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GDVC responds to an article titled “tax losses by Customs: under-value declaration for tax avoidance”

19:22 | 04/06/2020

VCN- The General Department of Vietnam Customs (GDVC) has responded to an article titled “tax losses by Customs: under-value declaration for tax avoidance”. Accordingly, the contents of the article reflect only a part of the actual customs declaration and valuation, and does not provide an overall reflection of all aspects of customs value management, especially measures taken by customs.

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gdvc responds to an article titled tax losses by customs under value declaration for tax avoidance
Illustrative photo. Internet.  

In response to the content of the article, the GDVC said the frozen chicken leg quarters product originating from the US in the list of imported goods with risk on value issued together with Decision 3089/QD-TCHQ October 22, 2019 is stipulated the reference price as a basis for identifying the suspicion and inspection of customs value of US$1.22/kg.

The GDVC emphasized that from January 1, 2020 to May 29, 2020, 827 import customs declaration forms for this item (including 675 customs declaration forms imported goods from the US) of 75 businesses (the number of businesses importing goods from the US is 67 businesses). The declared price is from US$0.35/kg to US$2/kg. For goods originating from the US, the declared price is from US$0.8/kg or less, there are 336 customs declaration forms of 37 enterprises.

For wines of all kinds, they are stipulated in the list and 1.057 reference prices. From January 1, 2020 to now, there are 733 declarations of 157 enterprises imported from 27 countries, declaring the price from US$0.4/ bottle to US$170/bottle.

For Nike sport shoes, it stipulated in the list of imported goods with risk on customs value, from January 1 to now, five businesses imported this item under 49 customs declaration forms and imported from China, Indonesia, and India with declared prices from US$13/pair to US$75/pair.

According to the GDVC, the price of goods traded on the international market always changes due to many factors. 

The GDVC provides an example, the price of wine changes by origin, grape crop, manufacturer, trade volume, relationship between suppliers and importers. Therefore,  as per the WTO’s regulations, the Customs shall not determine customs value by calculating the average (as content in the article) but it must determine for each specific transaction and each specific item, with specific factors affecting the purchase and sale price of that transaction.

In response to the article, according to the GDVC, to comply with current provisions of the Customs Law and Tax Law on customs value, the Customs has listed 1,152 HS codes of imported goods with high tax rate subject to customs value inspection when importing  and 5,926 items with reference prices in the List of Imported Goods with risk of value as a basis for identifying the suspicion  and applyinginspection measures.

When customs declarants declare imported goods, Customs shall identify cases with suspicious signs on value to conduct price ruling and request customs declarantsto presentevidence proving the truthfulness of the declared price and implement customs valuation for customs declarants whocannot prove the declared price by themselves.

In addition, according to the Customs management principles of the WTO, to facilitate businesses in importing goods, and the current Customs law, the Customs shall apply risk management techniques to classify customs declaration forms, so there are customs declaration forms that are classified into Green Channel and not subject to customs value inspection. However,Green Channel customs declaration forms will be reviewed and identified suspicious signs and conducted post clearance audit at Customs’ headquarters and businesses’ premise within 5 years from the date of customs clearance.

To enhance the management of customs value, the GDVC has directed the review of the results of customs declaration, inspection, ruling and valuation for each specific declaration form. On an average day, the GDVC has directly requested to check 50-70 declaration forms nationwide and directed local customs units to review and check cases with the same errors. If detecting errors, leading to the lack of tax payable, the inspection measures shall be applied to collect tax arrears and must consider the responsibilities of officers related to the declarations.

On the basis of analyzing the results of the value declaration by customs declarants, the GDVC shall direct local customs units to inspect the customs value of specific items under each inspection plan.

Currently, the GDVC requested customs units to check customs value under specialized plans for imported items such as wine, strong alcohol, paving stones, and electrical appliances.

The GDVC said that annually, it has issued three to four decisions to develop, amend and supplement the list of goods with risks on customs value, including developing reference prices based on information collected from many sources, focusing on comparing the price declared by the enterprise with the selling price of that enterprise on the domestic market after import.

Thus, according to the GDVC, the content of the article only reflects a part of the actual declaration and customs valuation and does not provide an overall reflection of all aspects of customs value management, especially measures taken by customs.

To further improve the efficiency of customs value management, the GDVC continues to perfect the system of documents guiding the inspection of customs value in both stages in customs clearance and post-clearance audit. At the same time, coordinating with relevant management agencies and business associations to collect information as a basis to prevent false declaration of value for tax evasion; inspecting customs value according to specialized plans to detect and handle enterprises that evade taxes and implement tax fraud through prices.

According to the GDVC, for determination and declaration of customs value, Clause 3 Article 86 of the Customs Law stipulates that “the Customs value of an imported goods item means the payable actual price determined upon its arrival at the first entry border gate in compliance with Vietnamese lawand International treaties to which the Socialist Republic of Vietnam has contracted or acceded.”

Article 39/2015/TT-BTC dated March 25, 2015 supplemented and amended in Clause 4 Article 1 of Circular 60/2019/ TT-BTC dated August 30, 2019 of the Ministry of Finance guides that the customs value of imported goods is payable actual price of goods at the first entry border gate, determined by applying the valuation methods prescribed until the customs value is determined.

For the inspection and customs valuation, Article 25 of Circular 38/2015/TT-BTC dated March 25, 2015 supplemented and amended in Clause 14 Article 1 Circular 39/2018/TT-BTC dated April 28, 2018 of the Ministry of Finance stipulates the determination of suspicious object, inspection and  value ruling for suspicious cases declared by customs declarants. Post-clearance audit shall comply with provisions from Articles 77 to 82 of the Customs Law.