|The act of smuggling cashew nuts by enterprises causes heavy losses to the state budget. Photo: N.H
Intentionally changing the purpose of using thousands of tons of materials
Recently, Binh Phuoc Customs Department has issued a decision to prosecute a criminal case of “smuggling” occurring at Tuan Thinh Trading Production One Member Limited Liability Company (referred to as Tuan Thinh Company).
According to the dossier of Binh Phuoc Customs Department, Tuan Thinh Company has a business address in Phuoc Long town, Binh Phuoc province and is registered to operate the business of agricultural products, processing cashew nuts for export. From January 23, 2017 to July 2022, Tuan Thinh Company opened 33 import declarations under the type of export production (E31) with a total volume of 3,611 tons of raw cashew, equivalent to a taxable value of over VND166 billion. Also during this time, the company opened two export declarations for cashew kernels with a total export volume of only 53 tons.
According to customs dossier, the amount of unshelled raw cashew nuts in the import declarations of type E31 which was backlogged is 2,828 tons.
Calculated at the average unit price, this volume is equivalent to VND130 billion, the corresponding import tax amount is VND6.5 billion.
At the end of October 2021, Chon Thanh Customs Branch – Binh Phuoc Customs Department checked the situation of using raw materials and inventory, machinery, equipment and exported goods at the headquarters of Tuan Thinh Company. At the time of inspection, the company was operating and the company representative also confirmed that 2,828 tons of raw cashew materials were no longer in stock according to the customs declaration which was worth VND130 billion, corresponding to the tax amount of VND6.5 billion.
Through investigation, verification and working with Mr. Dang Van Tuan, Director of Tuan Thinh Company, Mr. Tuan admitted that the company had directly sold cashew kernel products made from 2,828 tons of imported raw cashew nuts at 33 declarations under the form of E31 for two customers. Accordingly, one enterprise in Binh Phuoc signed 24 contracts to buy cashew kernels in the period from June 2020 to June 2021 with a total weight of nearly 558 tons, worth VND72.2 billion; a business in Ho Chi Minh City signed a contract to buy 7.5 tons of cashew kernels, worth VND1.08 billion. Both of these enterprises confirmed that they bought and sold cashew nuts with Tuan Thinh Company as mentioned above.
According to Binh Phuoc Customs Department, Tuan Thinh Company had intentionally changed the purpose of use for 2,828 tons of raw cashew nuts as imported raw materials for export production, the value according to customs declaration was VND130 billion. According to the provisions of Decree No. 08/2015/ND-CP (amended and supplemented in Decree No. 59/2018/ND-CP) and Circular No. 38/2015/TT-BTC (amended, supplemented in Circular No. 39/2018/TT-BTC), goods are raw materials and supplies imported for processing and production of exported goods and goods temporarily imported and re-exported that have been released or cleared but then changed the purpose of use or domestic consumption.
It must make a new customs declaration. Changing to domestic consumption or change of use purpose shall be carried out only after completing the customs procedures for the new customs declaration. However, so far, Tuan Thinh Company has not followed the prescribed procedures.
Thus, the actions of Tuan Thinh Company have infringed on the state economic management of export and import, showing signs of smuggling as specified in Clause 4, Article 188 of the Criminal Code 2015 (amended and supplemented in 2017).
Strictly punish violations
According to statistics of Binh Phuoc Customs Department, in the province, there are more than 1,000 businesses operating in the field of buying, selling, manufacturing, processing, importing and exporting cashew nuts. In particular, there are more than 200 enterprises engaging in the import and export of cashew nuts. Notably, the majority of enterprises in the cashew industry are small and medium enterprises.
According to the provisions of the Law on Export Tax and Import Tax No. 107/2016/QH13, raw cashew nuts and cashew kernels imported to produce exported goods are exempt from export tax. Along with that, VAT Law No. 13/2008/QH12 also stipulates that raw materials imported to produce export goods under production contracts are not subject to VAT.
For example, enterprises import raw materials under the form of E31 to enjoy tax incentives and specialized inspection, then they only produce a small part of materials for export to cover the eyes of the management agency while a large amount of raw materials is processed for domestic consumption. This is not a new trick but many businesses still find ways to take advantage of it, affecting the business environment as well as causing loss for the state budget.
Director of Binh Phuoc Customs Department Nguyen Van Lich said Binh Phuoc Customs Department has reviewed and classified enterprises. Accordingly, for businesses that comply with the law, the unit will encourage businesses to continue to develop. For businesses that do not know the regulations and still have some mistakes, the unit will guide and support businesses to improve their compliance. Particularly, for enterprises that intentionally take advantage of the State’s preferential policies to make a profit, the unit will take strict handling measures.
Since the beginning of the year, Binh Phuoc Customs Department has issued three prosecution decisions to a case similar to Tuan Thinh Company with a total volume of nearly 19,000 tons of raw cashews, equivalent to over VND550 billion. Currently, the unit is also coordinating to investigate many other businesses that have similar behavior.
Besides strongly handling enterprises that intentionally violate the law to gain profit, Binh Phuoc Customs Department has launched many dissemination and support activities to raise awareness for businesses.
Specifically, the unit has gathered and compiled statistics on the risks that businesses may face when importing raw cashew nuts to produce export products in the form of E31 to help businesses review and adjust in order to avoid mistakes.