That enterprises still do not observe law strictly while policies on customs management still have gaps and inconsistencies has made tax fraud through price declaration of exported and imported goods a pressing problem.
General Department of Customs said that in recent times, many enterprises have used various ways to avoid tax, one of which is price fraud. Particularly, they reported goods with faulty tax, kinds, value of imported goods, etc.
According to the Goods Analysis and Classification Center of the General Department of Customs, many enterprises declare correctly only about 35 – 40 percent of the commodity code.
The classification of goods of enterprises is still different compared to that of customs agencies for various reasons including the emerging of new enterprises engaged in import and export markets, or purposely false application of price code to reduce the tax. However, the current major cause is because enterprises have not fully updated knowledge in the analysis and classification of goods. Enterprises when import goods do not require the sale to provide complete information of the items. In many cases, enterprises took advantage of the loopholes in management system to practice tax fraud through price declaration. Some enterprises even collude with foreign partners to make fake profile and report higher price of some goods having import tax of 0 percent to reduce the taxable value of goods with high import tariffs. Besides, some enterprises also falsely report the total weight of components, especially those of imported auto parts. Even the same kind of components at different customs agencies, are applied with different application code.
For instance, a blood collection tube is applied the tax rate of 30 percent from 0 percent; isopropyl alcohol (a highly volatile alcohol) is applied the tax rate of 40 or 50 percent from 0 percent. Some items can bring the enterprises the benefit of billions dong if reported with a different name of components or chemical composition, such as the TV card used for computer or imported steel. For each shipment of imported milk, if enterprises declare a low price and that price is approved tax will be reduced by VND 200 - 300 million.
In April and May 2012, Customs of Ho Chi Minh City has gained more than VND 3 billion from risk management and consultation on milk prices. In the first five months of 2012, Ho Chi Minh City customs has increased revenue of over VND 82 billion from the budget consultation. One of the emerging problems of tax fraud is the application of tax code of imported steel. Enterprises usually declared lower price of imported powder milk compared to the price of identical item that enterprises imported once in every three months and lower than production costs after excluding taxes, general cost and profit.
Loopholes in management
According to the customs department, inspection and consultation activities to identify prices in current time, is not really effective. There still exists the phenomenon of evaluating price lower than databases, omitting additions when evaluating price such as license fees, insurance fees, etc. or making any adjustment not in accordance with regulations. Declared price rejection rate after consultation reached only about 50 percent compared with the number needing consultation.
Another reason given by the local customs agencies is that the preferential import tariff has been modified, but there are no criteria to distinguish the tax of items with similar name or usage, which leads to protracted disputes and claims. Database system of customs agencies are still poor, most of which is based on the information by provided by enterprises with low credibility.
The Import Export Duty Department of the General Department of Customs assumed that to make the customs tax declaration accurate and convenient for enterprises, first of all, it is essential to build a check price for the management portfolio of risky goods and timely make amendments when there are fluctuations in prices. At the same time, it is also crucial to update the list on online registration of the declaration system to alert employees when registering declaration checks, identify suspicious signs, standardized data inputs from the stage of declaration and determine the basic elements directly affecting the price of the goods.
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