05 Cases of cancellation of outstanding tax, late payment interest and fines in Vietnam

05 Cases of cancellation of outstanding tax, late payment interest and fines in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. 05 Cases of cancellation of outstanding tax, late payment interest and fines in Vietnam

According to Article 85 of the Law on Tax Administration 2019, 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.

(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.

(3) The tax authority fails to collect the taxpayer’s outstanding tax, late payment interest in cases other than those specified in (1) and (2) of this Article within 10 years despite the implementation of enforcement measures specified in Point g Clause 1 Article 125 of the Law on Tax Administration 2019.

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 cancelled before resuming the business operation or establishing a new business shall pay such debts must be paid to the State.

(4)  In the force majeure events in which late payment interest is exempted according to Clause 8 Article 59 of the Law on Tax Administration 2019, 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 the Law on Tax Administration 2019.

(5) The Government shall provide for cooperation between tax authorities, business registration authorities and local authorities in making sure cancelled tax, late payment interest and fines are paid to state budget in accordance with (3) before the certificate of business registration or certificate of enterprise registration is issued; elaborate (4).

2. Application for cancellation of outstanding tax, late payment interest and fines in Vietnam

Application for cancellation of outstanding tax, late payment interest and fines according to Clauses 1 and 2, Article 86 of the Law on Tax Administration 2019 are as follows:

- The supervisory tax authorities of taxpayers eligible for cancellation of outstanding tax, late payment interest and fines (hereinafter referred to as “tax debt cancellation”) shall prepare and submit applications for debt cancellation to competent authorities or competent persons.

- An application for tax debt cancellation consists of:

+ The written request for tax debt cancellation prepared by the supervisory tax authority;

+ The decision to declare bankruptcy in case the enterprise or cooperative is declared bankrupt;

+ Documents relevant to the request for tax debt cancellation.

3. Power to decide tax debt cancellation in Vietnam

According to Article 87 of the Law on Tax Administration 2019, the power to decide tax debt cancellation is as follows:

- Presidents of the People’s Committees of provinces shall decide tax debt cancellation in the following cases:

+ The cases specified in (1) and (2) of Section 1;

+ The households, household businesses, individual businesses and individuals in the cases specified in (3) of Section 1;

+ The enterprises and cooperatives in the cases specified in (3) of Section 1 whose outstanding tax, late payment interest and fines is below VND 5.000.000.000.

- The Director of the General Department of Taxation, the Director of the General Department of Customs shall decide cancellation of debts from VND 5.000.000.000 to under VND 10.000.000.000 owed by enterprises and cooperatives in the cases specified in (3) of Section 1;

- The Minister of Finance shall decide cancellation of debts from VND 10.000.000.000 to under VND 15.000.000.000 owed by enterprises and cooperatives in the cases specified in (3) of Section 1;

- The Prime Minister shall decide cancellation of debts from VND 15.000.000.000 and above owed by enterprises and cooperatives in the cases specified in (3) of Section 1;

- Presidents of the People’s Committees of provinces shall submit reports on tax debt cancellation to the People’s Committees of the same provinces during the first meeting of the year.

The Minister of Finance shall submit consolidated reports on tax debt cancellation to the Government, which will report to the National Assembly when preparing the annual state budget statement.

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