Bogus companies and smuggling - Part 1: Escaping when being detected

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	Smuggled goods are in transferred containers at Cai Mep port

Smuggled ivory was seized by the HCM City Customs Department on 10th November 2016 at Cat Lai port. Photo: Thu Hoa.

Bogus companies imported prohibited goods

After initial investigation and verification of 7 illegal cases of ivory imports, with the weight of nearly 6 tons detected by Customs authorities in the last 2 months of 2016 at Cat Lai port (HCM City), companies which imported ivory were all bogus companies.

Through the investigation and verification of the Customs office, these companies only had their name on Customs declarations, and receipt and other activities related to Customs procedures were performed by other companies. Verifying the business registration address of enterprises, Customs officers found that most of these companies were bogus companies. For example, Dieu Tien Trading & Service Co., Ltd. (66/8 Ta Dai Street, Ward 11, Tan Binh District, Ho Chi Minh City) smuggled more than 2 tons of ivory discovered in early October 2016. Although the company was licensed by the end of 2015, there was no company existing at the business registration office, but just only a grocery store of 4-5 square meters. Tam Phuc Trading & Service Co., Ltd (Chon Thanh - Binh Phuoc) which imported timber shipment containing nearly half a ton of ivory last October 2016 was also unidentified the office. Through investigation and verification, the Customs Control Team discovered many perpetrators using fake identity cards to establish companies.

According to the Customs Control Team - under the HCM City Customs Department, the above-mentioned shipments usually consisted of 2 containers or more, with 1 violated container. When the shipment was classified into the Red Channel (subject to physical inspections), perpetrators would put the proper container for inspections to deal with the competent authorities. Accordingly, quarantine agencies would randomly sample on this container, so it is difficult for the violated shipment to be detected.

In addition, shipments were transported across different countries to erase the origin of shipments. Like shipments of Trading & Service Co., Ltd and Dao Gia Company, these shipments departed from the port of Nacala port - Mozambique, transshipped to port Kelang - Malaysia, then back to Vietnam. During the process of transportation, the shipments changed twice. After the first shipment was seized, subsequent shipments were transitted through more ports, departed from the port of Lagos-Egypt, transhipped at Tanjung Pelepas-Indonesia port, then at Kelang-Malaysia port and returned to Vietnam and finally changed the ship three times during the transportation to Cat Lai port in Ho Chi Minh City.

Companies imported goods then disappeared

Through verification, there were cases that a person established many companies to import many mass shipments, but he did not work at the registration business address. Typically, Gia Hung Thinh Building Materials Company Limited and Phuc Giang Construction Company Limited were represented by Mr. Luong Tuan Anh (registered on 9^th June 2016 at 63 Nguyen Ba Huan Street, Thao Dien Ward, District 2, Ho Chi Minh City).

After being licensed for operation, only in a short time from June to July 2016, these 2 companies opened tens of Customs declarations to import floor tiles through Cat Lai port at low prices without consulting price according to regulations. When Customs officers performed Customs post-clearance audits, these companies did not cooperate with Customs officers and left a tax debt of more than 3.4 billion vnd.

Another case was that Nguyen Phung Co., Ltd (17 Ho Ba Kien Street, Ward 15, District 10, Ho Chi Minh City). In just only 2 months (August and September 2016), the company opened 17 Customs declarations to import frozen products, including frozen feet, wings, and thighs; frozen potato from Australia, Brazil, and Poland. In particular, on Customs declaration, the company declared the price of frozen chicken wings from Brazil with a price of only $US 0.1 per kg (more than 2,000 vnd per kg); chicken thighs and frozen chicken garlic thighs from Australia with a price of $US 0.1 kg per kg. The total tax paid for 17 Customs declarations was more than 324 million vnd.

Detecting unreasonable price declaration, the Customs Branch of Saigon Port, Zone I requested price consultancy but the company did not agree. Then, the Customs office must conduct Customs clearance according to regulations and transferred records of the company for the Tax Administration Teams to conduct Customs post clearance audits. However, after Customs authorities issued the post-clearance decision to the company, the representative of the company did not come to work with the Customs office. On the basis of the results of the examination, the Customs Branch of Saigon Port, Zone I rejected the declared price for the imported goods on 17 Customs declarations. Accordingly, the taxable price for chicken feet was adjusted from $US 0.1 to $US 1.22 per kg; chicken wings from $US 0.1 to $US 2.25 USD per, chicken thighs from $US 0.1 to $US 1 per kg. Also, the Customs Branch of Saigon Port, Zone 1 issued a tax assessment decision with the total tax amount of more than 3.7 billion vnd. Thus, compared to the amount of real taxes paid at the time of Customs clearance (324 million), the company must pay an additional nearly 3.4 billion vnd, but the company now “running away" from business registration address.

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Currently, the number of tax debts arising at the HCM City Customs Department is difficult to recover because the HCM City Customs Department has issued a tax assessment decision on the post-clearance audits with the amount of 80 billion vnd. The causes are mainly due to enterprises’ evasion for price consultation at the stage of Customs clearance and Customs post-clearance inspections.