Ministry of Finance Proposes Writing Off License Fee Debts and Overhauling Exit Restrictions for Inactive Businesses

The Vietnamese financial and regulatory landscape is undergoing a significant reassessment as the Ministry of Finance actively solicits feedback on two pivotal draft resolutions—one submitted to the National Assembly and another to the Government. Designed to alleviate persistent administrative and financial burdens for taxpayers, these sweeping legislative proposals introduce targeted relief measures. Among the most anticipated reforms are the complete write-off of outstanding business license fee debts and associated late-payment penalties, a structured reduction of tax violation fines, and a crucial procedural safeguard that temporarily halts exit bans for citizens whose personal information has been fraudulently misappropriated to establish phantom enterprises.

As regulatory authorities double down on cleaning up legacy tax databases, these measures aim to untangle a complex web of compliance bottlenecks that have long frustrated taxpayers, burdened administrative agencies, and occasionally trapped innocent citizens in legal limbo.

Untangling the Legacy Debt Crisis: The Burden of Inactive Entities

At the core of the Ministry of Finance’s legislative push is the urgent need to address millions of dormant, dissolved, or abandoned tax registration numbers that continue to clog the national tax registry. Statistical data compiled up to December 31, 2025, reveals that approximately 764,000 taxpayers still carry outstanding business license fee debts, totaling an estimated 1.45 trillion Vietnamese dong. Furthermore, as of October 23, 2026, the total number of taxpayers classified under status code 03 (temporarily suspended operations without completing tax cessation procedures) and status code 06 (not operating at the registered business address) has swelled to roughly 2.518 million cases.

For years, the primary impediment to resolving these dormant accounts has been the sheer volume of compliance costs and administrative red tape. When an enterprise or business household ceases operations without officially liquidating its tax status, the legal representative or owner often faces an arduous retroactive compliance process upon returning to a tax office.

To illustrate the severity of this issue, tax experts point to a typical scenario involving a small enterprise that has been non-operational at its registered address for a decade. Despite generating zero commercial activity during this period, an attempt to officially terminate its tax identification number requires the compilation of an exhaustive backlog of mandatory tax filings. This typically includes filing approximately 40 value-added tax (VAT) declarations, 10 corporate income tax finalization reports, supplementary personal income tax documents, and various other statutory returns.

To fully clear its liabilities with the state treasury, such a business might face a cumulative bill of 55 million dong. This staggering figure often breaks down into 23 million dong in administrative fines for late filing of VAT and corporate income tax documents, 20 million dong in accumulated business license fees calculated at an annual rate of 2 million dong, and 12 million dong in late-payment interest charged at 0.03% per day on the overdue license fees.

The Ministry of Finance has openly acknowledged that forcing defunct enterprises to reconstruct a decade’s worth of unfiled paperwork only to penalize them for delayed submissions artificially inflates compliance costs, strains administrative resources, and disincentivizes taxpayers from voluntarily coming forward to resolve their historical obligations. Consequently, the proposed resolutions seek to break this vicious cycle through sweeping debt forgiveness and streamlined closure mechanisms.

Structured Relief: Writing Off License Fees and Scaling Fines

Under the framework of the draft resolution submitted to the National Assembly, the Ministry of Finance has proposed the total cancellation of outstanding business license fee debts, alongside all accumulated late-payment interest tied directly to these fees. Additionally, the proposal mandates the write-off of late-payment interest for all taxpayers currently registered under status codes 03 and 06 up until the exact date the resolution officially takes effect.

Complementing this legislative initiative, the draft Government resolution introduces a sliding-scale reduction of tax violation fines for taxpayers classified under statuses 03 and 06 who proactively step forward to complete their missing paperwork. To encourage early compliance, the penalty structure is tied directly to a strict timeline:

• Taxpayers who submit their missing tax dossiers between the effective date of the resolution and June 30, 2027, will be assessed a fine equivalent to only 30% of the statutory penalty.
• The penalty rate increases to 50% for dossiers submitted between July 1, 2027, and December 31, 2027.
• A 70% rate applies to submissions filed between January 1, 2028, and June 30, 2028.

