with the administrative penalty decision on tax management within the time stated in the decision, except for cases of suspension or postponement of penalty execution.

- Tax enforcement measures have not been implemented for taxpayers under the tax authority’s debt management for the allowed period; no late payment interest is assessed according to the Law on Tax Administration 2019; tax debts can be paid gradually within no more than 12 months from the start of the enforcement period.

Gradual repayment of tax debts is considered by the tax authority head based on the taxpayer’s proposal and must be guaranteed by a credit institution. The Minister of Finance regulates the number of installments, documents, and procedures for gradual repayment.

- No enforcement is applied to taxpayers with overdue customs duties and fees for goods and vehicles in transit.

- Individuals as legal representatives of the taxpayer must fulfill the tax obligations of businesses under administrative enforcement of tax management before departure and may be temporarily banned from exiting according to the law on entry and exit.

How many tax enforcement measures are there? How are tax enforcement measures implemented?

According to Article 125 of the Law on Tax Administration 2019, there are seven enforcement measures for administrative decisions on tax management:

1. Direct withdrawal from the taxpayer's account at the State Treasury, commercial banks, other credit institutions; account freezing.
2. Wage or income garnishment.
3. Suspension of customs procedures for exported or imported goods.
4. Suspension of invoice usage.
5. Asset seizure and auction of seized assets according to legal regulations.
6. Collection of money and other assets of the taxpayer held by other agencies, organizations, or individuals.
7. Revocation of business registration certificates, business licenses, cooperative registration certificates, investment certificates, establishment and operation licenses, practice licenses.

The implementation of enforcement measures is as follows:

- For measures (1), (2), (3), the tax authority applies appropriate measures based on the actual situation.- For measures (4), (5), (6), and (7), if the previous measures are not applicable, the tax authority moves to the subsequent measures.- If some enforcement decisions remain ineffective within their validity period, and if the tax authority has sufficient information and conditions, the previous or the next applicable measures are enacted as per Clause 1, Article 125 of the Law on Tax Administration 2019.

Can a person under administrative tax enforcement exit Vietnam?

According to Clause 1, Article 66 of the Law on Tax Administration 2019 the regulation is as follows:

Fulfillment of tax obligations for exit cases

1. Taxpayers under administrative tax enforcement, Vietnamese emigrating for permanent residence abroad, overseas Vietnamese, and foreigners before exiting Vietnam must fulfill tax obligations; failure to do so will result in temporary exit prohibition as per legal provisions on entry and exit.

2. The tax authority must inform the entry and exit management agency about individuals, taxpayers specified in Clause 1 of this Article.

3. The Government of Vietnam stipulates detailed guidelines for this Article.

Thus, individuals under administrative enforcement of tax management who have not fulfilled their tax obligations will be temporarily banned from leaving the country as per entry and exit laws.