There is a phenomenon of taxpayers dispersing their assets when they know they are being enforced by the customs agency in order to avoid customs coercive measures. As a result, coercive measures for debt collection are inefficient.

Records of overdue tax debts at HCM City Customs Department. Photo: T.H

Preventing taxpayers from dispersing their assets and money

The implementation of coercive measures against taxpayers and to recover tax debts by HCM City Customs Department in accordance with the Law on Tax Administration has raised several problems that must be removed.

HCM City Customs Department said when verifying tax debtors, the customs agency knows that taxpayers have money at bank accounts, assets as land and vehicles and other assets. However, when the Customs agency completesenforcement decisions and sends them to the competent agencies, they respondedtaxpayers have not money in their bank accounts and their vehicles have been transferred.

This shows taxpayers disperse their assets when they know they are being enforced by the customs agency in order to avoid customs coercive measures. As a result, coercive measures for debt collection are inefficient.

Therefore, HCM City Customs Department proposed a temporary solution when knowing the taxpayer has assets, to prevent taxpayers from dispersing their assets. For assets that are vehicles, the Customs agency will send a written request to the Traffic Police Department for the suspension of the procedures related to those assets and provision of the document of origin or sale contract of vehicles as a basis for estimating the value of those assets and send a written request to the Vietnam Register to suspend registration procedures for those assets.

For assets that are land use rights, the customs agency shall ask the competent agency (the Department of Natural Resources and Environment, the Land Registration Office) to suspend the procedures related to those assets and provide information for asset valuation.

Regarding a long-term solution, the HCM City Customs Department proposes the General Department of Customs study and report to the Government and the Ministry of Finance to amend decrees and circulars as follow agencies that provide information on taxpayers’ bank accounts, money and other assets to the tax agency should at the same time block taxpayers’ accounts, money and assets to serve the enforcement of debt recovery for the State budget.

Costs arising from valuation of distrained assets

In addition to the proposal on preventing the dispersing of assets, HCM City Customs Department also reflects on arising problems that must be removed.

Under Article 35 of Decree No. 126/2020 / ND-CP on enforcement by distraining assets and selling distrained assets at auction: Point b, Clause 3 states: if proceeds from the auction of distrained assets are not sufficient to cover the enforcement costs, the competent agency shall apply other enforcement measures in Clause 3, Article 125 of the Law on Tax Administration."

The enforcement decision issuer may use the State budget to pay the enforcement costs which will be reimbursed by the taxpayer against whom the tax is enforced. If the taxpayer does not voluntarily reimburse these costs, the enforcement decision issuer may implement tax enforcement measures specified in Clause 1 Article 125 of the Law on Tax Administration.

For costs arising in the first phase "Before the distraint decision is issued" may be asset valuation costs, and the costs for the second phase" after the the distraint decision is issued" may be costs arising in entire process of asset distraint and auction.

HCM City Customs Department faces problems in using and collecting funds as prescribed in Clause 15, that is: Point b, Clause 15 “enforcement decision issuer may use state budget to pay the enforcement costs“is understood as the funds incurred to implement distraint of assets and issue decisions on distraint.

If the customs agency determines that the proceeds from the auction of distrained assets are not enough to cover enforcement costs (including costs for distraining assets and cost for issuing distraint), handling of costs arising in the first phase has not been stipulated.

For tax debt collection to be efficient, the HCM City Customs Department has proposed to the General Department of Customs provide specific instructions.