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