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Is the State yielding to businesses and accepting a loss of VND15 trillion?

Date: 8/19/2016 10:27:19 AM

The Ministry of Finance (MOF) is collecting opinions on the draft National Assembly’s resolution on rescheduling and forgiving businesses a total tax debt of VND15 trillion, or $675 million, explaining that the tax relief will help businesses escape current difficulties.

The ministry has proposed to cancel delinquent taxes for businesses providing goods and services that the state budget pays for, but it has not made payments yet. The total sum of tax debt is estimated at VND542 billion.

It also suggested a write-off and rescheduling of tax debt payment for cases in which taxation bodies cannot collect debts from taxpayers because the businesses had dissolved, gone bankrupt, or closed prior to 2014.

Nguyen Van Duoc, general director of the Trong Tin Tax Consultancy Company, a member of the Vietnam Tax Consultancy Association, said it was unreasonable to write off of the tax for businesses that have not paid taxes because the state has not paid for the goods and services, and businesses cannot sue the state for delayed payments.

The State has to forgive tax debts for business that went bankrupt and could not pay tax. Tax debts are considered debt with no mortgaged assets. Collecting the debt will depend on decisions to be made by the court in case the businesses go bankrupt.

MOF is collecting opinions on the draft National Assembly’s resolution on rescheduling and forgiving businesses a total tax debt of VND15 trillion, or $675 million, explaining that the tax relief will help businesses escape current difficulties.

Therefore, it is necessary to write off tax debts in these cases to reflect the country’s true financial situation.

However, he has questioned the write-off of tax debts for businesses which were dissolved or closed. In principle, businesses can only be dissolved after they fulfill tax duties.

“How can businesses be dissolved if they did not pay tax debts?” Duoc said.

He, therefore, has asked to clarify the cases of business being dissolved, warning that the state may accidentally prompt businesses to delay tax payments if writing off tax debts for businesses which deliberately delay payments. As a result, the laws will be not respected by businesses.

Meanwhile, Chung Thanh Tien, chief representative of the southern office of the Vietnam Association of Chartered Accountants (VICA), does not believe in the effects the tax debt write-off will have on the business circle.

Tien, who is also director of the Dong Hung Accountancy Service Company, said that the tax write-off will in no way have an impact on Vietnamese businesses in general, while it will mostly target state-owned enterprises (SOEs).

“I don’t believe that businesses can escape from the taxation bodies’ reach, unless they die and never come back to the market,” he said.

(Source:Vietnamnet news)

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