Warning of wrong declaration on HS code at Haiphong port

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Imported steel sheets at Hoang Dieu port, Hai Phong. Photo: T.Binh.

Falsifying taxable goods into goods with a tax rate of 0%

Recently, B. Company opened a Customs declaration at the Customs Branch of Hai Phong port, Zone I (the Hai Phong Customs Department) to import nearly 130 tons of steel from Japan. Accordingly, most of the goods are self declared as the code of the product line with the import tax rate of 0%. Specifically, the company declared 102.3 tons of hot rolled steel coil, pickled and coated with oil thickness 1.3-2.3 mm, type 2, non-alloy, Japan origin, HS code 72082790 with import tax rate of 0%. The rest (more than 27 tons) was declared by the company as hot galvanized steel, thickness of 1.4-2.0 mm, type 2, non-alloy, originating from Japan, HS code 72104999, with an import tax rate of 10%.

However, through the physical inspections and the results of goods inspections, the Customs forces have discovered that enterprises declare wrong types and codes of goods, leading to lack of payable tax amounts. Accordingly, in the above consignment, there are more than 41 tons of rolled steel coils, hot galvanized, thickness of 0.5-1.2 mm, with HS code 72104912 and an import tax rate of 20%. The remaining 88 tons are identified as flat rolled, galvanized by hot galvanized steel, with a thickness of 1.3-2.3 mm, HS code: 72104999, with an import tax rate of 10%.

Accordingly, according to the results of the physical inspections by the Customs office and inspection results of the competent agencies, the whole lot of goods mentioned above are subject to the import tax rate of 10% and 20%, much different from previous declaration of the company as mentioned above. If the average import unit price is 10 million VND per ton, the difference between the declaration of the company and the real import goods shall be over 100 million VND.

In other cases, in recent times, the Customs Branch of Dinh Vu Port (the Hai Phong Customs Department) has detected that M. Company has committed wrong declaration, tax code leading to shortage of payable tax. When carrying out Customs procedures, enterprises declared the import of nearly 87 tons produced by the method of sulphate from coniferous wood with HS code 47031100 and an import tax rate of 0%. However, through the physical inspection by the Customs and the inspection of the competent authority, the goods actually imported are unbleached, 80% of uncoated cover, of a height of 560 kPa, with HS code 48041100 and an import tax rate of 15%.

The cases mentioned above are not rare in Hai Phong port area. According to information from the Standing Office of the National Steering Committee 389, recently, the Customs Branches of border gate under the Hai Phong Customs Department discovered many cases of wrong declaration on types and codes of imported goods, leading to a shortfall of payable taxes.

Mainly handling administrative violations

Exchanges with the reporter of the Customs Newspaper, the leader of anti-smuggling and violation handling division (the Hai Phong Customs Department) said that the act of declaring wrong type, code, or quantity of goods has been handled by the Customs Branches based on their authority. According to the Hai Phong Customs Department, in the first 6 months of 2017, the whole department sanctioned 2,865 administrative violations, including 2,826 fines at the Customs Branch level; 17 cases at the Department level; transferred the Chairman of the provincial People's Committee about 22 sanctioning decisions, collected budget remittance from handling administrative violations of 8.75 billion VND.

In order to clarify the treatment of cases of incorrect declaration of goods codes resulting in the shortfall of tax payment, on 21^st August 2017, the reporter of the Customs Newspaper exchanged with Mrs. Trinh Thanh Hai- the Deputy Director of Legal Department (the General Department of Vietnam Customs). Mrs. Hai said: Currently, the grounds for handling administrative violations in the above cases are stipulated in Article 8 and Article 13 of Decree No. 45/2016 / ND-CP. In particular, Article 8 provides the handling of violations of regulations on tax declaration. Accordingly, if taxpayers make false declarations leading to shortages of payable tax amounts or increase of tax amounts to be exempted, reduced, refunded or non-collected, they shall be subject to additional penalties such as a fine of 10% or 20% of the declared tax amount.

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Article 13 provides penalties for acts of tax evasion, tax fraud, and more severe penalties. Specifically, taxpayers who commit acts of tax evasion or fraud in the customs field (as provided for in Clause 1, Article 13), but not seriously, in addition to having to fully pay the tax amount prescribed, they shall be subject to a fine equal to one time the amount of tax evasion, fraud in the absence of aggravating circumstances. In cases where aggravating circumstances are involved, the fine level shall be raised by up to 0.2 times for each aggravating circumstance but shall not exceed 3 times the fraudulent tax amount. For individuals in each aggravating circumstance, the fine level shall be increased by 0.1 times, but must not exceed 1.5 times of the fraudulent tax amount.