Industry experts and legal professionals have largely lauded this phased approach. Mr. Le Van Tuan, Director of Keytas Tax Accounting Co., Ltd., emphasized that writing off license fee debts and late-payment interest serves as an effective cornerstone for the national campaign to clean up tax registration data.

"The tax debts that taxpayers have failed to settle naturally trigger retroactive collection procedures under the law," Mr. Tuan noted. "However, over the long term, regulatory authorities must streamline and simplify the dissolution procedure. Prolonged and difficult dissolution processes remain a primary root cause of the current backlog."

Similarly, Mr. Tran Xoa, Director of Minh Dang Quang Law Firm, expressed strong support for the structured timeline, noting that it provides a powerful financial incentive for taxpayers to resolve their dormant status before punitive measures escalate. With millions of cases languishing under statuses 03 and 06, creating a predictable, lenient pathway to closure is viewed as a vital administrative breakthrough.

Safeguarding Citizens: Halting Exit Bans for Victims of Identity Theft

Beyond financial debt forgiveness, one of the most sensitive and widely debated provisions within the government’s draft resolution addresses the controversial application of temporary exit bans. In recent years, tax authorities have increasingly utilized exit restrictions as a coercive measure to compel compliance from delinquent taxpayers and legal representatives of non-operational companies. However, this policy inadvertently ensnared thousands of innocent citizens whose personal identification documents—such as citizen ID cards—were stolen, forged, or misappropriated by bad actors to secretly establish phantom enterprises, business households, or cooperatives.

Under the new regulatory framework proposed by the Ministry of Finance, a vital safety valve is being introduced. If an individual has been identified as a legal representative of a non-operational company due to identity theft, and that person has submitted formal feedback or denunciations to business registration authorities, tax offices, or the police, immediate relief is guaranteed. Specifically, once the police officially acknowledge receipt of the citizen’s report and confirm that the matter is under active investigation, tax authorities will temporarily suspend the enforcement of exit ban measures against that individual.

This adjustment directly addresses a growing crisis. During the nationwide rollout of the database-cleansing campaign, tax agencies utilized hotlines and the eTax Mobile application to record approximately 4,000 separate complaints from citizens reporting that their personal information had been pirated to establish fake companies. Previously, under existing legal frameworks, these victims were trapped in a bureaucratic Catch-22: they remained legally responsible for corporate tax liabilities and subject to travel restrictions until police investigations conclusively proved identity fraud—a process that could take months or even years.

During this investigative lag, innocent citizens faced severe disruptions to their personal and professional lives, finding themselves barred from boarding international flights for overseas business trips, leisure travel, or urgent medical treatments abroad. Public outcry over these blanket exit bans forced a critical re-evaluation of enforcement practices.

Tax expert Nguyen Ngoc Tu strongly endorsed the ministry’s proposed course correction, pointing out the inherent unfairness of burdening victims of identity theft with the responsibility of proving their innocence while restrictive state measures remain active.

"In the past, exit restrictions frequently led to contentious disputes," Mr. Tu observed. "The victim of identity fraud bore no legal burden of proof, yet state agencies—ranging from business registration offices to tax authorities and the police—enforced travel restrictions without immediately verifying the legitimacy of the underlying corporate data. Over the long term, we cannot continue applying blanket exit bans indiscriminately, especially against individuals trapped in status 06 scenarios."

Broader Economic Implications and Next Steps

The dual initiatives introduced by the Ministry of Finance mark a profound shift from purely punitive enforcement toward facilitative governance. By simultaneously wiping away uncollectible legacy debts, scaling down penalties for cooperative taxpayers, and implementing immediate procedural protections for victims of identity theft, the state aims to restore integrity to national economic registries.

For the business community, these measures are expected to significantly reduce compliance overheads, lower administrative friction, and eliminate the fear of unexpected travel embargoes linked to phantom corporate registrations. As the National Assembly and the Government review the respective draft resolutions, tax practitioners and legal experts alike anticipate swift enactment, setting the stage for a cleaner, more transparent, and infinitely more supportive tax administration system in Vietnam.