Prevent lower valuations by post-clearance audit

Customs officers at SaiGon port – area 1 checking imported goods

“Doing magic” with iPhone valuation...

According to the Tan Son Nhat International Airport Customs Branch, through records, information and inspections atCustoms clearance for mobile phones, the unit detected suspicious signs from Customs valuations for duty assessment for iPhones and made a decision to conduct PCA at the Customs headquarters for a business specializing in importing this commodity.

Through examining the Customs value for duty assessment that an enterprise declared on 25 Customs declarations on imports of 16GB iPhone 5s, Customs officers discovered the value that the company declared is lower than the identical item price in the Customs pricing data system. Specifically, before 28th February 2016, the company declared at only $US 285 each, but on the domestic market this commodity is priced at nearly 8.5 million vnd (about $US 400each.

Based on information collected, as well as the process of working the business, Tan Son Nhat International Airport Customs Branch concluded that the declared price of the company does not meet one of four conditions of applying the transaction value method. On the other hand, the written explanations of the enterprise conflicts with the data shown on the documents produced to the Customs authority. From this point, the Branch rejected the declared value of the imported mobile phones of the enterprise before 26th February 2016 in 25 Customs declarations, adjusted the Customs value for duty assessment from $US 285 each to $US 483 each, 28.5 billion vnd in arrears on tax payments.

From 25 Customs declarations on tax arrears, in the beginning of 2016, through the PCA work, Tan Son Nhat International Airport Customs Branch has obtained more than 7.5 billionvnd in arrears of tax for mobile phonesin 7 declarations of imported iPhones in late 2015. In the Customs declaration No. 100 523 387 640/A11 in August 2015, the enterprise declared it had imported 13,200 pieces of 8GB iPhone4s GSM with Customs value for duty assessment of $US 173 each. Through inspection, the Customs authority rejected the value declaration of the enterprise, and increased Customs value for duty assessment to$US 300 each, thereby making arrears on import taxes for the State budget of 3.6 billion vnd.

Similarly, an enterprise declared on importing 12,000 mobile phones 8GB Black iPhone4s GSM, with Customs value for duty assessment of $US 165 each. Through inspection,the Branch rejected the declared value,and increased the Customs value for duty assessment to $US 300 each, arrears to the state budget nearly 3.5 billion vnd.

In recent times, Tan Son Nhat International Airport Customs Branch also rejected a number of iPhoneswith declared value such as a shipment of 16 GB iPhone6s Plus Gold, the business declared at$US 603 each, Customs authority rejected the declared value, and adjusted the value to $US 804 each, increasing revenues for the State budget of nearly 100 million vnd.

The Head of the Duty management team (Tan Son Nhat International Airport Customs Branch), Ta Hong Khanh said the company that imported the mobile phonesabove is a large organization, specializing in importing mobile phones and tablets. The decision to reject the declared value of the company is a problem in dealing with company management. However, with the convincingarguments and evidence, conforming to the regulations, the company agreedto pay the entire amount of tax that the Customs authority determined as arrears in 25 import mobile phone Customs declarations.

... And also with phone components

According to the Customs News' reporter at the Tan Son Nhat International Airport Customs Branch), there are non-commercial shipments withadjusted Customs value for duty assessment increased many times by the Customs authority, more than 10 times the declared value of the company.

For example, an enterprise imported a flash shipment, declared the Customs value for duty assessment of about 878 million vnd, but the Customs Branch adjusted the price to more than 8.78 billionvnd (10 times higher) and the fixed tax rate for the goods to more than 2.5 billion vnd. Or in the case of the Company Limited Y. imported non-commercial goods(virtual server computing system platform server & storage system), the enterprise declared Customs value for duty assessment at more than478 millionvnd, the Customs authority determined the price at more than3 billionvnd, which is equal to an increase on 300 million vnd of taxation.

Notably, according to the Tan Son Nhat International Airport Customs Branch, with the familiar import items such as mobile phone accessories have also been valued price. A shipment of mobile phone circuits in a non-trade declaration was recently opened at the Branch, the enterprise declared the Customs value for duty assessment of the entire shipment at 2 billion vnd. However, the Customs authority determined the price of the shipment to be nearly 4.6 billion vnd, increasing revenues for the State budget of 307 million vnd. Similarly a shipment of mobile phone components imported and then also adjusted resulted in an increase of 301 million vnd taxation. This shipment, the enterprise declared asa non-commercial declaration, the Customs value for duty assessment of nearly 1.6 billion vnd, but the Customs branch adjusted the Customs value for duty assessment on the entire shipment to 3.8 billion vnd.

One of the most imported commodities under non-commercial forms through air routes to are clothesand fashion bags. The taxation valuation for these items is not a small challenge for the Customs authority, since the owners normally declare a very low price compared to the real value of the imported goods. Recently, a shipment of imported sports socks, clothes and handbags, after Custome determination, the taxation was increased by nearly 300 million vnd. When importing, the enterprise declared the Customs value for duty assessment at just over 290 million vnd. Through actual examination, and based on the data of the Customs authority, Customs officers determined and adjusted the Customs value for duty assessment of shipments to nearly 1.4 billion vnd.

These are just some typical cases of the nearly 900 cases of tax adjustments increased by redefining the Customs value for duty assessment of non-commercial imports that Tan Son Nhat International Airport Customs Branch has performed over the first 7 months of 2016. According to the Branch, depending on the type of import for business, as prescribed for non-commercial imported goods, the Customs authority will not consult the price but shall determine the Customs value for duty assessment for each shipment. From early 2016 until 19th August, the Branch has made a valuation of 2,677 non-commercial declarations, with 868 declarations adjusted to increase the Customs value for duty assessment, with a total amount of nearly 14 billion vnd tax increase.