The Vietnam Chamber of Commerce and Industry (VCCI) has recently submitted feedback to the Ministry of Finance regarding the draft amendments to the Tax Administration Law. VCCI also consulted the business community on the issue of temporary travel bans for tax arrears.
A taxpayer working at a tax office in Ho Chi Minh City. Photo: Hoàng Triều
According to VCCI, the draft law has introduced a provision to delay travel for individuals who are beneficial owners of businesses that have not fulfilled their tax obligations.
Citing the Enterprise Law, VCCI clarifies that individuals holding at least 25% of the capital are considered beneficial owners, regardless of their management role.
“Beneficial owners are only liable within the scope of their contributed capital or shares and are not indefinitely responsible for the enterprise’s tax liabilities,” VCCI stated. The organization further noted that, in many cases, beneficial owners do not directly manage or make decisions regarding the enterprise’s operations.
Meanwhile, the purpose of the travel ban provision is to pressure those who directly own and manage the enterprise to collect taxes. Therefore, applying this ban to beneficial owners is overly broad and infringes on their freedom of movement, especially for those not involved in management.
This, according to VCCI, could diminish the attractiveness of the investment environment, particularly for foreign investors, who might face travel restrictions simply because the enterprise they invested in has unpaid taxes.
Furthermore, tax authorities already have numerous enforcement measures, such as deducting funds from bank accounts, disallowing the use of invoices, and seizing and auctioning assets. The travel ban should be a targeted and specific measure. Thus, VCCI recommends that the drafting agency remove this provision.
Under the current regulations of Decree 49 issued by the Government, travel bans are applied based on the threshold of tax arrears and the duration of the debt. This includes individual business owners and household business owners subject to coercion when their tax debt exceeds 50 million VND and has been overdue for more than 120 days.
Individuals who are legal representatives of enterprises, cooperatives, or cooperative unions are subject to coercion when their tax debt exceeds 500 million VND and has been overdue for more than 120 days.
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