Of this, VND17.2 trillion is classified as irrecoverable debt.
Tax arrears increase
At the end of May, the Director of Ho Chi Minh City Tax Department decided to enforce tax debt collection by suspending the use of invoices for 21st Century International Development Co., Ltd., with the amount subject to enforcement exceeding VND6.7 trillion. This substantial figure reflects significant tax arrears. In fact, the company had been flagged for tax debt issues two years earlier. In March 2022, Thu Duc Tax Division imposed a collection measure of over VND5.49 trillion for land use and lease taxes due to ongoing non-payment.
Meanwhile, a list published at the end of June showed that Xuyen Viet Oil Travel and Transport Trading Company Limited owed over VND1.7 trillion. The situation has become more serious as the investigative authorities have filed a case and arrested several company officials.
Due to increasing tax arrears, recent reports have highlighted various measures taken by tax authorities to enforce and recover these debts. These measures include travel bans on company executives with unpaid taxes, public naming of delinquent businesses, and suspension of invoice use.
According to the General Department of Taxation, in the first six months of 2024, 174,492 enforcement decisions and 16,859 exit bans were issued to recover tax arrears, totaling over VND24.25 trillion. During this period, the tax authorities collected nearly VND45.5 trillion, achieving 33 percent of the 2024 debt collection target. Of this, VND42.7 trillion was recovered through debt management measures, and VND2.7 trillion through enforcement actions.
As of June 30, the total tax arrears reached over VND204.4 trillion, a 13.4 percent increase compared to December 31, 2023. The estimated ratio of total tax arrears to the 2024 revenue forecast is 13.8 percent, with the proportion of recoverable arrears estimated at 9.97 percent.
The General Department of Taxation reports that the total tax arrears and their ratio to total state budget revenue for the first half of 2024 remain high and have not met targets. Many regions are experiencing significant increases in tax arrears, and some units have been slow in implementing collection and enforcement measures, failing to fully fulfill their responsibilities.
In Ho Chi Minh City alone, tax arrears as of June 30 totaled nearly VND61.6 trillion, equal to 17.5 percent of the 2024 state budget revenue forecast. This amount is a 1.2 percent decrease from May 31 but a 14.6 percent increase compared to the same period in 2023 and a 22 percent increase from December 31, 2023. Ho Chi Minh City Tax Department estimates that nearly VND31 trillion is collectible, while more than VND17.2 trillion is classified as irrecoverable debt.
The increase in tax arrears since December 31, 2023, is mainly due to debts that have exceeded their extension periods without being settled by taxpayers. Additionally, unresolved issues with land lease and land use fees, along with financial difficulties and credit issues faced by businesses, have contributed to the rise in tax arrears. However, compared to the previous month, there are signs of a decrease in tax arrears in June 2024.
The leadership of Ho Chi Minh City Tax Department reported that they regularly publish lists of tax debts, ranging from a few million Vietnamese dong to several thousand billion Vietnamese dong per company. Before these lists are made public, the tax authorities implement various enforcement measures.
These measures include withdrawing funds from the debtor's accounts at the State Treasury, commercial banks, or credit institutions; freezing accounts; suspending the use of invoices; and seizing money or assets held by other organizations or individuals on behalf of the debtor. For companies with tax arrears where executives have been arrested, the recovery of tax debts will be handled according to court rulings.
Standardizing data
To boost tax collection, Ho Chi Minh City Tax Department issued 66,018 enforcement decisions in the first half of 2024, with a total enforcement amount of over VND512 trillion. They also implemented temporary exit bans on 2,766 individuals and company representatives with tax debts and publicly disclosed information about 1,196 delinquent taxpayers. As a result, by the end of June 2024, tax collections reached VND21.58 trillion.
Nguyen Tien Dung, Deputy Director of Ho Chi Minh City Tax Department, stated that the tax authorities will enhance the review and standardization of tax debt data, overdue payments, and excess payments, and resolve discrepancies in data. They will also closely monitor progress and implement comprehensive measures to boost debt collection and enforcement in accordance with regulations, including publicly listing delinquent companies.
Furthermore, Ho Chi Minh City Tax Department will continue to advance administrative reforms by integrating information technology into debt management and enforcement processes, digitizing procedures for issuing debt notifications and enforcement decisions, ensuring accurate and timely classification of debts, and handling them appropriately based on their nature. They will also work on developing a comprehensive taxpayer database.
The General Department of Taxation has announced that, besides standardizing and classifying tax debts and enforcing collection measures as per regulations, they will specifically target arrears related to land, and mineral extraction rights, and recommend land recovery for cases that remain non-compliant despite enforcement actions. They will also ensure timely collection of taxes and land lease payments once the extension period ends.
Digitization and electronic processing will be key strategies, applied across all stages of tax debt management and enforcement. This includes developing tools for daily and monthly monitoring of tax debts.
