Tax is a compulsory levy that citizens are obliged to pay into the State Budget. However, in the following cases, citizens will be exempted from tax debts, fines and late payment interest according to Vietnam’s regulation.
Article table of contents
According to Article 85 of the Law on Tax Administration 2019 of Vietnam, cases of cancellation of outstanding tax, late payment interest and fines include:
1. An enterprise or cooperative is declared bankrupt and, after making the payments in accordance with bankruptcy laws, has no other assets to pay tax, late payment interest or fines. (Clause 1 Article 85 of the Law on Tax Administration 2019 of Vietnam)
2. An individual is dead or declared dead or incapacitated by the court and does not have any assets, including inheritance, to pay the outstanding tax, late payment interest or fines. (Clause 2 Article 85 of the Law on Tax Administration 2019 of Vietnam)
3. The tax authority fails to collect the taxpayer’s outstanding tax, late payment interest in cases other than the 02 mentioned above cases within 10 years despite the implementation of enforcement measures which are revocation of the certificate of business registration, certificate of enterprise registration, cooperative registration certificate, investigation registration certificate, license for establishment and operation, practice certificates. (Clause 3 Article 85 of the Law on Tax Administration 2019 of Vietnam)
Note: An taxpayer that is an individual, individual businesses, householder, household business owner, sole proprietor or owner of a single-member limited liability company has had the outstanding tax, late payment interest and fines canceled before resuming the business operation or establishing a new business shall pay such debts must be paid to the State.
The Government shall provide for cooperation between tax authorities, business registration authorities and local authorities in making sure canceled tax, late payment interest and fines are paid to the state budget before the certificate of business registration or certificate of enterprise registration is issued. Specifically, the cooperation is detailed in Article 25 of Decree No. 126/2020/NĐ-CP of Vietnam’s Government.
4. In the force majeure events in which late payment interest is exempted according to Clause 8 Article 59 of this Law, the taxpayer’s business is still irrecoverable and thus tax, late payment interest and fines cannot be paid even after tax deferral is granted according to Point a Clause 1 Article 62 of this Law. (Clause 4 Article 85 of the Law on Tax Administration 2019 of Vietnam)
Force majeure events specified in Clause 27 Article 3 of the Law on Tax Administration 2019 of Vietnam include:
- Taxpayers suffering from physical damage caused by natural disasters, catastrophes, epidemics, fire, sudden accidents;
- Other force majeure situations as prescribed by the Government.
This case is detailed in Article 24 of Decree No. 126/2020/NĐ-CP of Vietnam’s Government.
In order to ensure the cancellation of outstanding tax, late payment interest and fines to be published, transparent and accurate manner to avoid loss of tax revenue of the State, competent agencies, organizations and individuals need to closely coordinate and strictly comply with the law to identify the right subjects. Organizations and individuals will be cleared of tax debts, fines and late payment when the tax administration agencies carry out the procedures and are approved by the competent authorities.
Thuy Tram
- Key word:
- Law on Tax Administration 2019
