Customs cracks down on fraud

The Viet Nam Customs Agency has revised customs regulations involving garment exporters in an attempt to counter duty fraud that capitalises on governmental incentives.

The new regulations were recently submitted to the Ministry of Finance for approval, said Trinh Dinh Kinh, deputy head of the National Customs Agency’s Watchdog.

According to current regulations, materials imported for processing exported goods are exempted from duties on the condition that all completed goods will be exported.

Garment and footwear makers are the biggest benefactors of the incentive, given that they import up to two-thirds of their materials for production.

However, some garment-makers have taken advantage of the incentive to import duty-free materials in large quantities and sold them domestically, incurring losses of hundreds of billions of dong (dozens of millions of US dollars) in duty revenue.

They then fabricate airway bills to present to the customs agency as evidence of their exports, or they just run away with the profits.

“Clothes items having tags ‘exported by Viet Nam’ can be found in many markets in Ha Noi,” said Pham Thanh Binh, head of the National Customs Agency’s Department of Post-clearance Watchdog. “It proves that most imported materials are used for domestically bought garments.’

The new regulations will impose tighter checks on three categories of garment-makers: those contracted by foreign importers for the first time, those hiring others to do part or all of their contracts, and those failing to export any items three months after they import materials, said Trinh Dinh Kinh, deputy head of the National Customs Agency’s Watchdog.

However, the draft regulations have encountered a backlash from garment exporters, especially those which have signed their first processing contracts.

“Many new regulations contravene governmental directions on reducing red tape,” said Dang Phuong Dung, general secretary of the Vietnamese Association of Garmentmakers. — VNS

Tags: Vietnam customs sector