Mr. Tam said that this case may be investigated in the form of tax evasion, a new phenomenon in the form of international trade.
- Why did you consider that?
Until now, there is no final conclusion for this case but pursuant to the original information of the General Department of Customs, after finishing customs protocol, a part of imported aluminum materials of Global Vietnam Aluminum Company Limited are taken to the production plant to produce and a part of that is sent to the outsource yard. Global Vietnam Aluminum Company Limited is a processing enterprise, therefore, imported and exported goods of the Company are not subject to tax.
Based on the above information, many experts have asserted that it is fraud of goods origin, forged goods origin but in fact, this may be the act of importing goods from a third country and then processing to export. If being investigated, in this case, the importing country will apply the form of anti-tax investigation.
I will take a more easily visualized statement. For example, in the context of ongoing trade war, many enterprises because of the immediate benefit that import goods with foreign origins and then label as Vietnamese in order to enjoy preferential tariffs upon export. This is a counterfeit of origin that is typical of the Khaisilk silk scarf.
But there is also another case, an enterprise importing raw materials abroad and then process in Vietnam. Meanwhile, these items can fully meet the criteria of C/O of the exporting country but could still be exposed to the risk of being evaded. The case of Global Vietnam Aluminum Company Limited is in this case.
- So far, Vietnam has only initiated a case of anti-tax evasion investigation of imported cold rolled steel wire. However, Vietnamese goods in exporting countries have been investigated against quite a lot, why sir?
From personal experience through exposure to cases and consultant for enterprises, I see an alarming site that most cases regarding tax evasion related to the fact that enterprises import raw materials from China and then process and assemble in Vietnam.
In fact, some enterprises import foreign materials, process goods into Vietnamese goods and then export them. The goal of these businesses is not just to receive preferential tax rates but may also evade anti-dumping or countervailing duties imposed by the importing country on goods in countries where the material is evasive.
(Exported Vietnamese products were investigated in anti-evasion quite a lot with 20 cases, 17 items in EU, US, Turkey and Braslzil markets. There are 11 cases under tax and 2 cases under investigation).
Typically, the case that the US Department of Commerce (DOC) made a decision to impose evasive taxes on stainless steel and cold rolled steel imported from Vietnam. According to the DOC, in July 2019, the volume of products imported to the US from Vietnam increased sharply, 331% and 916% respectively compared to previous years after the US imposed anti-dumping and anti-subsidy duties on anti-rust and cold-rolled steel products from South Korea and Taiwan.
- So, what are the consequences of tax evasion towards Vietnam?
In this case, the goods of the exporting country may be subject to sanctions of the importing country. This measure may only be for export enterprises but may also be suitable for the relevant industry.
That is not to mention the situation, in some countries such as the US, EU then these countries apply the self-certification of origin, that is not require enterprises to present C/O issued by the competent authorities of the exporting country.
So when a lawsuit on anti-evasion occurs, It is difficult for authorities of the exporting countries to intervene and support businesses. In addition, Vietnamese goods will lose credibility in the international market or be restricted export to these markets if being detected by the importing country and applied trade remedies.
- So, any solution to limit this situation, sir?
Firstly, Vietnam needs to tighten the certification of goods origin when exporting. However, the essence of the problem is not in this stage but in the management of goods and raw materials imported into Vietnam. Also, in the current trade war between the United States and China, another form of processing some stages of goods in Vietnam is the movement of a factory to Vietnam, with large capital inflows to attract domestic businesses.
This will have a huge impact on the domestic industry. Therefore, controlling this movement is also a vital issue, not only limiting the issue of taking advantage of Vietnamese origin but also on the domestic manufacturing and processing industry.
- Do you have any recommendations for enterprises in the context of complicated trade war, sir?
The most important issue is enterprises awareness and ethics. It is necessary to be aware of the risk of foreign investigation of trade fraud and origin, especially from the United States, with high value export processing industries such as seafood, footwear, timber and textile… Not to mention cases of intentional commercial fraud, in fact, many genuine enterprises also "accidentally" get caught in the crime of evading this origin.
However, the current law on certificates of origin of goods is not really specific and clear, many enterprises are subjective in determining the level of "Vietnam" in their goods, which leads to unfortunate cases.
- Thank you Sir!