Customs agencies have made public the names of the companies which imported petroleum products, but did not re-export the products as declared, which was considered a behavior of committing trade frauds.

In reply, the importers have claimed innocent, saying that they really did not want to sell the products in the domestic market, because this made them incur loss.

The public keeps half-believing the accusation by the customs agencies and the explanations by importers. A question has been raised that why the importers still imported petroleum products and then sold on the domestic market, though they anticipated loss?

In the past, some petroleum distributors even complained that they could only make profit from temporary imports for re-export, while they incurred big losses from the domestic sale.

Profit or loss?

“I am sure that people do not understand well--the tax policies applied to petroleum imports for re-exports. Therefore, they think that we seek profit when put the imports into domestic sales. In fact, we incurred loss when selling the imports domestically,” an executive of Saigon Petro, Vietnam said.

Customs agencies believe that the enterprises imported petroleum products at the moment when the import tariffs were low, and then sold the temporary imports on the domestic market at the moment when the import tariffs increased to make profits from the tax gaps.

However, the executive reminded that the consignments of temporary imports had very high import prices. Meanwhile, if putting the consignments of imports into domestic consumption later, the importers would have to sell at the market low prices at these moments. Moreover, if importers put the consignments of temporary imports into domestic sale after 30 days, they would be charged heavy fine for the tax payment delay.

On April 22, the diesel import tariff was zero percent, but the import price was very high 133.11 dollars per barrel (in principle, the government would lower the import tariff when the world prices go up in order to ensure the stable domestic prices). At that time, the base diesel price stayed at 21,230 dong per liter, and the retail price at 21,900 dong. As such, importers made a profit of 669.91 dong per liter from the domestic consumption.

On June 8, the import price dropped to 113.77 dollars per barrel, but the diesel import tariff rose to six percent. At that time, the retail price dropped to 20,500 dong per liter, which still could bring the profit of 1031 dong per liter.

According to the Saigon Petro’s executive, people thought that importers would enjoy the six percent import tariff gap, if enterprises imported diesel at the time when the import tariff was zero percent and sold at the time when the import tariff climbed to six percent.

However, he said, they key lies in the retail price as well. At the time when the import tariff was six percent, the retail price was low at 20,500 dong per liter. Meanwhile, enterprises imported diesel at the time when the import tariff was zero percent at high price of 21,230 dong per liter.

This spells that the enterprises incurred the loss of 730 dong per liter when they put the imports into domestic consumption. Meanwhile, if they imported products and sold domestically right on June 8, they still could make a profit of 1000 dong per liter, despite the six percent import tariff.

If comparing the import prices, one would see that the CIF price of the consignments of goods taxed zero percent is 19.34 dollars per barrel higher than the price of the consignments taxed six percent.

Also according to Saigon Petro, when re-exporting the temporary imports, enterprises would have to sell at the world prices at the transaction moments. If they bought at 133.11 dollars and re-sold at 113.77 dollars, they would lose 19.34 dollars. Therefore, they would rather to sell the imports on the domestic market to incur smaller losses.

Source: Vietnamnet