Getting ‘death certificate’ a trouble for bankruspant firms in Vietnam

It is not quite difficult for a business to go into bankruptcy, but it really is when it comes to filing for insolvency here in Vietnam.

Any firm seeking for bankruptcy must secure verification from tax authorities as having no tax debt before it can complete the final bankruptcy formality at the investment and planning department.

Being unable to complete the insolvency procedure means the company will not have the “death certificate,” which is crucial for them to be completely absolved of corporate duties and responsibilities.

Truong Tri Nguyen Co. Ltd., based in Tan Phu District, Ho Chi Minh City, submitted its bankruptcy declaration on December 31, 2013, but has never seen any agency come to inspect its tax responsibilities since.

The taxman of Tan Phu District was supposed to do the job within 15 days after receiving the file, but the firm has waited for 15 months in vain.

A company representative said they had urged the tax agency twice, in May and October last year, but received no response.

SGBA, an investment firm based in District 3, is still waiting for the bankruptcy application submitted in December last year to be approved.

The Tan Phu branch of Thanh Dong Co., a construction and transportation company, was a bit luckier.

The firm filed for bankruptcy on December 15, 2014, and finally managed to carry out all procedures last weekend.

In October last year, the General Department of Taxation allowed tax agencies to have independent audit companies or tax agents to inspect the tax liabilities of businesses who seek bankruptcy on the department’s behalf.

The move was intended to speed up the verifying procedures, at a time when tax authorities do not have enough personnel to handle a huge number of insolvency applications.

But the mechanism has not been enacted, nearly six months since its issuance, because the department “has yet to release the guidance” on its implementation, according to Tran Ngoc Tam, deputy head of the Ho Chi Minh City tax department.

“What if businesses do not agree to be audited by these units?” Tam wondered.

The tax agencies have to be responsible for what the tax agent or audit firm of their choice does so they still have to do the verifying work again, which is time-consuming, Tam concluded.

There are around 14,000 businesses seeking bankruptcy in Vietnam every year and there are not enough tax officials to handle such a huge number, Tam said, adding it takes at least five days for two officials to process one insolvency file.

“The General Department of Taxation acknowledges this drawback and has tried to solve it with the new mechanism,” Tam said.

“Unfortunately, they did not show us how to implement it.”

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Getting ‘death certificate’ a trouble for bankruspant firms in Vietnam

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