New thresholds for exit bans due to tax debt proposed

The Ministry of Finance (MoF) has submitted a draft government decree to the Ministry of Justice for appraisal, proposing thresholds for applying exit bans.

The MoF suggests imposing exit bans on individuals and business households with tax debts of VND50 million (around $2,000) or more, and businesses with tax debts of VND500 million ($19,464) or more, overdue for more than 120 days.

Explaining the rationale for these limits, the ministry stated that it had consulted practices from various countries. For example, in Malaysia, individuals with tax debts of around $2,000 are subject to exit bans, while in the United States, the threshold is around $40,000. Thus, the proposed threshold of approximately $2,000 (equivalent to VND50 million) for individuals in Vietnam is deemed appropriate.

For businesses, the ministry referenced Taiwan (China), where the debt threshold for businesses is set at TWD 2 million (equivalent to VND1.57 billion or $60,880).

Given that other countries do not specify a particular threshold, the ministry proposes a debt threshold of VND500 million for businesses, ten times the amount applied to individuals.

Regarding the overdue period, the proposed threshold is set at tax debts overdue for more than 120 days. This measure aims to ensure the recovery of outstanding tax debts, increase taxpayer compliance, avoid prolonged and difficult-to-recover debts, and ensure compatibility with tax management applications, allowing tax authorities to implement the decree immediately upon its issuance.

The ministry also proposes that notifications will be made electronically or on the tax authority's website as soon as a taxpayer falls under the scope of enforcement of administrative decisions on tax management. If the taxpayer does not fulfill their tax obligations within 30 days from the notification date, the tax authority will issue a document to officially apply the exit ban.