Brian Jeffrey
The recent predicament involving Luong Hoai Nam, the CEO of Bamboo Airways, who was prevented from leaving the country due to tax obligations, has sparked discussions about the appropriateness of exit bans for tax recovery.
While there’s a consensus on the necessity of strict actions against non-compliant companies, some entrepreneurs feel that imposing exit bans for minor debts is disproportionate.
On September 20, Phan Ba Quan, the head of Phuc Thinh Digital, was taken aback when informed of a temporary exit ban related to a small tax debt of 2.8 million VND ($115).
“This was my first notification regarding such a restriction, and I was unaware of any outstanding tax,” Quan stated, explaining that a recent relocation and staff changes had led to the oversight.
Similarly, Nguyen Thi Huong, who runs Xuan Huong Company, found herself on an exit ban on September 12 due to an 8.6 million VND ($350) tax debt.
In another scenario, Nguyen Van Cuong, who operates a real estate firm in Vinh City, was similarly dismayed to learn about the exit ban, particularly as his business had already ceased operations.
“I believed we had completed all necessary procedures to suspend our activities, and our business hasn’t operated due to the pandemic. I had no prior knowledge of any tax issues,” he expressed.
Many entrepreneurs view exit bans as an additional burden. Critics argue that such measures are excessively punitive, especially for small debts or ongoing disputes over government fees.
“Sure, we have tax responsibilities,” remarked an entrepreneur from Ho Chi Minh City, “but our debt pertains to a land use fee still under negotiation with local officials. The media coverage implied we were trying to evade our obligations.”
This entrepreneur noted that while exit bans might deter willful tax evasion, they can be particularly damaging for those stuck in legitimate bureaucratic or financial predicaments. “No one wishes to be in this scenario. Our investments are tied to these businesses.”
Others echoed these sentiments. A representative from Binh Duong shared, “My firm has tax debts, but we are also awaiting a delayed tax refund. We tried to offset our obligations with this refund, but our request was rejected.”
The trend of utilizing exit bans to enforce tax compliance is on the rise, with high-profile figures like Luong Hoai Nam being affected. Although the unpaid taxes were acknowledged, Nam voiced his displeasure, clarifying that the issue is administrative rather than personal.
“I recognize the importance of meeting tax obligations, but we’re actively collaborating with authorities to resolve this during our financial difficulties,” Nam explained.
For some entrepreneurs, the exit ban serves as both a wake-up call and a burdensome measure. While it can encourage debt resolution, it also feels like harsh punishment for business leaders already struggling.
“I just took over, yet I’ve inherited significant tax liabilities from past owners,” lamented a CEO from Binh Duong who fears a similar fate. “I’m doing everything in my power to rectify the situation, but being penalized for someone else’s actions feels unfair.”
Many believe that while exit bans could be useful, they should be employed more judiciously, particularly for minor or disputed debts.
“A more proportionate approach is needed,” insisted one business owner. “If a company is obviously evading taxes, then enacting a ban is warranted. However, for those of us striving to resolve issues in good faith, a more reasonable solution should be considered.”
