Will seek the way to block imported steel

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	Tax evasion “trick” makes it difficult for Vietnamese goods

According to VSA, coil steel with code 7213.91.90 has chemical ingredients and mechanical properties which can be used as imported coil steel are subject to trade safeguards taxes. Photo: internet.

On 18-10-2016, the Vietnam Competition Authority received Official Dispatch No. 71/HHTVN of the Viet Nam Steel Association on the status of imported steel from foreign countries into Viet Nam and raising a question about evasion of safeguards taxes with some steel billet and long steel items, in particular for coil steel products with HS code of 7213.91.90.

In order to provide a basis for plans to deal with this issue, the Vietnam Competition Authority held a meeting on 19/12/16 with local importers and relevant authorities including representatives of Viet Nam Competition Authority, Heavy Industry Department, Vietnam Steel Association (VSA) and concerned importers.

According to VSA, on 18-7, the Ministry of Industry and Trade issued Decision No. 2968/QD-BCT on the application of formal safeguard measures for steel billet and long steel imported into Vietnam, in that, long steel products (bar steel and coil steel) including HS codes of 7213.10.00, 7213.91.20, 7213.20.31, 7214.20.41, 7227.90.00, 7228.30.00 and 9811.00.00 with safeguard tariff of 15.4% from 2-8-2016 to 21-3-2017.

The application of safeguard taxes had a positive impact on production and the business situation of domestic enterprises. By the end of the first 9 months of 2016, the growth in production and sales of VSA members respectively was 22.4% and 24% over the same period last year.

However, by monitoring the import situation, VSA recognized an existed phenomenon of evading taxes by declaring a switched HS code.

Specifically, the amount of imported coil steel under HS codes which was subject to trade safeguards taxes in the first 9 months of 2016 decreased significantly, and only accounted for 29% over the same period and 25% compared with 2015.

But imported coil steel under HS codes which are not subject to tax (HS code of 7213.91.90) increased sharply, especially from April when the decision of imposing temporary safeguard taxes was applied.

Compared with 2015 and the first quarter of 2016, the amount of steel with this HS code had grown many times, particularly in September, the import figure had risen to 120,640 tones. Total imports in the first 9 months of 2016 of this item increased by nearly 14 times over the same period last year. At this pace, the volume of import in October was 100,000 tons.

According to VSA's analysis, coil steel with HS code of 7213.91.90 has chemical ingredients and mechanical properties which can meet the requirement to use as imported coil steel are subject to trade safeguards taxes.

Moreover, enterprises are switching to this HS code to have the tax rate of 3% compared to 15.4% of 7227.90.00 HS code, 30.4% for 7213.10.00 HS Code and 35.4% for HS code 7213.91.20.

Thus, we can see the behavior of trade safeguards tax evasion from the HS code which was subject to a different level of import tax.

Tax evasion of safeguard through import of steel VCN- In order to tackle problems of tax evasion of safeguard for imported steel by changing tax ...

Beside the above HS code of 7213.91.90, some other HS codes including 7213.99.90, 9839.10.00 and 9839.20.00 are likely to be declared by importers. These HS codes are reassembly described as HS code of 7213.91.90. They are hot-rolled coil steel, smooth rounded and just have the difference in diameter (7213.91.90 and 9839.10.00 HS code are below 14 mm and 7213.99 .90, 9839.20.00 HS code are above 14 mm in diameter).