A company was fined and collected tax arrears of nearly VND 50 billion

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A material fraud case in production for export was seized by customs. Photo: T.H

A “three-zero” company

At the end of 2019, the Post Clearance Audit Branch of Ho Chi Minh City Customs Department conducted a post clearance audit at the headquarters of G.P Garment Joint Stock Company under adecision of the Ho Chi Minh City Customs Department’s Director. After checking dossiers and books related to import declarations of raw materials and accessories under the export production contract of the company, customs detected many violations in implementing the contract. Specifically, Customs detected the firmdid not produce goods from the imported raw materials and supplies at the production facility at District 9, Ho Chi Minh City. This company’s facility was inspected by the Processing Customs Branch when the company carried out the goods export production since 2016.

The company did not notify the Customs authority ofthe new facility’s address at District 7 in Ho Chi Minh City. Notably, at time of inspection, the company did not have machinery, equipment; employees and did not produce goods from imported raw materials and supplies according to regulations, but it transferred to other companies in Vietnam to reprocess.

From physical inspection results, as per Clause 7, Article 16 of the Law on Import and Export 2016, and regulations on tax exemption for imported goods for export production in Clause 1, Article 12 of Decree 134/2016/ND-CP and Clause 2 of this Decree, the Post Clearance Audit Branch identifies the G.P Garment Joint Stock Company has not complied with regulations on export production. The company imported goods for export but does not directly produce goods and transfer a part or all of the imported goods to other companies to process and then receives back the products to export.

The Customs determines the company is not eligible for tax exemption as per Clause 12, Decree 134/2016/ND-CP. In addition, the company does not fully archive documents anddossiers related to imported and exported goods under the regime of export production. The value of infringing goods is VND 164 billion. From the violation of the company, Ho Chi Minh City Customs Department collected VND 39.5 billion of tax arrears and fined more than VND 7.9 billion.

Fined and collected tax arrears of nearly VND 50 billion

After conducting post-clearance audit and tax arrears collection, the Post Clearance Audit Branch has transferred suspicious information on customs declarations beyond the scope of post-clearance auditto the Processing Customs Branch where the firmopened declaration for inspection. Continuing inspection and review the data of imported raw materials and accessories, the branch detected the company registered 32 import declarations of E31 regime at the Processing Customs Branch. Through inspection, the Processing Customs Branch discovered the company does not have machinery, equipment, employees and does not directly produce goods from imported raw materials and supplies but transfers to other companies in Vietnam to reprocess.

The Processing Customs Branch issued a decision to collect tax arrears of more than VND 1.4 billion for G.P Garment Joint Stock Company. At the same time, it made a report on administrative violation for the company. On May 25, the branch issued a decision on imposing an administrative fine of more than VND 281 million.

Thus, through two inspection conducted by Ho Chi Minh City Customs Department, the G.P Garment Joint Stock Company collected nearly VND 41 billion of tax arrears and imposed an administrative fine of 20% of the total amount of tax arrears, with a total amount of nearly VND 8.2 billion.

Working with Customs, arepresentative of the company said after being collected tax arrears, the company is proposing to the Government to remove obstacles because the company is complying with the law in exporting all finished goods produced from imported raw materials to its customers, so the company proposes Customs consider and not to collect tax arrears.