Stopping a case of exporting timber for tax fraud

The shipment of smuggled wood was seized by HCM City Customs Department. Photo: T.H

Changing inspection channel to seize illegal timber

According to the case file, on April 17, 2019, Tin Tao Thanh Nghiep Trading Service Co., Ltd. registered customs declarations through the Saigon Port area 4 Customs Branch, exporting shipments to China. In the customs declaration, the enterprise declared the exported goods were a horizontal and vertical rubber timber bar which had been smoothed and dried by rubber wood to make pillars of stairs, tables and chairs. Those were brand new 100 percent with tax rate of 0 percent. Total weight was over 28 tonnes, worth more than 316 million VND. The shipment was classified to yellow channel (checking dossier).

Through inspecting records, customs officials of import-export cargo customs procedures team - Sai Gon port area 4 customs discovered suspicious signs, so they suggested leaders change the channel for conducting physical inspection by 10 percent for the exported timber shipment as mentioned above. Through inspection at the rate of 10 percent, customs officials found the actual export goods did not mactch compared to the customs declaration, so the leader decided to raise the physical inspection rate to 100 percent. As a result, the Saigon port area 4 Customs Branch found the exported products were vertical lumber (suspected rubber wood) which had been smoothed with a thickness of more than 40mm.

The verification results showed the exported timber is a ripped, smoothed and sanded rubber wood with size of (4.8-6.0) cm x (4.8-6.0) cm x (0.85-0.95) m. Based on the Export Tariff in accordance with the List of items subjected to tax in Appendix I, Decree 125/2017/ND-CP dated November 16, 2017 of the Government, the above item was classified to the group subjeted to 25 percent export tax rate (which was not 0 percent as claimed by the enterprise). Thus, Tin Tao Thanh Nghiep Trading Service Co., Ltd declared thee wrong name, category, volume, HS code and tax rate, leading to the lack of payable tax amount in excess of 111 million VND.

According to the Ho Chi Minh City Customs Department, Tin Tao Thanh Nghiep Trading Service Co., Ltd committed the acts of deliberately declaring wrong names, categories, volumes, values, goods codes and tax rates for tax fraud. According to the provisions of Decree 125/2017/ND-CP of the Government, the exported timber is ripped, smoothed and sanded rubber wood was classified to commodity codes with export tax rate of 25 percent. However, when registering the customs declaration, the company declared that it was horizontal and vertical rubber timber bar which had been smoothed and dried, with the export tax rate was0 percent. They aimed to hide the name of the actual exported good for tax evasion.

Customs broker and enterprise blame each other

After the illegal exported timber shipment was seized by customs authorities, the goods owners and customs broker which carried out export procedures blamed each other and neither side admited violations.

Working with Customs authorities, director of Tin Tao Thanh Nghiep Trading Service Co., Ltd said due to lack of experience, the company did not directly carry out export procedures. They used a customs broker for the procedurez. However, the transaction through customs broker was done via telephone without any agency contract. According to the agreement, the enterprise provided documents to the customs broker for implementing customs declaration but the director did not know about the content of declaration.

The director of this company also said the timber shipment was packged at the warehouse of the enterprise in Tan Uyen Industrial Park- Binh Duong. The above exported timber is ripped, smoothed and sanded rubber wood with size of (4.8-6.0) cm x (4.8-6.0) cm x (0.85-0.95) m. This item had export tax but the enterprise did not know tariff rate. However, when asking the customs broker, the representative said the above export timber product is not subject to tax. The origin of the exported wood was due to the purchase of self-processed rubber wood, a part of the company bought finished products on the market for export. This was the first timber shipment for export.

The representative of customs broker - VPT Joint Stock Company implemented procedures for the above shipment said this customs broker used agency code and digital signature to carry out procedures for the above exported timber shipment of Tin Tao Thanh Nghiep Trading Service Co., Ltd under agency contract. Also, representing V.P.T Joint Stock Company presented to customs authority a contract agency.

Furthermore, this customs broker said the declared information on the customs declaration was provided by Tin Tao Thanh Nghiep Trading Service Co., Ltd according to the voucher to comply with the contract. The cargo transportation from the warehouse of the enterprise to the export port was carried out by the shipment owner.

According to Ho Chi Minh City Customs Department, the customs broker and shipment owner put the blame on each other and did not admit the act of intentionally declaring wrong name of the goods. However, in terms of objective reality, Tin Tao Thanh Nghiep Trading Service Co., Ltd must understand the regulations when participating in import-export activities. Along with that, the director of Tin Tao Thanh Nghiep Trading Service Co., Ltd declared dishonestly about not signing a contract with the customs broker but, in fact, the broker showed the contract.

Besides that, in terms of subjective matters, both shipment owner and customs broker admited they knew the exported wood products was subjected to tax, but they intentionally made false declarations in comparison with reality.

With the above grounds, Ho Chi Minh City Customs Department said the violations of Tin Tao Thanh Nghiep Trading Service Co., Ltd constituted the crime of "smuggling" as stipulated in Article 188 of the Criminal Code 2015. After exchanging ideas with the HCMC People's Procuratorate, Ho Chi Minh City Customs Department issued a decision to prosecute a criminal case, transferred the file to the police agency for investigation in accordance with its authority.