Updated Authority to Waive Tax Debts & Penalties in Vietnam

To ensure efficiency in the management of state budget revenue and definitively address tax debts deemed irrecoverable, the current tax law provides specific provisions regarding the cases eligible for debt cancellation and clearly defines the authority for each level. Identifying the competent authority for each specific case is essential to ensure legality, reduce legal risks, and improve the efficiency of tax debt settlement. Viet An Law would like to provide clients with information regarding the updated authority to waive tax debts & Penalties in Vietnam according to Decree No. 122/2025/ND-CP.

Cases eligible for cancellation of tax debts, late payment interests, and penalties

According to Article 85 of the Law on Tax Administration 2019, organizations and individuals may be eligible for tax debt cancellation in the following cases:

• Enterprises or cooperatives declared bankrupt with no remaining assets to pay taxes, late payment interests, or penalties;
• Individuals who have died or have been declared by the Court as deceased or lacking civil act capacity, and have no assets to pay taxes, late payment interests, or penalties;
• Other organizations or individuals that have been subject to enforcement measures by tax authorities (such as revocation of investment registration certificates, cooperative registration certificates, business registration certificates…) and have outstanding tax debts, late payment interests, or penalties for over 10 years from the due date and are deemed irrecoverable;
• Cases affected by widespread natural disasters, catastrophes, or epidemics with no ability to pay taxes, late payment interests, or penalties.

Responsible authority for preparing tax debt cancellation dossiers

According to Clause 1, Article 85 of the Law on Tax Administration 2019, the tax authority directly managing the taxpayer eligible for debt cancellation is responsible for preparing and submitting the tax debt cancellation dossier to the competent authority.

Components of the tax debt, late payment interests, penalties cancellation dossier

The dossier includes:

• Written request for cancellation of tax debts, late payment interests, and penalties;
• Original or certified copies by the tax authority of the following documents:
  • Bankruptcy declaration decision; decision on suspension of enforcement of the bankruptcy declaration by the civil judgment enforcement agency; asset allocation documents from the executor showing the amount of tax debt recovered or not recovered (for enterprises or cooperatives declared bankrupt);
  • Death certificate, or notification of death, or court decision declaring a person as deceased, or equivalent documents; written confirmation from the Commune-level People’s Committee at the last place of residence confirming the deceased has no assets (for deceased individuals or those declared deceased);
  • Court decision declaring loss of civil act capacity; guardian’s statement confirmed by the Commune-level People’s Committee where the incapacitated person resides, confirming they have no assets (for individuals declared lacking civil act capacity);
  • Tax authority’s documents requesting competent authorities to revoke business registration certificates, cooperative registration certificates, investment registration certificates…; revocation decisions; enforcement decisions issued by the tax authority; written confirmation from the Commune-level People’s Committee that the taxpayer has no assets and no longer conducts business (for debts over 10 years);
• Tax debt statement at the time of the cancellation request.

Updated Authority to Waive Tax Debts & Penalties in Vietnam from July 1, 2025

According to Article 5 of Decree No. 122/2025/ND-CP and Article 87 of the Law on Tax Administration 2019, from 01 July 2025, the competence to decide on cancellation of tax debts, late payment interests, and penalties is amended as follows:

• The Chairman of the Provincial People’s Committee has the authority to waive debts in the following cases:
  • Enterprises or cooperatives declared bankrupt with no remaining assets;
  • Deceased individuals or individuals declared by the Court as deceased or lacking civil act capacity, without assets;
  • Households, business households, self-employed individuals with debts exceeding 10 years from the due date and deemed irrecoverable;
  • Enterprises or cooperatives with debts under VND 5,000,000,000 outstanding for more than 10 years from the due date and deemed irrecoverable.
• Directors of the Tax Department or Customs Department may cancel debts of enterprises or cooperatives with debts from VND 5,000,000,000 to under VND 10,000,000,000.
• The Minister of Finance may cancel debts of enterprises or cooperatives with debts of VND 10,000,000,000 or more. Previously, debts of VND 15,000,000,000 or more were decided by the Prime Minister.

Procedures for the tax debt, late payment interests, and penalties cancellation

For cases under the authority of the Chairman of the Provincial People’s Committee

• Step 1: Local tax team compiles the dossier and submits it to the district-level Tax Sub-department for appraisal;
• Step 2: The Tax Sub-department drafts a proposal and cancellation decision and submits it to the Provincial People’s Committee;
• Step 3: The Chairman issues the decision to waive the tax debts, late payment interests, and penalties.

For cases under the authority of the Director of the Tax or Customs Department

• Step 1: Local tax team compiles the dossier and submits it to the district-level Tax Sub-department for appraisal;
• Step 2: The Tax Sub-department drafts a proposal and sends the dossier to the Tax Department for appraisal.
• Step 3: The Tax Department appraises and prepares a draft cancellation decision for the Director to consider;
• Step 4: The Director issues the decision to waive the tax debts, late payment interests, and penalties.

For cases under the authority of the Minister of Finance

• Step 1: Local tax team compiles the dossier and submits it to the district-level Tax Sub-department for appraisal;
• Step 2: The Tax Sub-department drafts a proposal and sends the dossier to the Tax Department for appraisal.
• Step 3: The Tax Department appraises and prepares a draft cancellation decision for the Minister’s consideration;
• Step 4: The Minister of Finance issues the decision to waive the tax debts, late payment interests, and penalties.

Mandatory conditions for debt cancellation

• The taxpayer has ceased operations and has no assets available for debt recovery, even after enforcement by tax authorities;
• Not applicable to cases of tax evasion, fraud, or intentional non-payment despite having the ability to pay;
• Tax authorities must provide sufficient documentation proving all recovery and enforcement measures were exhausted (including asset verification records, failed enforcement outcomes, audit/inspection conclusions, bankruptcy documents…);
• The decision-making authority must comply with the delegated levels of competence.

For further consultation regarding tax law or Updated Authority to Waive Tax Debts & Penalties in Vietnam (under Decree No.122/2025/ND-CP), please contact Viet An Law Firm for comprehensive support!