Why does tobacco smuggling increase?

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	More than 37 tonnes of suspected smuggled tobacco discovered in Lao Cai

In 2016, tobacco smuggling increased. Photo: Nguyen Ha

Reports of the Vietnam Tobacco Association showed that in 2016, the tobacco smuggling increased. In 2015, with direction of the Government, the functional forces drastically and effectively implemented directive 30 and Decree 124/2015/ND-CP, tobacco smuggling still increased by 30% compared to 2014, but in 2016, tobacco smuggling increased again and took place complicatedly. The amount of smuggled tobacco increased by 10% against 2015, accounting for 20% of market share, causing estimated loss of State tax revenues of about 8.000 billion vnd.

The fact that tobacco smugglers are increasingly sophisticated and acting spontaneously and using modern facilities and challenging the State authorities, on the other hand according to the Association, the anti-smuggling effort had signs of depression. This was shown through specific figures: number of smugglers seized for criminal penalties reduced by 53.5% (compare to 2015); number of arrested cases for criminal settlement decreased by 58.9%; amount of tobacco seized and destroyed also decreased more than 30% (6.81 million packs compared to 10 million packs in 2015).

There were 10,147,156 packs destroyed in 2015 with financial support of 30.3 billion vnd in 2015 and 6,815,873 packs destroyed in 2016 with financial support of 21.6 billion vnd.

Many causes have been represented by the Association such as Special consumption tax and extraction rate of Funds for prevention and control of tobacco harm increased, thereby the profits from smuggled tobacco were much higher than domestically manufactured tobacco. Smuggled tobacco is cheap without printed health warnings and the tar and nicotine contents in smuggled tobacco is higher than the standards, attracting a large number of consumers. Jet and Hero brands accounted for over 70% of smuggled tobacco. Along with that was the lack of determination of some localities and functional forces in combating and preventing tobacco also being a cause of tobacco smuggling increase in 2016.

In particular, the Association said: The lack of consistency in the legal documents relating to the handling of tobacco smuggling defined in Penal Code 2015, Decree 124/2015/ND-TTg, Official Dispatch No. 06/TANDTC-PC of the Supreme people's Court, Trade Law, Investment Law caused difficulties and obstruction in the handling of crimes on trafficking, transporting, and stockpiling of smuggled tobacco, gradually losing the powerful deterrent tool of the law; also reducing the determination in the anti-smuggling of tobacco of functional forces because after arresting tobacco smuggling cases, they did not have power to handle them.

Accordingly, the Association presented 7 recommendations to enhance the anti-smuggling of tobacco for the incoming period as below:

1. The Government directs National Steering Committee 389, local Steering Committees and Central functional forces and local functional forces promptly deploy Directive 30/CT-TTg of the Prime Minister and collaborate together to issue action plans on key areas of tobacco smuggling. The Ministry of Industry and Trade directs the Market Management Department and local sub-departments to consistently fight against, promptly detect and handle acts of trafficking, transporting, and stockpiling of smuggled tobacco, especially placing and selling smuggled tobacco in cabinets, counters, stores, restaurants and hotels.

2. The Government proposes to the National Assembly to amend the law on prevention and control of tobacco harm and permit to move the management of the Funds or prevention and control of tobacco harm to the Ministry of Finance to fit the specialized management functions and extract 50% of the Fund for the fight against smuggled tobacco, for financial support and equipment and means and staffing for forces who directly implement the effort against smuggling of tobacco.

3. The Government suggests to the National Assembly to amend the Penal Code 100/2015 / QH13 and not to apply the minimum value of illegal goods as a basis for the crime decision and Framework for crimes relating to trafficking, transporting and stockpiling of smuggled tobacco, and handle the above illegal acts on the basis of an amount from 500 packs and more to unify with the provisions in Decree No. 124/2015/ND-CP on the administrative penalties for trading, manufacturing and trafficking of banned and counterfeit goods, and protect the interests of consumers.

Specifically: For Clause 1 of Article 190 (criminal offenses for manufacturing and trading of banned goods), there should be provisions on criminal penalties for cases: b) banned and illegal goods such as smuggled cigarettes from 1,500 packs to 3,000 packs; or from 500 packs to 1,500 packs, which have been administratively sanctioned for this act or have been sentenced for this crime, or crime of banned goods stockpiling and transporting specified in Article 191 of this Code, have not been expunged;

For Clause 1 of Article 191 (criminal offenses for stockpiling and transporting of banned goods), there should be provisions on criminal penalties for cases: b) banned illegal goods such as smuggled cigarettes from 1,500 packs to 3,000 packs; or from 500 packs to 1,500 packs, which have been administratively sanctioned for this act or have been sentenced for this crime, or crime of stockpiling and transporting of banned goods specified in Article 191 of this Code, have not been expunged ".

Destruction of seized smuggled tobacco is one of measures submitted to the Government by the Association

4. The Ministry of Finance does not levy tax stamps for packed cigarettes of enterprises because the nature of stamping is to serve the State's tax administration.

5. The Government directs to destroy all the seized smuggled tobacco against re-smuggling under Decision 2371/QD-TTg dated 26 December, 2014, taking the provisions on tobacco destruction into amendments and supplements of Decree 67/2013/ND-CP.

6. The Government and ministries and ministry level agencies consider to increase staffing and supportive tools for the police force, and border guard force, Customs force and market management force; fund and provide equipment and means, staffing for forces who directly implement the inspection, supervision and anti-smuggling of tobacco.

7. The Government permits to build centralized incinerators of smuggled tobacco (construction plans made by the Association) in order to meet environmental protection requirements.

Shortcomings in the handling of smuggled tobacco VCN - The fact that there are too many legal documents stipulating the handling of acts of ...

From January 01, 2017, the Vietnam Tobacco Association increased the support level for smuggled tobacco destruction from 3,500 vnd/pack to 4,500 vnd/pack. In 2017, the Vietnam Tobacco Association agrees to eliminate and not to sign contracts with agents with signs of smuggled tobacco.