Exit Ban Due to Business Tax Debt: Causes, Solutions & Latest Prevention Tips

Facing an unexpected exit ban due to tax debt – A growing concern

Are you a business owner suddenly hit with an exit ban at the airport without prior warning? The culprit might just be… a tax debt of a few hundred thousand dong.

This isn’t an isolated case. The situation where businesses face administrative enforcement due to tax debts, leading to travel bans for their legal representatives, is becoming increasingly common. So, what are the causes, and how can you resolve it quickly to avoid disrupting business operations?

Why are businesses facing exit bans?

Tax debts can stem from both the business’s side and the tax administration system:

From the business’s side:

• Forgetting to pay the annual business license fee as required.

• Facing financial difficulties, leading to overdue tax payments.

• Incorrectly declaring sub-item codes or transferring funds with wrong content, causing the system to misrecognize tax obligations.

• Having the tax code locked without timely resolution, leading to:

  • Inability to submit tax declarations on time.

  • Accumulation of administrative penalties and increasing tax debts over time.

From the tax system’s side:

• Automatic enforcement measures applied if businesses pay taxes overdue.

• Warnings not fully sent or information updated slowly on the system, preventing businesses from reacting in time.

Legal Basis: According to Clause 5, Article 127 of the Law on Tax Administration 2019, combined with guidance in Article 36 of Decree 126/2020/ND-CP, legal representatives may be temporarily suspended from exiting the country if their business has overdue tax debts.

Tax enforcement measures applicable to businesses

In addition to temporary travel bans, businesses may also face the following measures:

• Forced deduction of funds from bank accounts.

• Suspension of e-invoice usage.

• Freezing accounts, seizing assets (per Article 125 – Law on Tax Administration).

• Locking of tax codes, causing difficulties in changing business lines, registered addresses, or establishing new legal entities.

5 steps to take when a business faces an exit ban due to tax debt

If the legal representative is found to have an exit restriction, the business should follow this process:

Step 1: Identify the cause

• Check the tax status on the General Department of Taxation’s e-portal or contact the directly managing tax officer to understand the debt amount and the reason for the enforcement.

Step 2: Review all tax records

• Re-check all tax declaration periods and any tax debt notices or penalty decisions sent via email or through the General Department of Taxation’s e-portal. Ensure no errors or omissions remain.

Step 3: Pay all taxes, penalties, and late payment interest (if any)

• Businesses should fully pay their tax obligations via bank transfer. Ensure the correct tax code and payment sub-item are recorded to avoid incorrect transfers that prolong processing time.

Step 4: Submit a request letter to lift the exit ban

• Draft an official letter requesting the lifting of the exit ban and send it to the managing District or Provincial Tax Department, attaching payment proofs.

Step 5: Monitor update status

• The process of lifting an exit ban usually takes 2-5 working days. If urgent travel is required, businesses can coordinate with tax and immigration authorities to expedite the process.

Prevention solutions – Be proactive, not reactive

To avoid similar situations in the future, businesses should:

• Regularly monitor the system: Periodically check the General Department of Taxation’s portal to promptly detect debts or system errors.

• Actively manage tax obligations: Set up a system for tax payment reminders and periodically check payment sub-items.

• Collaborate with professional consulting firms: Working with accounting and tax experts helps you declare taxes correctly and on time, minimizing legal risks.

Conclusion: An exit ban is not a minor issue

A legal representative being banned from exiting the country due to tax debt indicates that the business has issues in managing its tax obligations. Don’t let small errors significantly impact your business operations, especially when you need to travel internationally to sign important contracts or meet potential partners. Proactive prevention and early resolution are key to ensuring smooth business operations and legal compliance.

TPM is always ready to accompany businesses in:

• Checking and resolving tax enforcement statuses.

• Consulting on tax declaration in compliance with laws and deadlines.

• Preventing legal risks related to taxes, invoices, and bank accounts.

If your business is looking for a company formation consultant or professional, reputable accounting and tax services, please contact TPM via our website or hotline (+84) 28 3505 1800 for dedicated and prompt support.

Quyen Nguyen