Công văn 4539/TCHQ-TXNK

To: Provincial Customs Departments 

During the implementation of directives of the Ministry of Finance in the Official Dispatch No. 9877/BTC-VP dated August 27, 2021 on management and fight against fraudulent acts in VAT refund, the General Department of Vietnam Customs has detected some fraudulent acts in VAT refund through anti-smuggling and fraudulent trading investigations. To be specific:

(i) Taking advantage of simple procedures for enterprise establishment, loose regulations on dissolution of enterprises and document management, and light penalties for violations for establishing different enterprises of which legal representatives are the violator’s relatives or hired employees or by using ID Card/citizen's identity card of unknown persons (those who lost ID Card/citizen's identity card or fake ID Card/citizen's identity card, etc.) for the purposes of applying for VAT refund. These enterprises usually follow dissolution procedures after a short operating period so as to avoid competent authorities' inspection.

(ii) Taking advantage of printing and issuing VAT invoices, domestic sales invoices (VAT invoices) printed and used by enterprises, and simple procedures for dissolution of enterprises for creating a lots of invoices to serve the legalization of origin of shipments of exported goods.

(iii) Taking advantage of incentive policies concerning customs procedures (physical inspection by risk levels) for fraudulent trading in exporting goods. e.g.: fictitious exporting; exporting fewer goods than the declared quantity; exporting goods of types other than the ones declared; exporting a large quantity of goods with extraordinarily high value; exporting goods of low value while declaring goods of high value; incorrectly declaring names and HS codes of goods for preparing fictitious applications for opening customs declarations for exports or certifications of exports, and then cooperating with other established enterprises for VAT refund; preparing fictitious invoices or documents; declaring the quantity of exports greater than the one actually exported for increasing VAT refunded; turning over goods for appropriating VAT refunded.

(iv) Declaring increased customs value of imported goods serving the implementation of investment projects for the purpose of appropriating refund of input VAT.

In order to strengthen the strict management and control of declaration and prevent fraudulent acts performed to appropriate VAT refunded, the General Department of Vietnam Customs hereby requests relevant provincial Customs Departments to implement the following measures:

1. Promote the application of information technology to collection and analysis of information which is used for identifying risks and adopting appropriate inspection, supervision, control and post-clearance inspection of exports in the province as well as promptly detecting and preventing fraudulent exporting and appropriation of VAT refunds.  If detecting any violations against the Law on customs, based on collected information, goods shall be suspended from passing through the customs controlled area for inspection as prescribed.

2. Implement customs measures against imports and exports:

a) List and manage exporting enterprises eligible for VAT refund according to risk management criteria.  Carry out careful inspection and supervision of exports of which exporting procedures have been completed until goods are actually exported to prevent the return of goods into domestic market.

b) Intensify the inspection of documents and physical inspection of goods during the processing of customs procedures for exports for the purposes of detecting and handling, as prescribed by law, cases of goods showing signs of fictitious declaration of quantity of exports or declaration of a quantity of exports greater than the quantity of goods actually exported; incorrect declaration of names or types of goods or declaration of extraordinarily increased customs value of certain types of high-value exports on customs declarations for exports (such as electronic parts, including: computer RAM, IC chips, main board chips, video graphics cards, memory cards, etc.); use of invalid documents for completing procedures for exporting goods.

c) Intensify the inspection of customs values of imported goods used for serving the implementation of investment projects and exempted from import duties but suspected of declaration of increased customs values for increasing the VAT amounts payable and then appropriating refunded amounts of input VAT at domestic tax authorities.

d) When detecting and processing the cases in Points 2.a, 2.b, 2.c of this Official Dispatch, cases showing signs of violations against law, accompanied by relevant documents, must be transferred to investigating authorities that shall take charge of investigating, prosecuting and taking actions against the entities taking advantage of VAT refund policies for appropriating VAT refunds.

3. Cooperate with domestic tax authorities and other forces in combating and preventing frauds in VAT refund:

a) Each provincial Customs Department shall:

a.1) Proactively cooperate with the provincial Department of Taxation to perform the following tasks:

- Provide information about exporting frauds (incorrect declaration of names, quantity or value of goods, or use of invalid documents for completing exporting procedures) for legalization of applications for VAT refund, compile and transfer the list of violating enterprises that are detected when following customs procedures or through anti-smuggling and fraudulent trading investigations to domestic tax authorities for updating information about such violating enterprises when processing applications for VAT refund.

- Provide domestic tax authorities with information about import shipments whose declared value is 20% higher than the reference price of the like or similar goods announced by the General Department of Vietnam Customs according to Article 22 of the Circular No. 39/2015/TT-BTC dated March 25, 2015 of the Ministry of Finance, and information about export shipments with extraordinarily high customs values detected during the processing of customs procedures to serve the control of refund of input VAT.

- Carefully inspect information in the VAT refund dossiers in respect of imports/exports at the request of domestic tax authorities (if any) so as to ensure the refund of VAT to eligible entities as prescribed by law.

- Request domestic tax authorities in the province to provide information about cases where an extraordinary VAT amounts refunded to enterprises, in comparison with the same period in the previous year or other enterprises trading the same goods in the province, list of enterprises, activities or goods showing signs of tax evasion or tax fraud so that the customs authority can carry out tight inspection of exports during processing of clearance procedures and post-clearance inspection.

a.2) Cooperate with other forces in combating and preventing frauds in VAT refund:

- Intensify interdisciplinary inspections (combination of customs and taxation), and post-clearance inspection of enterprises engaging in exporting and having VAT refunded.

- Cooperate with tax authorities and investment and planning authorities to properly manage licensed scopes of enterprises, and then develop and operate an enterprise database system shared between tax, customs, and investment and planning authorities.

- Intensify the cooperation and information exchange between customs authorities and other forces (including police agencies, market surveillance forces and border guard forces) in investigating, verifying, combating and processing important and complicated cases of VAT refund violations which involve multiple provinces and cities so as to prevent the leakage of exports with VAT refund to be inspected.

- Intensify anti-smuggling activities, and cooperate with local governments and competent authorities of border areas in preventing the returning of exports (which have been exported after completing customs procedures but, by taking advantage of wide border areas, are transported to Vietnam for following exporting).

- Intensify the cooperation with customs authorities of countries in the region, especially those sharing the same border with Vietnam.  Promptly provide information about enterprises and the exporting of goods showing signs of frauds in VAT refund.

b) Units of the General Department of Vietnam Customs shall:

Proactively contact with the General Department of Taxation for connecting/receiving VAT refund data (including VAT amounts refunded and to be refunded) concerning amounts payable to state budget collected by customs authorities.  When receiving data, these units shall, within the ambit of their assigned functions and tasks, compare the received data with VAT refund data provided by the General Department of Vietnam Taxation for analyzing and evaluating suspicion signs of refund of VAT against regulations of law, organizing inspection/verification of such suspicion signs or exchanging/cooperating with relevant authorities for promptly detecting and processing acts of appropriating VAT refunds.

Information shall be exchanged between the General Department of Vietnam Customs and General Department of Taxation every 3 months.

4. Strictly comply with disciplines and rules during their performance of tasks; adequately and strictly implement regulations of laws, professional procedures and measures for customs inspection and control, and tax management.

Provincial Customs Departments are requested to comply with the instructions herein./.