HCMC Customs prevents many large tax frauds

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The smuggling of fish bladders by air is seized by Ho Chi Minh City Customs and the Anti-Smuggling Investigation Department in March 2022. Photo: T.H

Misdeclarations

According to the HCMC Customs Department, the situation of customs law violations through HCMC border gates in the first six months of 2022 increased significantly. Deputy Director of HCMC Customs Department Do Thanh Quang said that the whole department handled 1,309 violations, an increase of more than 500 cases compared to the same period in 2021. The total value of infringing goods was over VND1,961 billion. HCMC Customs imposed an administrative fine of nearly VND23 billion and transferred 26 cases with criminal signs to other agencies.

Among the violations, HCMC Customs Department handled many large tax violations and frauds, increasing revenue for the state budget from hundreds of millions of dong to several billion dong.

At the end of May 2022, the Processing Management Customs Branch issued a decision to sanction a garment company (Tan Binh district, HCMC) with VND2.2 billion. This company had imported raw materials for export production, but misdeclared non-taxable items. The value of infringing goods was over VND197 billion. According to the customs agency, the company itself discovered the fault and made additional declarations after 60 days from the date of customs clearance and before the decision on post-clearance audit, the company should pay the missing tax amount and administrative fine.

Similarly, on May 31, 2022, Saigon port zone 1 Customs Branch sanctioned Information Technology Company Limited A (District 5, Ho Chi Minh City) nearly VND1.7 billion for misdeclaring HS code of goods, leading to a missing of taxpayable and this was identified by the customs agency during the inspection of goods after customs clearance. The infringing goods are network cables, CAT5E and CAT6 network cables of Aptek brand; Dintek; worth over VND8.3 billion.

As well as domestic enterprises, many foreign- directly invested enterprises also commit huge tax violations. In May 2022, the Investment Management Customs Branch discovered that many FDI enterprises imported goods different from declared goods, leading to a lack of tax payable to the state budget. An enterprise in the HCMC imported Lecithin products used as food processing materials was valued at over VND 21.5 billion, but incorrectly declared the name of the goods, resulting in a lack of tax payable. The leader of the Investment Management Customs Branch issued Decision 1285/QD-XPVPHC to imposed a fine of over VND142 million for the enterprise.

Another case is an enterprise based in Trang Bom district, Dong Nai province that imported vitamin supplements for dogs and cats with a value of over VND23.4 billion. The Customs agency identified the incorrect declaration and decided to fine the enterprise over VND 320 million.

Another case was also fined by the HCMC Customs Department over VND436 million on May 26, 2022 for misdeclaring code and tax rates on electrolyte powder used for hemodialysis worth over VND33 billion.

Control imports and exports

According to analysis by the Ho Chi Minh City Customs Department, import-export activities recovered strongly after the pandemic, and the Customs authorities developed many solutions to support customs clearance. However, many enterprises have taken advantage of open customs clearance to commit commercial fraud, such as through Green and Yellow channel declarations that are quickly cleared. Taking advantage of the risk management mechanism in the clearance of goods, some people use the "Select channel" method to clear goods; deliberately declaring many items but there is only one item and vice versa in order to evade tax; and adjust the manifest to avoid the inspection and control of the Customs to conduct the act of smuggling and illegal cross-border transportation of goods.

HCMC Customs Department has offered many solutions to prevent violations, which are forecast to increase in the second half of the year. Of these, the department shall strengthen patrol and control work on river routes, seaports and airports; collect information on processing and investment goods in export processing zones and high-tech zones; focus on combating the fake documents for customs clearance and bringing goods out of the customs supervision area.

HCMC Customs Department shall also request border gate Customs Branches promptly control and prevent border-gate transfer goods, transit goods without permits and misdeclarations, and proactively get information and develop relationship between units in order to handle acts of smuggling and trade fraud.

At the same time, the department shall work with other authorities to end violations in compliance with the provisions of law and support import and export activities of enterprises.