Is the VND1 million threshold appropriate?

A draft decree issued by the Ministry of Finance to guide the implementation of the Law on Tax Administration has attracted attention after proposing temporary exit bans for taxpayers classified as no longer operating at their registered addresses, known as TT06 status in the tax system, with tax debts of at least VND1 million.

Under the proposal, affected groups would include business individuals, household business owners, beneficial owners of enterprises under the Law on Enterprises, legal representatives of companies, cooperatives and cooperative unions. They could face temporary travel suspension if they are no longer operating at their registered address and owe taxes from VND1 million or more.

The measure would be applied 30 days after notification by tax authorities if the taxpayer still fails to fulfill their obligations.

Speaking with VietNamNet, Nguyen Vu Cao, chairman of Van Khang Phat Group (Khang Land), said the proposal is not suitable under current conditions. In his view, policy should take into account the scale of the economy and the level of risk in each case.

“Applying temporary travel suspension measures for debts from VND1 million is overly strict,” he said.

Cao argued that authorities should classify cases according to different thresholds rather than applying a single standard.

“Treating a VND1 million debt and debts worth hundreds of millions or billions of dong with the same measure is unreasonable. It risks creating a one-size-fits-all approach and unfairly affecting those with small debts,” he said.

He suggested raising the threshold to several tens of millions of dong, VND100 million (US$3,900), or even higher. He also said temporary exit bans should only apply when taxpayers show signs of deliberately delaying or refusing to fulfill obligations after repeated reminders.

“In principle, temporary exit suspension is necessary, but it should correspond to the level of violation. Cases involving large, prolonged and difficult-to-collect tax debts require stronger measures, potentially including higher legal liability,” Cao said.

From a practical enforcement perspective, he proposed more flexible solutions for taxpayers who only discover the issue upon arriving at the airport for business travel. In such cases, taxpayers should be allowed to immediately settle debts electronically or via bank transfer to complete their obligations.

For small debts in urgent situations, he said authorities could also consider allowing written commitments to facilitate travel for businesses.

He added that authorities already have many other tools to deal with tax debts, such as restricting the establishment of new companies or controlling access to credit. According to him, temporary exit suspension should only be considered in cases showing signs of serious violations or even criminal liability.

Proposal considered more flexible than current regulations

Meanwhile, lawyer Nguyen Van Duoc, general director of Trong Tin Accounting and Tax Consulting Co Ltd, said the proposed regulation is actually more flexible compared with existing rules.

According to Duoc, Decree 49/2025 on thresholds for temporary exit suspension currently stipulates that business individuals and household businesses subject to tax enforcement may face travel bans when debts exceed VND50 million (US$1,950) and remain overdue for 120 days. For legal representatives of organizations, the threshold is above VND500 million (US$19,500).

However, for business individuals, household business owners and legal representatives of enterprises no longer operating at their registered addresses, temporary exit suspension can already be applied after 30 days from tax authority notification if overdue debts remain unpaid, even if the debt amount is very small.

“The Ministry of Finance’s proposal for a VND1 million threshold is based on the current reality that there are many small tax debts in the system, so authorities selected this level for handling purposes. In principle, this is actually a better policy,” Duoc said.

Still, he acknowledged that VND1 million is relatively low and could be adjusted upward. However, he argued that whether the threshold is VND1 million or VND2-3 million is not the core issue. If necessary, it could be raised to VND50 million in line with businesses that remain operational.

According to him, the more important concern is whether the process for determining that a taxpayer is “no longer operating at the registered address” is truly rigorous.

In practice, there have been cases where verification was insufficient, leading businesses to be wrongly classified as having abandoned their registered addresses. Once placed in this category, restoring normal operating status often takes considerable time.

In addition, even if taxpayers promptly settle their tax obligations after being subjected to travel suspension, the removal process can take up to 24 hours, which may not be fast enough for urgent overseas travel or business trips.

From the taxpayer’s perspective, Duoc advised individuals and businesses to proactively check information on the tax authority’s system, especially sections related to tax debt enforcement, to monitor their status in a timely manner.

“Before leaving the country, taxpayers involved in related cases should check the system. If there is already an enforcement notice, including temporary exit suspension, the measure will be applied. Otherwise, they can travel with peace of mind,” he said.

According to Duoc, applying strict enforcement measures for small debts may affect personal plans. However, in principle, enforcement remains necessary to ensure discipline and seriousness in tax administration.

Nguyen Le