According to the latest statistics from customs authorities of Vietnam, nearly 60,000 companies are engaging in export and import. Besides, growing pressures from international trade commitments, the Government and the business community are striving to reduce administrative procedures, shorten the clearance time and create an open corridor for export and import activities. Compliance management based on risk management is an optimal solution for Vietnamese customs authorities to tackle these issues. The ratio of physical inspections of goods has been substantially reduced over the past years. In particular, the actual inspection rate was 12.62 per cent in 2011 and 5.36 per cent in 2016. Vietnam Business Forum Magazine has an interview with Mr Bui Thai Quang, Deputy Director of Risk Management Department under the General Department of Vietnam Customs, on this issue. Le Hien reports.
Could you please briefly introduce compliance management?
In essence, compliance management - understood to manage law compliance of applicable subjects - is not a new concept in State management in general and customs management in particular. The task of customs authorities is balancing rational interests between compliance with minimised disruption in trade, reducing costs for legitimate trade and reducing social costs. This may be achieved when customs authorities apply compliance management approach methods based on risk management. An important feature of this approach is actively directing the business community to voluntary compliance (low risk) to set aside resources for controlling high-risk subjects.
Modern compliance management based on risk management is built on some basic elements: legal framework, risk management, administrative management, and technical and of technological framework that customs authorities use. Generally, all four groups will decide how goods, passengers and vehicles are passed through border gates and how customs authorities control that flow. Conceptually, customs customers can be divided into four main categories: Customers voluntarily abide by the law; customers always try to adhere to but fail to meet compliance; customers tend not to adhere to if the opportunity is given; and customers completely do not comply.
In risk management-based compliance management strategy, all customers are essentially treated differently. As for customers who voluntarily comply (low risk), they should be incentivised and offered simplified procedures. Other three groups need appropriate sanctions to settle.
Thus, compliance management must be based on the "health" of enterprises through information system of enterprise activities. How have customs authorities of Vietnam handled this? Have you ever learnt about companies that try their best to achieve compliance management standards but they will do illegitimate business afterwards?
When enterprises are rated voluntary compliance, they will be incentivised and applied simplified customs clearance procedures. In customs business, this is like obtaining the green flow status. However, with a multi-dimensional information system, we affirm that we have not found any case trying to achieve compliance management model standards and then do illegal business. Currently, Vietnam has nearly 60,000 exporting and importing businesses. To manage them, customs authorities must manage business information system, business activities and law compliance.
Every year, the customs sector assigns answer-ability to units responsible for collecting and updating new business information into company profile records. This information collection is made with information needs for assessing compliance and classifying corporate risks. In the past time, customs authorities have assessed and classified three groups of enterprises: Prioritised enterprises, compliant enterprises and non-compliant enterprises.
The task of customs is clearly demarcating compliance and non-compliance to take supervisory measures. Customs authorities will carry out more checks on goods and means of transport of non-compliant enterprises. In contrast, compliant companies will be imposed a very low level of check plus rapid clearance service. If both buyers and sellers are compliant, their exports and imports in a contract/deal will be allowed to after-clearance checks in a period of time, according to Article 86 of Circular 38/2015/TT-BTC dated March 25, 2015. They will be accepted the guarantee of tax obligations issued by credit institutions; allowed to bring back their goods for preservation to meet required conditions; incentivised to opt for pre-clearance or post-clearance documents when they have taxes cut, reduced or refunded.
In addition, customs authorities regularly monitor, analyse and assess operational and compliant risks, integrate and recommend changes to regulations, policies, procedures and priority modes as well as mechanisms for assessing compliance and risk classification for importers and exporters.
What should enterprises do to be certified compliant?
They must observe customs laws, tax laws and relevant laws. They must proactively provide company profile information for customs authorities to have enough information for timely and effective assessment. They must cooperate with customs authorities to timely report on emerging issues to customs authorities for prompt handling. In turn, customs authorities must provide enough for enterprises to raise their awareness of risks and avoid violations.
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