VietNamNet Bridge - Not only trading companies but authorized car distributors as well have been found playing tricks to evade tax.

The Ministry of Finance (MOF) in early October inspected smuggling activities at the General Department of Customs (GDC) with special attention given to luxury imports and cars entering Vietnam as gifts.

The inspected imports arrived between January 1, 2011 and September 30, 2016, the time when Circular 20 with required strict procedures was applied. 

The outcome of the inspection will only be released in one month. However, a source from MOF has revealed that inspectors have discovered wrongdoings committed by two authorized car distributors. 

Not only trading companies but authorized car distributors as well have been found playing tricks to evade tax.

The two distributors are likely to be asked to pay tax arrears worth hundreds of billions of dong after a long period of committing fraud under different forms.
The behavior of evading tax by declaring low taxable prices was committed some years ago by some trading companies. However, the inspection has found that authorized dealers also commit fraud with a hand lent by manufacturers.

A mid-class car, which has a real selling price of $15,000, might be declared at $12,000 only with the ‘cooperation’ between the authorized distributors and manufacturers. If the declared price is accepted by taxation bodies, the distributors can evade the tax on the difference of $3,000.

A report of the Ministry of Transport showed that in the first nine months of the year, Vietnam imported about 72,000 vehicles of different kinds, including 1,200 non-commercial ones and 8,400 used products.

The discovery that authorized car distributors also tried to evade tax showed that Circular 20 is an imperfect barrier to prevent tax fraud.

The circular stipulates that importers of cars with nine seats or under, besides performing necessary import procedures, must be authorized by official carmakers or dealers as their distributors in Vietnam. The importers have to show certificates proving adequate qualifications for car guarantee and maintenance 

High profits

Analysts believe that while Circular cannot help prevent tax fraud and protect consumers, it has given the monopoly to some authorized distributors, thus distorting the import car market.

Nguyen Tuan, director of Thien Phuc An Company, said the circular with its requirement has given a tool to authorized distributors to crush trading companies.

Tuan said with the circular, the right to determine the import car market has been transferred from Vietnamese to foreign.

Circular 20 raised controversy when it was released, while arguments still continue. In principle, the circular expired in July 2016. However, some people want to extend the circular or replace it with a similar legal document.

Lao Dong