HCM City Customs: Focusing on revenue loss prevention through declaring customs valuation

Customs officer of Saigon port area 4 checks goods in transit. Photo: T.H

Preventing price fraud from the gate

According to the HCM City Customs Department assessment, through professional operation, border-gate customs units have discovered some cases of importing goods with unreasonable declared prices for tax calculation, showing signs of reducing tax amounts for state budget collection. By using professional methods of price consultation, the units have rejected the declared value, adjusted the price to match the actual imported goods and fully charged tax for the state budget. In January 2023, the Department conducted price consultations for 1,265 declarations, thereby rejecting the declared value for over 400 declarations, with the tax revenue paid to the state budget over VND 6.7 billion.

Through price consultation, border-gate customs units rejected the declared value because the enterprise did not meet all four conditions of transaction value, the declaration of the discount was not appropriate with the provisions of Article 15 of Circular 39/2015/TT-BTC; the enterprise has not had sufficient and relevant dossiers to provide to customs authority; accounting books related to accounting and sales documents.

At Saigon port area 1 Customs Branch, where the number of declarations conducting price consultation and tax increases is high, it showed that the price consultation had increased revenue for the state budget by hundreds of billions of dong per year. For example, in 2022, the unit increased revenue for the state budget by over VND 210 billion. This year, Saigon Port Customs Branch focuses on combating price fraud for several key items, such as motorcycles, alcohol, and frozen food. In particular, motorbikes increased by over VND 6.4 billion; wine and beer are over VND 4 billion; ceramic tiles is VND 1.48 billion; frozen foods are VND 2.2 billion...

Many imported shipments have been rejected for declared value and adjusted to increase the tax from several hundred million to billion dongs. Typically, some businesses import motorcycles with a declared price of US$1,400-1,450/unit. Through consultation, Saigon port area 1 Customs Branch determined the price of US$1,626-1,797/unit; this case helps increase state revenue by about VND1.5 billion. Or, in the case of one company importing sake wine, the declared price is JPY 1,958 /bottle. Through price consultation, the Customs authority determined to increase the price to JPY 2,310/bottle, increasing budget revenue by about VND400 million. Another case is Company C. importing chicken wings, the declared price is US$ 1.02/kg, but through consultation, the customs authority determined the price is US$1.62/kg; This enterprise has to pay about VND 430 million to the state budget.

Many synchronous solutions

Besides preventing revenue loss through price consultation, HCM City Customs Department also strengthened the inspection and review of incorrect declarations of HS codes, declarations for disguising the name of goods or unclear and incomplete declarations of goods names to apply low taxes rate or enjoy special preferential tax rates and at the same time, advising on developing guidance documents to implement the tax calculation work in the whole Department uniformly. Furthermore, to step up the review of the declaration and determination of values for groups of items with a high risk of value, improve the efficiency of price consultation and post-clearance audit on customs valuation.

Along with that, HCM City Customs Department directs branches and advisory divisions to deploy legal documents and documents guiding commodity codes of the General Department of Vietnam Customs to unify implementation throughout the unit to avoid the situation of one item having many different codes, or one HS code has many different items to minimize loss of revenue. Furthermore, regularly reviewing and promptly detecting cases where an item applies many different codes, making statistics of easily confused items about codes to correct and urge units to overcome, learn from experience, and collect tax arrears following regulations.

To fulfil revenue collection targets in difficult revenue sources, besides trade facilitation solutions, HCM City Customs Department leaders directed units to strengthen the fight against revenue loss through supervision and inspection of customs procedures, post-clearance audit, specialized inspection, anti-smuggling and trade fraud. In particular, from an import-export shipment of 41 containers of electrical cables showing signs of large tax fraud through making an incorrect declaration of origin that occurred at Cat Lai port recently, HCM City Customs Department has directed units to focus on anti-fraud of origin for goods enjoying special preferential tariffs; apply anti-dumping duties, anti-government subsidies.