The General Department of Taxation clarifies that temporarily barring business leaders from leaving the country due to unpaid taxes is not their harshest measure. Instead, it's part of a balanced approach to tax enforcement that considers each case's unique circumstances.

The issue gained attention following the temporary travel ban imposed on Mr. Luong Hoai Nam, CEO of Bamboo Airways, for the company's tax debts, sparking a debate on the effectiveness and fairness of such measures.

Deputy Director Dang Ngoc Minh of the General Department of Taxation explains, "The law does not specify what constitutes a 'small' or 'large' tax debt. Any taxpayer - individual or corporate - facing enforcement measures must settle their tax obligations before traveling abroad."

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Deputy Director Dang Ngoc Minh of the General Department of Taxation (GDT) . Photo: GDT

This regulation has been in effect for years and is articulated in both the 2020 Tax Management Law and the Law on Entry and Exit of Vietnamese Citizens, effective from July 2020.

There has been criticism that the travel ban is excessively severe, especially when applied to CEOs who are essentially employees, not business owners. In response, Minh said: "These concerns were considered during the drafting of the Tax Management Law. However, the law was passed with these provisions, and we must enforce them."

The tax authorities are bound by law to enforce these measures until any amendments are made. In practice, they aim to avoid rigidly applying this policy across the board.

"Typically, if the individual is not the business owner, the use of this measure is quite limited. However, for those owing significant amounts, particularly when there's a risk of substantial tax loss, enforcement is necessary," Minh added.

From 2023 through August 2024, the tax office issued 17,952 travel bans linked to tax debts totaling VND 30,388 billion. This marks a significant increase from the previous year, where only 2,411 cases were recorded.

"Following our directive early in February 2024, tax bureaus have been actively reviewing cases, leading to a noticeable rise in the number of travel bans this year," Minh commented.

Minh emphasized that a travel ban is just one of many enforcement tools available. "We have stronger measures like suspending the use of invoices, which has a more immediate impact on large businesses."

To improve tax debt recovery, the tax department is incorporating advanced technologies like Artificial Intelligence (AI) to support tax officials in enforcing timely measures.

Recognizing the hardships businesses face post-COVID-19 and natural disasters, the state has implemented various deferrals and reductions in tax obligations.

"Even as managing tax debts becomes more challenging, we're committed to facilitating the best possible conditions for taxpayers, especially those affected by natural disasters or epidemics," Minh assures.

Under the Tax Management Law and the Law on Entry and Exit, any taxpayer facing enforcement actions must settle their tax obligations before traveling abroad, with temporary travel restrictions applied as per legal provisions.

While the use of travel bans for tax debt collection remains contentious, tax officials maintain that it is a necessary, albeit not the most severe, tool to ensure compliance and protect state revenue.

Binh Minh