EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
Recent Searches
People Advisory Services Tax Alert | September 2025 | Official Letter 3656/CT-CS regarding Department of Taxation's response to business recommendations on exit restrictions due to tax debt
The alert covers Official Letter 3656/CT-CS regarding Department of Taxation's response to business recommendations on exit restrictions due to tax debt.
On 9 September 2025, the Department of Taxation issued Official Letter No. 3656/CT-CS (OL3656) in response to several recommendations from businesses regarding exit restrictions due to outstanding tax debt.
The content of the official letter addresses business proposals concerning the principles of application, tax debt thresholds, procedures for issuing decisions, matters related to taxpayer rights, and the future direction for amending the Law on Tax Administration in response to certain recommendations, as follows:
|
Item |
Business recommendation |
Department of Taxation opinion |
|---|---|---|
|
Non-retroactive principle |
Do not apply exit restrictions to businesses established before 5 December 2020 |
The Law on Tax Administration No. 38/2019/QH14 (amended by Law No. 56/2024/QH151) has been effective since 1 July 2020 and applies to all entities. There is no provision exempting companies established before 5 December 2020 |
|
Distinction between tax debt and other debts |
Recommend that only tax debt be used as the basis for issuing exit restriction decisions, excluding penalties and fees |
Tax debt includes both taxes and other receivables under the state budget. It is not feasible to consider only tax amounts for exit restriction decisions. |
|
Minimum threshold for tax debt |
|
|
|
Priority handling of large enterprises |
Recommend prioritizing enforcement against large enterprises with high tax debts |
Policies apply equally to all businesses, regardless of size |
|
Procedural transparency |
Recommend mandatory meetings, minutes, and opportunities for individuals to explain before decisions are issued |
Tax authorities notify taxpayers via electronic methods. Taxpayers have the right to respond and explain if there are discrepancies |
|
Exemption in force majeure cases |
Propose not applying exit restrictions for tax debts arising from force majeure events or legitimate reasons |
The Department of Taxation is studying this for inclusion in the amended Tax Administration Law (expected in October 2025) |
|
Corporate vs individual responsibility |
Recommend assigning tax debt responsibility to legal entities, not individuals who are legal representatives |
The Department of Taxation is considering adding beneficial owners to the scope of the amended Tax Administration Law (expected in October 2025) |
|
Authority to |
Suggest limiting the authority to issue exit restriction decisions to around 20 managers of provincial tax office |
Current regulations assign authority to heads of direct tax management agencies; the proposal is not feasible |
|
Impact on business environment |
Recommend careful consideration of exit restrictions to avoid discouraging entrepreneurship |
Current tax policies offer many incentives for small and newly established businesses. Exit restrictions are enforcement tools for tax recovery, not intended to hinder business spirit |
OL3656 reaffirms the tax authorities' position that current regulations are applied consistently across all businesses and in accordance with the Law on Tax Administration. However, it also acknowledges certain concerns raised by enterprises such as exemptions in force majeure cases, clarification of responsibilities between legal entities and individuals, etc. are under review for possible inclusion in the upcoming Draft Law in Personal Income Tax (replacement), expected in October 2025.
In the interim, it is recommended that businesses closely monitor regulatory developments, maintain proactive engagement with tax authorities, and ensure robust internal compliance processes to mitigate enforcement risks.
We will continue to provide updates as further guidance becomes available.