Tax Debtors Face Exit Ban: Urgent Need for Solutions

The exit ban policy has been largely ineffective in recouping outstanding taxes.

A businessman expressed his hopes regarding the newly released Politburo’s Resolution 68, emphasizing his desire to eliminate the rule preventing business owners from leaving the country due to their corporate tax obligations.

This sanction was recently modified with the introduction of Decree 49/2025 in February 2025, yet it continues to pose challenges within the business landscape.

It is estimated that tens of thousands of employees representing affected business owners suffer due to this measure.

Another entrepreneur supported this view, sharing that he and others are unable to travel internationally to pursue new contracts because of their firms’ tax liabilities.

Resolution 68, lauded for its reformative spirit, encourages Vietnamese businesses to expand their global reach, and its guidance on reducing criminal proceedings in business and civil matters has bolstered entrepreneurs’ confidence.

The exit ban policy raised public concerns over the past year, as prior rules lacked clarity on the tax debt amount triggering temporary exit prohibitions.

The threshold for such measures was solely determined by the tax authority, resulting in situations where businesses with minimal tax dues faced temporary exit suspensions for their representatives, severely disrupting their operations.

In February 2025, Decree 49/2025 clarified the tax debt limits: individuals or sole proprietors face bans for debts exceeding VND50 million that are overdue by more than 120 days, while company representatives can be banned for debts surpassing VND500 million, also overdue by more than 120 days, particularly in cases under enforced tax administrative orders.

Last week, tax officials reported recovering VND4,955 billion from 7,309 taxpayers subject to exit restrictions, out of a total debt of VND83,028 billion.

From the perspective of tax authorities, exit bans are deemed vital for addressing growing tax arrears, as there are concerns that business leaders may flee to escape substantial debts, which can reach tens or hundreds of billions of dong.

When business executives leave the country, their companies enter a state of abandonment, potentially scattering assets while machinery and facilities are mortgaged, complicating tax collection for the authorities.

However, as noted by the two entrepreneurs, this policy may cause more challenges than benefits as it restricts their ability to pursue new contracts, partners, or business opportunities, thereby hindering the recovery of struggling enterprises. The data reveals a minimal impact from this policy, with only 1/17th of the owed debt being recovered.

This indicates that the exit ban on business leaders with tax liabilities does not effectively enhance tax recovery efforts, suppressing the potential for revenue generation necessary for tax payments.

While Decree 49 delineates clearer and higher debt thresholds, limiting the scope of exit bans, the business sector believes these limits remain inadequate and advocates for restrictions only in cases of significant debt.

Currently, tax authorities have access to data on millions of bank accounts. Given the rise of non-cash transactions and interconnected data systems, directly deducting funds from accounts is practical and should be prioritized.

Once effectively implemented, alternative measures such as invalidating invoices or imposing exit bans should be reserved for serious cases involving substantial debts, rather than broadly applied. Many countries successfully address tax evasion without infringing on fundamental rights like the freedom to travel.

Resolution 68 calls for a distinct separation between criminal, administrative, and civil liabilities, as well as between legal entities and individuals.

It advocates for revisions to criminal, civil, and procedural laws to emphasize administrative, economic, and civil solutions, enabling businesses to correct violations. When criminal prosecutions are an option, non-criminal remedies should be prioritized, focusing on economic solutions as a basis for subsequent actions.

Overall, Resolution 68 emphasizes the importance of clear distinctions in handling violations, differentiating between legal entities and individuals.

As this resolution advances, it’s essential to re-evaluate the exit ban policy to foster wealth creation among entrepreneurs while adopting equally effective alternatives for enforcing tax debt obligations.