HM&P Managing Partner shared opinion on the decision to postpone exit for business owners due to tax debt

On May 24, 2024, Managing Partner Nguyen Van Phuc participated in an online interview at the program "Business and Law" on VOH Online. This is the second time Lawyer Phuc has collaborated with the The Voice of Ho Chi Minh city People (VOH). During the program, Lawyer Phuc provided valuable and practical insights on the issue of business owners facing travel restrictions due to tax debts.

Lawyer Phuc explained that temporary exit from business owners due to tax debts is not an uncommon occurrence. According to Article 5 of Article 36 of the Law on Exit and Entry of Vietnamese Citizens 2019 and Point a, Clause 1, Article 21 of Decree No. 126/2020/ND-CP, the legal representative of an enterprise undergoing enforcement of an administrative decision on tax management will have their departure temporarily postponed until they fulfill their tax obligations. Furthermore, current law does not specify a threshold for the amount of tax debt owed by an enterprise that would result in the legal representative of the enterprise being subject to temporary departure restrictions by the competent authority. Therefore, there are many businesses that owe tax from only a few hundred thousand VND to a few million VND, but the competent authorities still decide to postpone the exit of their representatives.

In the program, HM&P's managing partner also shared solutions to resolve these postponements for businesses, such as verifying and fully paying off the outstanding tax amounts. After completing the tax payments, businesses need to notify the tax authorities and relevant agencies to cancel the exit postponement decision, which should be processed within 24 working hours.

In practice, the impact of exit postponements can cause significant inconvenience and losses for business owners and their enterprises, affecting business plans, credibility with partners, personal costs, and overall company finances. Given the extensive implications on reputation and financial aspects, Lawyer Phuc advised businesses to regularly review their operations, comply with tax obligations, and check their tax debt status and exit postponement measures on the websites of the General Department of Taxation and Vietnam Customs for timely handling and necessary actions before departing abroad.

Furthermore, in terms of legal policy, HM&P's managing partner proposed that authorities consider alternative measures such as deducting funds from accounts, freezing accounts, suspending invoice usage, seizing assets, or revoking business registration certificates instead of applying temporary exit postponements for businesses with small tax debts.

Desision from Nghe An province Tax Department (source: https://cafef.vn)

Lastly, Lawyer Phuc stressed the importance of understanding and adhering to tax regulations, which significantly impact business operations and ownership. Any negligence or oversight could lead to severe consequences for both businesses and business owners, highlighting the critical need for businesses to pay close attention to and comply with these legal requirements.

HM&P and managing partner expressed sincere thanks to VOH for providing the platform to address common concerns and raise awareness among businesses regarding tax issues and compliance. They expressed a desire to continue participating in future programs on VOH to contribute to the improvement of Vietnam's legal system and enhance public and business awareness of legal issues in Vietnam.

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