Temporary exit suspension due to tax debt: "More flexible regulations needed"

According to a lawyer, to avoid situations where a small financial loss to the State leads to significant harm to citizens, more flexible regulations are needed for handling exit suspension.

Recently, customs sub-departments under the Ho Chi Minh City Customs Department have issued decisions to temporarily suspend the exit of 12 individuals who are legal representatives of enterprises due to their tax debt. In these cases, the Saigon Port Customs Sub-Department Area IV has notified the Immigration Department - Ministry of Public Security about the temporary exit suspension on Mr. Le Huy Binh, Director and legal representative of Hai Dang Chemical Trading Co., Ltd. The reason was that Mr. Binh's company has not fulfilled its tax obligation of 977.2 million VND.

The Saigon Port Customs Sub-Department Area IV also announced a temporary exit ban for Mr. Nguyen Huu Huynh, Director and legal representative of An Thai Food Technology Co., Ltd. Mr. Huynh's company owes nearly 290 million VND in taxes. Additionally, Mr. Tran To Quyen, Director and legal representative of Ngoc Dieu Construction Trading Service Co., Ltd., has been temporarily banned from leaving the country due to tax enforcement of over 10.2 million VND.

Furthermore, the Bien Hoa - Vinh Cuu Tax Sub-Department, under the Dong Nai Tax Department, has notified the Immigration Department (Ministry of Public Security) to temporarily ban 64 individuals who are legal representatives of tax-delinquent enterprises from leaving the country.

Earlier, in October 2023, District 7 Sub-department of Tax - Nhà Bè Ward under the Tax Department of HCM City also requested the competent authorities to prohibit 11 individuals who were legal representatives of 11 tax-delinquent businesses from exiting.

Regarding the issue of legal representatives of businesses being unable to exit the country due to tax debt, Lawyer Le Cao, Manager Partners Lawyer of FDVN Law Firm, explained to the Reporter that currently, under Clause 5, Article 36 of the Law on Exit and Entry of Vietnamese Citizens 2019, and detailed in Clause 1, Article 21 of Decree 126/2020/ND-CP, the cases of temporary exit prohibition include: individuals, or individuals who are legal representatives of tax-paying businesses, who are subject to enforced execution of administrative decisions on tax management and have not yet fulfilled their tax obligations; Vietnamese citizens exiting to settle abroad who have not yet fulfilled their tax obligations; Vietnamese citizens residing abroad who have not fulfilled their tax obligations before exiting; and foreigners who have not fulfilled their tax obligations before exiting from Vietnam.

“As a result, the resolution of temporary exit suspension in these cases aims to ensure these subjects comply with their tax obligations to the State. It is not a prohibition measure but rather a temporary suspension of exit for those who still owe taxes.

For individuals and legal representatives of tax-paying businesses, as per the aforementioned regulations, it should be understood that not all tax debt cases lead to exit suspension. This measure applies when there is an outstanding tax debt, an administrative decision has been issued, and enforcement of this administrative decision on tax management is ongoing, but the tax obligation has not yet been fulfilled. The enforcement process takes time, and as long as the tax obligation remains unmet, the exit suspension regulation is practically based on preventing the possibility of evading tax obligations,” explained Lawyer Le Cao.

The lawyer continued to analyze the legal perspective, noting that the current regulations do not set a threshold for tax debt and lack flexible solutions for situations where the legal representative or business owner might be unaware of the tax enforcement action. Consequently, there could be cases where a minimal tax debt results in a suspension of exit.

“Therefore, we believe that to avoid scenarios where a minor loss to the State causes significant harm to citizens, more flexible regulations are needed to handle exit suspensions. Moreover, the procedure for exit suspension and the coordination in handling these cases need to be improved. This would allow business owners to promptly address their tax debts and lift the exit suspension immediately upon settlement.

For instance, there should be solutions enabling them to promptly settle minor tax debts, ensuring the removal of the exit suspension order quickly, thus allowing them to exit normally once the tax obligation is fulfilled.

Additionally, to prevent legal representatives and business owners from being caught off guard by exit suspension regulations, it is essential to provide early warnings, information, and updates to these individuals. This would help them avoid the surprise of discovering their exit suspension only upon arriving at the airport,” stated Lawyer Cao.

(Source: Nhat Ha, Gocnhinphaply)

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