‘Reduce” price to evade tax, 1kg of chicken thighs cost $US 0.1

Imported chicken in super market. Photo: T.Hoa.

More than 2,000 VND/kg of imported chicken

According to the Deputy Director of HCM City Customs Nguyen Huu Nghiep, in recent times, a number of newly established enterprises imported many shipments, declared very low prices and then stopped working, it has been a loss of state revenue, and has caused difficulties for the Customs management. Declared prices of enterprises were too low, not acceptable.

According to investigation by journalists, in August and September of 2016, the NP Ltd., Co (District 10, HCM City) opened 17 Customs declarations of imported frozen food including: legs, wings, thighs of frozen chicken, frozen potato and pork legs originated in Australia, Brazil, Poland... On the Customs declarations, the enterprises declared that prices of frozen chicken wings originated in Brazil were only $US 0.1 (2,000 VND)/1 kg; prices of quarter of frozen chicken thighs, frozen chicken legs originated in Australia were $US 0.1/kg... Total paid taxes for the 17 declarations were over 324 million VND.

Detecting unreasonable declaration prices, the Saigon port Customs Branch area 1 suggested price consultation, but the business did not agree, the Customs authorities had to settle Customs clearance as prescribed, simultaneously transferred files to the Tax Administration Team to perform post-clearance. After Customs authorities issued post-clearance decisions send to business, representatives of the company did not work with the Customs authorities. Based on the record examination result, and data of the Customs office, the Saigon port Customs Branch area 1 rejected the declared price of imported goods in the 17 Customs declarations and determined taxable value for the chicken legs from $US 0.1 to $US 1.22/kg; chicken wings from $US 0.1 to $ 2.25/kg; chicken thighs from $US 0.1 to $US 1/kg... Also, the Saigon port Customs Branch area 1 issued tax a assessment decision with the total amount of paid tax over 3.82 billion VND. Thus, compared to the amount of actually paid tax, at the clearance time (324 million VND), the enterprise had to pay an additional 3.5 billion VND!

Similar to the above case, in May and June of 2016, the G.D. Ltd., Co opened 28 import declarations of frozen chicken wings, legs, thighs, and frozen salmon heads. For these 28 customs declarations, the company declared taxable value of imports very low. Such as quarter of frozen chicken leg priced from $US 0.12 to $US 0.18/kg depending on the origin; chicken wings priced from $US 0.2 to $US 0.22/kg... The Saigon port Customs Branch area 1 rejected the declared prices of imported goods in the 28 Customs declarations and determined the taxable prices of goods up from $US 1 to $US 2.25/kg. They issued tax assessment decisions, with a total amount of paid tax up to more than 4.7 billion VND.

Only in August of 2016, because the businesses did not come to work, the Customs Branch issued tax assessment decisions for 81 frozen chicken declarations, tax increase due to price adjustment by 12.5 billion VND. Similarly, 190 declarations of import tile mosaics were issued post- clearance decisions by the Customs border gate branches, but the businesses did not come to work. Currently, the Customs branches are considering issuing tax assessment decisions, with tax increase of about 8 billion VND. The amount of tax assessment in these above cases, the HCM City Customs Department said that the recovery of assessed taxes to pay for the state budget was impossible.

Meanwhile, according to the understanding of journalists, on the market, chicken thighs sold in supermarkets @ 90,000-95,000 dong/kg; chicken feet price from 60,000-65,000 dong/kg; chicken wings with prices ranging from 93,000-96,000 dong/kg ... depending on the brands.

The risk of revenue loss

In addition to frozen chicken products “Reduce” price and tax evasion, the HCM City Customs Department also discovered many other imported commodities declared at very low prices, such as tile mosaics declared cost $US 2/m2, while the reference price in the Customs system was $US 3/m2. The Customs branches decided post-clearance examination on 190 imported goods declarations, but the businesses did not come to work. In addition, there were many other cases like fruit, food, apparel fabrics, mobile phones, alcohol..., their declared prices were also very low.

According to the HCM City Customs Department, since the beginning of 2016 until now, the unrecoverable tax debts which the Customs Branches issued tax assessment decisions in post-clearance examination on taxable value arose about 83 billion VND. The main reason was newly established businesses imported massively but avoided value consultation to implement clearance, then deferred to come or begged to delay the post-clearance examination time.

Analysis of the HCM City Customs Department shows that now, businesses base on provisions of Article 25, Circular No. 38/2015/TT-BTC of the Ministry of Finance to decide “not agree consultation” when Customs requests. Therefore, Customs authorities are required to implement the clearance under the declared price of the companies and transfer files to the post – clearance inspection department. However, when the Customs Branches issue decisions, invite to work to perform post-clearance inspection, the companies delayed or postponed the inspection time to continue importing.

According to the Deputy Director of the HCM City Customs Department Nguyen Huu Nghiep, to prevent this situation, the HCM City Customs Department requests the Customs Branches immediately implement solutions: In cases where declared prices of the import companies are lower than the current reference price and available databases of the Customs authorities, the directors of the Customs Branches direct the professional teams look up on risk management system to classify companies. If companies are ranked Grade 6 and Grade 7, they will direct to post-clearance inspection as soon as possible, not to wait up to 60 days as prescribed. If the companies do not come to work at the deadline of inspection, the Customs Branches will follow Article 142 paragraph 4 item c Circular No. 38/2015/TT-BTC dated 25-3-2015 of the Ministry of Finance to issue tax assessment decisions, enter data into the centralized accounting system immediately which the companies unregister next shipment.

In cases where if the businesses ask to delay inspection time in writing at the inspection deadline, the Customs Branches will direct the Tax Management Teams to inform the Procedure Teams immediately to track and not clear when the companies continue registration of next shipment. The Customs Branches invite the companies come to work and direct the post-clearance inspection department work at once to conclude the taxable values, issue notices of the post-clearance inspection result, enter data into the centralized accounting system for the companies to pay additional tax (if rejected declared prices).