Regulations on tax debt relief for enterprises that have fled or gone missing

Dong Nai Customs officers guide procedures for enterprises. Photo: N.H

Giving proposals

According to the National Assembly Delegation of Dong Nai province, some enterprises import machinery and equipment to create fixed assets and import raw materials and supplies to serve production projects in the form of outsourcing and production for export goods or export processing enterprises that are exempt from tax or not subject to import tax and VAT, after an operating period (even for more than 10 years), for many reasons, these enterprises have fled, disappeared or ceased operations. These enterprises, in the initial investment stage, often imported machinery and equipment to create fixed assets and enjoy incentives, including incentives of exemption from import tax and VAT. In particular, most imported machines and equipment have fully depreciated and have not much-remaining value in use. However, because the enterprise has fled, disappeared, or ceased operations, the customs agency cannot work with them to handle these goods.

The National Assembly delegation of Dong Nai province said that the new Law on Tax Administration only stipulates debt forgiveness for two cases: enterprises are announced bankrupt by the court or debts for which the tax administration agencies have applied tax coercive measures under Article 125 of the Law on Tax Administration and these taxes, late payment interest and fines have been over 10 years from the date of expiration of the tax payment time limit  but cannot be recovered.

The National Assembly delegation of Dong Nai province said that for case 2 of debt forgiveness, one of two conditions must be satisfied including the tax administration agency has applied coercive measures and the debts are over 10 years old. Meanwhile, now the enterprise has fled, disappeared, or ceased operations, and the Customs office cannot automatically calculate the debt amount on imported goods that have been imported for too long, due to problems with the taxable value (the goods have been fully depreciated and no longer valid) for tax assessment, and at the same time, the enterprise has fled or disappeared, so it is not possible to apply coercive measures under the Law on Tax Administration. Thus, even though imported goods have been imported for more than 10 years and are no longer valid for use, the Customs office still cannot perform debt forgiveness according to the Law on Tax Administration.

Although on February 27, 2023, the General Department of Customs issued Official Letter No. 1631/TXNK-DTQLT to guide the Dong Nai Customs Department, this guidance has not been implemented yet. Specifically, when the customs authority calculates tax to determine the payable tax amount according to Point B, Clause 10, Article 13 of Decree 126/2020/ND-CP and Point B, Clause 2, Article 17 of Circular 39/2015/TT-BTC as amended and supplemented in Clause 9, Article 1 of Circular 60/2019/TT-BTC of the Ministry of Finance, the tax debt amount in this case will be zero. Therefore, if there is a tax, it does not make sense and adds cumbersome procedures.

The National Assembly delegation of Dong Nai province proposed to add more specific provisions in Article 85 of the Law on Tax Administration for tax debt writing-off for imported goods for more than 10 years and subject to investment incentives but taxpayers have fled away, disappeared, ceased operations, and the Customs authorities searched according to the Law but unsuccessful.

In addition, the National Assembly delegation of Dong Nai province proposed to amend Article 17 of Circular 39/2015/TT-BTC and Clause 9, Article 1 of Circular 60/2019/TT-BTC guiding the taxable price for imported goods for more than 10 years, subject to investment incentives, but the importer has fled, gone missing or stops working, the taxable price for the imported goods will be 0% of the declared value at the time of import.

Answer questions and give detailed instructions

Answering and giving specific instructions about the above problems, the General Department of Customs said that in Clause 5, Article 25 of Decree 08/2015/ND-CP as amended and supplemented in Clause 12, Article 1 of Decree 59/2018/ND-CP stipulating: "For import-export goods that are not subject to import-export tax, excise tax, VAT, environmental protection tax or tax exemption, but then there is a change in non-taxable objects or purposes of tax exemption, the importer must open a new customs declaration”.

In addition, at point k, clause 4, Article 17 of Decree 126/2020/ND-CP stipulates that the customs authority shall impose tax in the following cases: " The imports are eligible for tax exemption or not subject to tax but repurposed or sold domestically by the taxpayer without declaring and paying tax on the new customs declaration as prescribed by law;

Also point d, clause 1, Article 21 of Circular 38/2015/TT-BTC, which was amended and supplemented in Clause 10, Article 1 of Circular 39/2018/TT-BTC, specifically guides the declaration and payment of taxes and fines.

Clause 3, Article 124 of the Law on Tax Administration No. 38/2019/QH14 stipulates: " “The taxpayer attempts to liquidate assets or abscond " belongs the case of tax enforcement; Article 125 of the Law on Tax Administration No. 38/2019/QH14 stipulates that distraint, auction of distrained assets in accordance with the law is a measure to enforce the implementation of decisions on tax administration.

For the proposal on adding the case of tax debt forgiveness for imported goods for more than 10 years and subject to investment incentives but taxpayers have fled, disappeared, or ceased operations, the Customs authorities have traced them but unsuccessful, according to the General Department of Customs, if taxpayers with tax debts commit acts of liquidate assets or abscond, the customs authority will take coercive measures in accordance with the provisions of the Law on Tax Administration (Article 124, Article 125) including measures of assets distrain and auction of distrained assets. The auction proceeds will be remitted to the state budget in accordance with the law on tax administration. Imported goods of investment projects that have been used for more than 10 years, although depreciated, will still have actual value upon the liquidation. Therefore, the proposal on adding the case of tax debt forgiveness for imported goods for more than 10 years and subject to investment incentives that taxpayers have fled, disappeared or stopped operating is not appropriate.

For the proposal on guiding the taxable price for goods imported for more than 10 years, subject to investment incentives, but the importer has fled away, gone missing, or stops working, the taxable price will be 0% of the declared value at the time of importation. According to the General Department of Customs, goods such as machinery and equipment are tax-free imports but cannot be used for tax-exempt purposes because the taxpayers have fled away, the taxpayer must pay tax amount under the initial customs declaration as described in point d, clause 2, Article 21 of Circular 38/2015/TT-BTC, as amended and supplemented in Clause 10, Article 1 of the Circular 39/2018/TT-BTC.

Therefore, the proposal of a taxable price of 0% for imported goods over 10 years, subject to investment incentives but the importer has fled way, gone missing, or stops working, is inappropriate.