Ho Chi Minh City Customs warns about violations in export processing and production

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Materials imported through Cat Lai port. Photo: T.H

Arbitrarily selling tax-free materials

In recent times, the Customs agency has discovered many enterprises taking advantage of preferential policies for export processing and production to commit acts of tax fraud. According to Ms. Le Thi Thuy Dung, Deputy Head of the Customs Control and Supervision Division, Ho Chi Minh City Customs Department, through inspection of enterprises' production facilities, the Customs agency discovered: some enterprises rented land, built factories and equipped machinery, meet the conditions for production facilities to import tax-free raw materials and supplies, determined by the Customs. After that, these enterprises imported raw materials and supplies, but did not produce them for export according to regulations, but arbitrarily sold them to the domestic markert, evaded taxes and fled from the business registration address.

In addition, the Customs agency also discovered some businesses intentionally provided fake documents on factory and production facility lease contracts; the import activities of raw materials, supplies, machinery and equipment did not meet for the enterprise's production streams; addresses attached to certificates of land use right and properties attached to the land were not specific.

In addition, the handling of scrap and waste products of some enterprises was not in accordance with regulations. Some businesses take advantage of destruction to sell tax-free goods; regularly sell raw materials, supplies and components to the domestic market; report on the destruction of excess raw materials, supplies, machinery, equipment, scrap, and waste products in quantities greater than or the real amount; sell waste products but actually sell products; selling scrap and waste products to the domestic market higher than actual volume or issue false invoices for the sale of scrap and waste products to the domestic market; conduct destruction of machinery, equipment, and production lines, in which valuable components are dismantled for sale; sign a destruction contract with an enterprise that does not have a destruction license according to regulations.

Enterprises subject to inspection

According to Ho Chi Minh City Customs Department, during the process of customs procedures, inspection and control, the Customs agency shall check the use of raw materials, supplies and inventory of enterprises where there are signs of risk of importing machinery, equipment, raw materials and supplies that are out of production cycle but there are no export products; there are signs of an unusual increase or decrease in import or exports from the production capacity; there are signs of selling machinery, equipment, raw materials and products to the domestic market without customs declaration; or check enterprises that make false declaration of exported products, fail to explain checked contents at customs headquarters and check the final settlement report on the application of risk management, assess legal compliance of organizations and individuals.

For checking raw materials, supplies and inventory – checking final settlement reports: the Customs shall check import and export dossiers, accounting documents and books; monitoring sheets of inventories; other related documents.

Through actual inspection, the Customs agency identified violations such as: enterprise canceled declarations but on the enterprise's system, the declarations are in an uncancelled state, so the detailed report of imported and exported goods would not be accurate. Unit prices are inconsistent or a raw material code has many unit prices; goods are directly re-exported goods without customs declarations (this violation often happens when businesses buy goods from the domestic market or borrow raw materials from other domestic businesses).

For unpaid goods, during the process of buying and selling goods, it is possible that some damaged goods may be compensated by the supplier with unpaid invoices or donated by the supplier. Pursuant to Article 25 of Circular 200/2014/TT-BTC of the Ministry of Finance, accountants are not required to monitor the value of unpaid goods and goods held on behalf of customers. However, this quantity of goods is still used to produce export products. During data importing, the accountant missed some customs declarations, leading to difference.

When inspecting raw materials, supplies, inventory - checking settlement reports, the Customs agency also discovered that some businesses opened declarations with the wrong type. For example, packaging is raw materials for export processing and production, but the import-export unit opens declarations according to the following types: A12, E13 - import for consumption.

In addition, businesses often make mistakes regarding purchasing of invoices between two export processing enterprises without customs declarations. In fact, some enterprises do not carry out customs procedures for these cases, so when comparing, the amount of sale invoices between two export processing enterprises needs to be listed for monitoring. Actual warehoused goods are different from the quantity on the customs declaration. Or one accounting code has many customs codes or declarations is zigzag, enterprise should compare with group of codes to determine validity.