Series of measures to prevent fraud in value-added tax refund

Recently, the General Department of Vietnam Customs (GDVC) discovered a number of fraudulent activities of VAT refunds through anti-smuggling and trade fraud investigations.

Therefore, GDVC requested Customs Departments of provinces and cities to step up the application of information technology to strengthen information collection and analysis for identifying signs of risk. Hence, taking appropriate inspection measures, supervise, control and post clearance audit for exported goods under the management area of ​​the unit.

Furthermore, promptly detecting and preventing cases of enterprises cheating in export activities in order to appropriate VAT refunds.

In case of identifying signs of violation of the customs law, based on the collected information, customs authorities would temporarily suspend the delivery of goods through the monitoring area for inspection in accordance with the regulations.

At the same time, implementing customs measures for imported and exported goods.

For example, making a list and managing export enterprises that had VAT refunds following risk management criteria. Carry out strict inspection and supervision of exported goods that have completed export procedures until the goods are actually exported to prevent the situation of goods returning inland.

The VAT refund customs inspection area at Da Nang international airport- Photo: N.Linh

Strengthening the inspection of documents and physical inspection when implementing customs procedures for exported goods to detect and handle in accordance with the law for suspicious cases – over-declaring the quantity of exported goods, declaring incorrect quantity of exported goods compared with the actual quantity; making incorrect declaration of goods names, types of goods, abnormal increase in customs value for some high-value export items on export declarations (such as electronic components like computer RAM, electronic IC chips, boards, video cards, memory cards); and using invalid documents to carry out export procedures.

Strengthening inspection of customs valuation for imported goods of investment projects that are exempt from import tariffs, showing signs of declaring incorrect customs value in order to increase the amount of VAT payable upon import for an appropriation VAT refund at the domestic tax office.

When detecting and handling the above cases, if the case shows signs of law violations, GDVC requested the units to immediately transfer the whole case with the dossier to the investigation agency for investigation, prosecution and handling of organisations and individuals which take advantage of the VAT refund policy to profit. It aimed to fully recover the lost VAT amount into the state budget.

In addition, the customs departments of the provinces and cities needed to coordinate with the domestic tax agency and other forces in fighting and preventing fraud in VAT refunds.

In particular, it is necessary to actively coordinate with tax departments of provinces and cities in the area to provide information on fraud for exported goods (making incorrect declaration of goods name, quantity, value or use of illegal documents to carry out export procedures for the purpose of legalizing VAT refund dossiers), making a list of violating enterprises as soon as violations are detected when carrying out customs procedures or through the investigation of anti-smuggling and trade fraud, transfer to the domestic tax office to update information on violating enterprises during VAT refund procedures.

Providing information on import shipments with a declared value higher than 20% compared to the reference price of identical or similar imported goods issued by the GDVC following the provisions of Article 22 of Circular 39/2015/TT-BTC of the Ministry of Finance and export shipments with an abnormally high declared customs value as soon as they are detected during customs procedures to domestic tax authorities in order to control VAT refund procedures.

Closely check the information on the VAT refund declaration dossier related to imported and exported goods as requested by the domestic tax agency (if any) to ensure the correct VAT refund and law compliance.

Requesting the local tax office to provide information on cases of VAT refund for businesses in which the value is higher compared to the same period last year or abnormally high compared to other firms operating in the same industry; a list of enterprises, tricks and goods showing signs of tax evasion or tax fraud so that customs authorities can strengthen inspection of exported goods when carrying out customs clearance and post-clearance audit.

In addition, it is necessary to coordinate with other forces in the fight against VAT refund fraud by strengthening inter-sector inspection and post-clearance audit for enterprises engaged in export and VAT refund activities.

Collaborating with Tax, Planning and Investment authorities to strictly manage the business licensing field. In particular, developing and operating the enterprise information database system between the Tax, Customs, Planning and Investment authorities soon.

Strengthen coordination and information exchange between Customs authorities and competent forces (Police, Market Management, Border Defence force) to investigate, verify and quickly handle cases of violations of VAT refund, involving many provinces and cities, preventing illegal activities of exporting goods for VAT refund.

Strengthen anti-smuggling, coordinate with local authorities and competent agencies at the border adjacent with other countries to prevent and stop the act of returning exported goods (goods that have been cleared and exported to another country, but taking advantage of the wide border, return to Vietnam to continue carrying out export procedures).

Strengthen close cooperation with Customs of other countries in the region, especially bordering countries. Informing about enterprises, the situation of exported goods showing signs of fraud of VAT refund.

The GDVC also requested affiliated units to actively contact the General Department of Taxation to connect and collect data of VAT refund related to state budget revenues collected by the Customs authority.

When receiving data, the units based on their functions and tasks, compare them with tax refund data provided by the General Department of Taxation to analyze and evaluate suspicious signs of incorrect VAT refund. Then, conducting inspections following signs of violation or exchange, coordinate with relevant agencies to promptly detect and handle acts of appropriating VAT of organisations and individuals.