MoF examines ways to restructure tax debt
MoF examines ways to restructure tax debt
The Ministry of Finance has proposed to freeze and extend tax debt repayment terms for ailing businesses which would be able to commit to paying tax in the future.
The proposal was made against a backdrop of skyrocketing tax debts as enterprises have toiled in the face of an economic downturn.
The ministry's report showed that by the end of this year's second quarter, tax debt collection had faced significant obstacles.
Over 25,000 firms were discovered to have a total tax debt of VND4.4 trillion (US$209.5 million), meanwhile only 32 per cent of last year's tax debts were collected by December 2012.
For the first half of this year, total tax debt reached VND65 billion ($3.09 million), of which 13.2 per cent was bad debt.
The Ha Noi Tax Department also released yesterday a list of 77 companies with bad debts of over VND1.8 trillion ($85.7 million). The Da River Joint Stock Company topped the list with tax debts of around VND283 billion ($13.4 million), followed by Cienco 1 Company with VND81 billion ($3.85 million) and Viglacera Ha Noi Company with VND70 billion ($3.3 million).
In the first eight months of 2013, the city's budget collection was just 93.7 per cent of the amount collected over the same period last year and it was forecast that Ha Noi would fall short of its 2013 target.
In addition, the large number of companies trying to avoid paying tax debts was making collection extremely difficult, according to the report.
The department said the capital had made efforts to provide preferential tax policies by extending, exempting and reducing taxes for businesses and people with a total of VND2.6 billion worth of assets.
Vu Vinh Phu, former director of the municipal Department of Industry and Trade, said enterprises had been asked to report reasons for their tax slow repayment to authorities.
"State management units would have to keep firms aware of their debts to prevent them from spiralling," he added.
Phu said real estate firms accounted for a large portion of the tax debt list and authorities should carefully check whether the debts were due to frozen property market or simple negligence.
He added that businesses would have to explain reasons for slow tax payments or they would face bankruptcy to avoid becoming antecedent for others.
Sharing these thoughts, lawyer Bui Dinh Ung said State management agencies should carry out check-ups at businesses to impose penalties on tax cheats.
"They could use coercive methods to resolve tax violations through administrative penalties or by launching criminal proceedings," he stressed.
Another lawyer Tran Dinh Trien added that enterprises would be allowed to restructure production to facilitate their tax obligations.
Finance minister Dinh Tien Dung said the ministry had asked its Taxation Department to restructure tax debt for certain cases.
Head of the department Bui Van Nam said authorities had calculated and researched plans to clear unrecoverable tax debts and tax penalties due to late payment would be wiped clean.
Debts incurred after the beginning of July this year would incur a late payment charge of 0.05 per cent per day for the outstanding tax from the payment deadline up to 90 days over. From day 91 onwards, a 0.07 per cent rate would be applied each day thereafter, he revealed.
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