Rejection of the value declaration of imported Land Rover and Jaguar cars and collect tax arrears of more than 700 billion vnd

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Imported cars at VICT in HCM City. Photo: Thu Hoa.

According to the Customs Branch of Customs Post-clearance audit under the HCM City Department of Customs, in June 2016, the HCM City Department of Customs issued Decision for Customs post-clearance audits at the headquarters of Tan Thanh Do Joint Stock Company (232 Tran Hung Dao , Nguyen Cu Trinh Ward, District 1, HCM City). During the implementation of Customs post-clearance audits, the Customs Branch of Customs Post-clearance audit focused on checking the declaration value for imported cars of this company in the last 5 years (from May 31, 2011 to May 31, 2016).

The examination results showed that, from May 31, 2011 to May 31, 2016, Tan Thanh Do Joint Stock Company opened 372 Customs declarations to import cars. In which, there were 318 Customs declarations for 976 cars which were consulted Customs value and conducted post-clearance audits at Customs offices for 60 days. Specifically, there were 338 vehicles rejected on declaration value by Customs officers, 559 vehicles were accepted on declaration value by Customs officers; and 54 declarations for 156 vehicles were not consulted on Customs value. When consulting Customs value and conducting post-clearance audits, Customs officers did not discover any special relationship between the seller and the buyer, which may affect the transaction value.

Through examination of records, the Customs post-clearance audit team found some unreasonable Customs declarations. Specifically, according to the agency contract, the seller's price was based on information from the Agent (Tan Thanh Do Joint Stock Company), not based on negotiations which must be undertaken in commercial transactions. Thus, the declaration value in this case was based on the special relationship between the sellers and the buyers. Thus, the taxable value declared by this company did not reflect the normal value of transactions in the market.

At the meeting with Customs authorities, Mr. Tran Ngoc Dan, the Director General of Tan Thanh Do Joint Stock Company said that the price of cars that Guava sold to Tan Thanh Do Joint Stock Company was only at 65% - 80% of retail price in the UK. In addition, the Customs post-clearance audit team found that the declared price of this company on import declarations was only 30% - 40% of the retail price published on the website of Land Rover and Jaguar, equivalent to only 42% of the invoice price to buy insurance.

Therefore, the above import declarations were rejected on transaction value and Tan Thanh Do Joint Stock Company must accept the adjusted taxable value and pay additional taxes. According to data in the system, from May 31, 2011 to May 31, 2016, Tan Thanh Do Joint Stock Company opened 372 import declarations, with 1,103 cars with a value of $US 39,552,431. This company has declared at various prices according to brand, type, capacity, year of manufacture and model. Through the examination of documents such as invoice and contract, Land Rover and Jaguar cars were expressed according to the standards of the manufacturer without any difference in the details of cars.

Through the examination of records and physical inspections of cars, the Customs post-clearance audit team concluded that the declaration value of Tan Thanh Do Joint Stock Company did not comply with condition 2 and condition 4 in the total of 4 conditions for application of Customs transaction value. Specifically, when carrying out import procedures, Tan Thanh Do Joint Stock Company declared that there was no special relationship with Guava. However, through examination and physical inspections, the Customs post-clearance audit team confirmed that the seller and the buyer had a special relationship in trading. According to Clause 1.4, Article 13 of Circular 205/2010 / TT-BTC of December 15, 2010; Clause 1 and Clause 2, Article 7 of Circular 39/2015 / TT-BTC of March 25, 2015 of the Ministry of Finance on Customs value for imports and exports, Tan Thanh Do Joint Stock Company and the exporter - Guava International Limited Company had a special relationship, which affected the transaction value.

Besides, this company did not fully declare the details of goods for determination of Customs value. Tan Thanh Do Joint Stock Company purchased insurance for a number of imported cars from the UK to Vietnam but did not declare on Customs declarations although the Customs value of cars must include insurance.

According to the Customs Branch of the Customs Post-clearance audit, Tan Thanh Do Joint Stock Company did not complete records at the request of the Customs post-clearance audit team. In addition, this company was unable to explain some unreasonable content of Customs declarations about the price and the differences in detailed description of goods such as category, the year of production and the production model, etc.

Therefore, Customs officers decided to reject the declaration value for Land Rover and Jaguar cars of Tan Thanh Do Joint Stock Company and collect tax arrears of nearly 720 billion vnd, including 273 billion vnd of import tax; 344 billion vnd of special consumption tax and nearly 102 billion vnd of VAT.

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Disagreeing with the tax assessment and decision for collection of tax arrears of Customs officers, this company is complaining to Customs authorities. Mrs. Phan Ngoc Mai Liem, the Deputy Head of the Customs Branch of Customs Post-clearance audit under the HCM City Department of Customs said, after this company sent written complaints of the tax assessment to HCM City Department of Customs, the Department established a team to resolve the complaint of this company. Currently, the settlement of complaints is conducted by the HCM City Department of Customs. If the company disagrees with the settlement of the HCM City Department of Customs, the company can submit a complaint to the General Department of Vietnam Customs or Court of Justice under the current Law.