Procedures for cancellation of tax debts, late payment interest, penalties in Vietnam (according to the Law on Tax Administration 2019)

Procedures for cancellation of tax debts, late payment interest, penalties in Vietnam (according to the Law on Tax Administration 2019) (Illustration)

1. Cases eligible for cancellation of tax debts, late payment interest, penalties in Vietnam

Tax Administration Law 2019 stipulates 04 cases eligible for cancellation of tax debts, late payment interest, penalties:

- Case 1: Enterprises and cooperatives declared bankrupt that have made payments according to the bankruptcy law, but have no remaining assets to pay tax debts, late payment, or penalties.- Case 2: Individuals who are deceased or declared dead by a court, lacking legal capacity with no assets, including inherited assets to pay outstanding tax debts, late payment, or penalties.- Case 3: Tax debts, late payment, and penalties of other taxpayers where tax authorities have enforced measures and the debts have exceeded 10 years from the due date but are irrecoverable.- Case 4: Tax debts, late payment, and penalties for cases affected by natural disasters, catastrophes, or widespread epidemics that have been considered for exemption from late payment and have been granted tax extensions but still incur damage and cannot resume production or business, and cannot pay tax debts, late payment, or penalties.

The detailed cases eligible for cancellation of tax debts, late payment interest can be found HERE.

2. Authority to decide on cancellation of tax debts, late payment interest for organizations and individuals in Vietnam:

The authority to decide on the subjects eligible for cancellation of tax debts, late payment interest according to Article 85 of the Tax Administration Law 2019 is specified as follows:

- Chairman of the provincial People's Committee decides on debt relief for entities in Cases 1, 2, and 3 for enterprises and cooperatives with debts of less than 5,000,000,000 VND.

- Director General of the General Department of Taxation or Director General of the General Department of Customs decides on debt relief for enterprises and cooperatives in Case 3 with debts of from 5,000,000,000 VND to less than 10,000,000,000 VND.

- Minister of Finance decides on debt relief for enterprises and cooperatives in Case 3 with debts of from 10,000,000,000 VND to less than 15,000,000,000 VND.

- Prime Minister of the Government of Vietnam decides on debt relief for enterprises and cooperatives in Case 3 with debts of 15,000,000,000 VND or more.

Note: The Chairman of the provincial People's Committee reports the results of tax debt relief, late payment, and penalties to the Provincial People's Council at the beginning of the year. The Minister of Finance consolidates the situation of tax debt relief, late payment, and penalties to report to the Government of Vietnam which in turn reports to the National Assembly when settling the state budget.

3. Procedures for cancellation of tax debts, late payment interest for organizations and individuals in Vietnam:

Step 1: Tax authorities compile and submit the dossier for cancellation of tax debts, late payment interest

According to Article 86 of the Tax Administration Law 2019, taxpayers eligible for cancellation of tax debts, late payment interest must have the dossier compiled and submitted by the tax authorities directly managing the taxpayer to the competent authority.

The dossier for cancellation of tax debts, late payment interest includes:

- A written request for cancellation of tax debts, late payment interest by the tax authorities directly managing the taxpayer;- A bankruptcy declaration decision for enterprises and cooperatives declared bankrupt;- Related documents regarding the request for cancellation of tax debts, late payment interest.

Step 2: The competent authority in section 2 receives the dossier and notifies the tax authority that submitted the dossier

The competent authority receiving the dossier for cancellation of tax debts, late payment interest must notify the submitting authority to complete the dossier if it is incomplete within 10 working days from the date of receipt.

Step 3: The competent authority issues a decision on cancellation of tax debts, late payment interest

The competent authority must issue a decision on cancellation of tax debts, late payment interest or notify that the case is not eligible for tax debt relief, late payment, or penalties to the submitting authority within 60 days from the date of receiving the complete dossier.

Thus, organizations and individuals eligible for cancellation of tax debts, late payment interest will have their dossiers submitted by the tax authorities directly managing the taxpayer to the competent authority for a decision allowing cancellation of tax debts, late payment interest.

Thuy Tram

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