Risk prevention solutions for processing and export manufacturing businesses

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Professional activities at Da Nang International Airport Customs Sub-department. Photo: N.Linh

Need to clearly understand the policy

According to leaders of Da Nang Customs Department, when submitting final settlement reports, businesses often encounter errors in raw material norms, data differences among documents, etc., causing many businesses to encounter difficulties in preparing settlement reports.

Therefore, this is an issue that Da Nang Customs Department prioritizes in sharing experiences with businesses in the area.

According to the Customs Control and Supervision Division (Da Nang Customs Department), businesses need to clearly understand the principles of preparing accounting books and settlement reports so that data on documents must match, avoiding discrepancies which can affect the payable tax rate as well as the reputation of the business. In addition, businesses need to update the latest circulars, decrees, and legal documents and firmly grasp the general regulations so as not to miss the deadline for submitting final settlement reports, with the latest submission time being 90 days after the end of the fiscal year.

Accordingly, businesses need to properly understand the instructions on information criteria on the final settlement report. The information indicators on the settlement report are not only data of the import-export department but are related to the production activities of the enterprise (import-export information is only information for checking and comparing). Besides, regularly check and review errors in the process of customs procedures such as: raw material codes, supplies, product codes on the declaration with warehouse codes/Accounting codes - units of calculation, convert units of calculation; declaration for correction and cancellation after customs clearance, etc.

At the same time, when preparing a final settlement report, it is necessary to link data from departments, from actual production and the system of accounting books and documents tracked at the enterprise such as: warehouse management department; production department; accounting department; import and export department.

Businesses also need to regularly check and compare data among departments on a monthly or quarterly basis to promptly make adjustments when detecting errors or discrepancies. In particular, corporate accountants need to separate sources of raw materials and supplies by type of import and export: tax-free, non-taxable, tax-paying business, domestic purchase and supply, etc; Cases where customs procedures are not carried out but must still be managed and monitored; Accounting and storing documents according to regulations of the Ministry of Finance on accounting and auditing regimes; Notify the import-export department of activities taking place in the warehouse in cases of release from warehouse for different purposes from production purposes such as: over-allocation of raw materials and supplies that must be recalled, under-production that must be compensated, exports for reprocessing inland, exports for consumption for business activities, exports for sale of raw materials, exports for scrap, other exports (destruction, donation), exports lacking due to inventory, etc.

Solutions to prevent risks

Regarding this issue, Mr. Phan Hai Trieu, Deputy Head of Import-Export Clearance Division, InterLOG Company shared some common errors in customs declaration and settlement reports such as: wrong quantity declaration; Excess, insufficient import, excess export, insufficient quantity without additional customs declaration; Using raw materials and supplies for other purposes, selling domestically without declaring change of use; Failure to notify processing contracts, reprocessing contracts, or reprocessing facilities; Wrong code declared, finalizing processing contracts miscellaneously. Regarding report content, common errors include: settlement of data that is not true to the reality of internal corporate governance, settlement of incorrect norms; wrong raw material data; wrong finished product data; failure to make settlement on time; not amending or supplementing within the prescribed time limit; failure to submit final settlement documents; improper handling of scrap and waste products, using raw materials and supplies for improper purposes.

According to Mr. Phan Hai Trieu, there are many reasons for discrepancies in settlement reports such as: not studying or not understanding legal regulations; researched but did not fully systematize relevant legal documents; researched but didn't understand correctly so did it wrong; The import-export department understands, but the responsible department does not understand, so it does not implement it or does it but incorrectly. That can lead to risks of arrears and penalties for administrative violations; assess the level of compliance.

Therefore, according to Mr. Phan Hai Trieu, the solution to prevent risks is that businesses need to review the entire management process and use of raw materials and supplies from importing raw materials, exporting products, and preparing final settlement reports that synchronize among departments in the enterprise; proactively monitor and build realistic norms; Refer to data and legal regulations with Customs authorities. In particular, any changes related to the location of production, processing, and storage of products must be notified in writing to the Customs authority; Proactively inventory and collate cross aggregated data from warehouse inventory and clearly hand over details when there are personnel changes, etc.