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Vietnam attempts to impose stricter control over goods processing
The General Department of Customs (GDC) is planning to put the enterprises, which do the outsourcing for foreign businessmen, under a stricter control in an effort to prevent tax evasion.
Stricter control to be imposed
Under the draft circular guiding the customs procedures applied to the goods processed for foreign businessmen, enterprises will bear regular and strict supervision.
The current regulations stipulate that the enterprises, which process products for export, will be inspected when customs agencies have doubts about the addresses, the management capability and the production capability in fulfilling outsourcing contracts.
Meanwhile, the draft circular covers a wider range of enterprises which will be subject to the strict control from customs agencies. These include the enterprises, which register to do the outsourcing for the first time; the enterprises which sign outsourcing contracts with foreign partners, but then outsource again to other enterprises; and the enterprises which still cannot make products for exports after three months they import materials for production.
Enterprises will have to face the inspection in many fields. They will have to show the documents that prove the right to legally use the workshops, production premises. Inspectors will also check the ownership and the right to use the machines and equipments at the production workshops (Enterprises have to show the invoices on purchasing the equipments or finance leasing contracts).
Customs inspectors will also examine the labor force reserved to carry out the outsourcing contracts.
Enterprises feel unhappy
The draft circular has caused shock to many enterprises specializing in processing goods for export, especially garment and footwear enterprises which have to import up to 70-80 percent of materials from other countries.
“My first feeling when reading the draft document is surprise. I also feel worried and unsafe because of too many additional regulations,” said Dang Phuong Dung, Secretary General of the Vietnam Textile and Apparel Association.
Meanwhile, Nguyen Tien Quan, Head of the Import-Export Division of a footwear company in Hanoi said that “he finds many provisions in the draft circular unnecessary.” For example, in order to get business registration certificate and tax codes, enterprises have to show to taxation bodies and local planning and investment departments their material facilities (Workshops, machines and equipment). Therefore, there is no need for customs agencies to examine the material facilities again.
GDC keeps cautious
Deputy General Director of GDC Vu Ngoc Anh, said “GDC will consider the opinions from businesses thoroughly before officially issuing the circular.”
However, Anh stressed that GDC will not give up the plan to tighten the control over the processing of goods for export after it has found out that many enterprises have made the corrupt use of the preferences to evade tax.
Under the current regulations, the materials imported to make products for export are exempted from import tax. Enterprises must export all the products made from the imported materials which enjoy the tax exemption.
A lot of enterprises have been found importing materials in big quantities, but they have not made products for export, and have been selling in the domestic market. A lot of enterprises have been found forging export invoices, or escaping registering addresses, and evading the tax sums of tens of billions of dong.
The customs agency of Binh Duong province, where there are 80 percent of enterprises making products for export, has announced that it has discovered a lot of cases where enterprises violated the current laws on exporting products.
Tuyet Ngan
vietnamnet
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