Dien Bien Customs: Collect arrears up to billions from post clearance audit of investment goods

Professional activities at the Son La Customs Branch, Dien Bien Customs Department.. Photo: Hữu Linh

In recent years, export activities through the territory of Dien Bien Customs Department are about investment goods for creating fixed assets which account for over 90% of the revenue of the unit. Therefore, common mistakes that were detected by Customs forces are declaring wrong numbers and goods codes, on the list of goods exempted from tax incentives. Hence, in order to raise awareness of law compliance of enterprises in this aspect, besides the training and answering enterprise’s concerns, the units need to focus on post clearance audit.

The Post clearance audit division of Dien Bien Customs Department, has 7 Customs officers working on planning and advising the leaders of the Department, conduct the auditing in post clearance stages. Specifically, the division has been actively advising and speeding up the subordinate units to fully implement the work of revising in clearance stage and recordkeeping with strict discipline and integrity in Customs. From 2015 till now, the Division has tracked and sped up the revision of 2,075 Customs documents and keeping records as prescribed (achieve 100%). In particular, focus on post clearance audit in investment areas for creating fixed assets, great value items and high tax rates. As a result, the division has conducted 6 inspections and made the decision for fixing and collected tax arrears and penalties for late payment up to 1,575 billion VND.

As an example, the auditing of M.S Company, located in Son La. The company carried out registration list for preferential import tax dated July 15^th 2009 with Dien Bien Customs Department, (the company self-determined in declaration and was responsible for the portfolio and commitment to use purposes). Dien Bien Customs conducted post clearance audit of the imported goods for creating fixed assets by type of investment 5 years prior. After more than 2 years (since its conclusions issued after Customs clearance inspection from July 2013 to January 2016), this company has just completed full payment of tax, penalties for administrative violations, and fines for late payment worth more than 4 billion VND to the State budget.

In fact, when doing the inspection and comparing the declarations at Customs offices at the M.S company, Customs forces noticed that some imported commodities also declared generic, unknown composition, notation specifications, technical specifications, the detailed unit price of each item and apply tariff classification of machinery, equipment, supplies and materials under the tariff classification of the main unit. Continuing to check and compare the payment documents stored at the Customs offices, the total value of goods declared on the declaration of the value of goods on Invoice has disparities $US 1.51 million ($US 20.6 / 22.1 million) due to non-declaration taxable value alternative spare parts. Besides that, the company has applied commodity codes including: refractory bricks; galvanized steel, steel tube, steel, plastic pipes; cables, cables and wires; spare parts replaced under the tariff classification of the primary to be false tax exemption provisions. For example, replacement spare parts are not in the list of preferential tax for importing and are charged by VAT. Due to the regulations: Only for tax exemption for the exact amount to assemble, connect and use the machinery system in order to operating normally, for the excess imported quantity will be fully paid tax in accordance with the law.

Thus, in order to set the basis of tariff applied to determine the amount of tax as prescribed, the Customs authorities had based on the registration list of imports, the description of goods, names, documents specifications provided by the M.S company. Hence, based on the conclusions of the inspection team, Dien Bien Customs Department issued the Decision on tax assessment, administrative penalties and fines of 3.55 billion VND and late payment of 629 million VND.

A Customs officer in charge of post clearance audit activity, at Dien Bien Customs Department revealed that the post clearance audit is a professional field. It requires Customs officers to have synthetic thinking, be knowledgeable in all aspects of law and export activities which can be changed in line with reality. Therefore, in order to avoid complaints, when doing each examination, each staff member not only explores and researches documents, but also they have to persuade the enterprises to cooperate during the work at the headquarters of the Customs authorities, as well as at the company’s offices. Thus, to make the enterprises respect and comply to pay fully tax into the State Budget, Customs officers have to play a role as legal advocacy to help enterprises to raise awareness of law observance, maximum remedy the flaws in the process of Customs procedures. Therefore, through the collection of information, re-examination of records and post clearance audit, basically, the enterprises generally comply with Customs law, not repeat the mistakes of the export declaration procedures for goods in the province.