In recent developments, the General Department of Customs in Vietnam has raised alarms over a series of tax evasion schemes related to steel imports. On November 18, 2024, the GDC issued detailed instructions to provincial and municipal customs departments, urging them to enhance their inspection processes and take stricter action against irregularities in steel shipments. This directive aims to address ongoing issues with false declarations and misclassification of steel products that are used to evade import taxes.
The GDC identified several methods of evasion that have been employed by importers to reduce their tax liabilities. These include misrepresenting the product name, type, or code on import declarations, as well as exploiting differences in preferential tax rates. For example, discrepancies in the tax treatment of hot-rolled versus cold-rolled non-alloy steel or coated versus uncoated products have been commonly used to underreport values and lower taxes. In some cases, importers have manipulated the classification between non-alloy steel and alloyed or stainless steel, taking advantage of varying tax rates to evade duties.
As part of the GDC's efforts to combat this, the customs department has called on local authorities to adopt a risk-based approach when inspecting steel shipments. This means prioritizing high-risk imports, such as those where discrepancies in declarations are more likely to occur, for more thorough checks. The goal is to ensure that all steel products entering the country comply with Vietnam’s tax laws and customs regulations. By targeting higher-risk shipments, the GDC hopes to uncover and prevent more cases of tax evasion, ensuring that only legitimate imports are allowed to enter the market.
The instructions also emphasize that local customs departments should report any issues or challenges encountered during their inspections to the GDC. If new risks or irregularities are detected, provincial units are required to communicate with the central customs authority to propose solutions. This ensures that oversight remains consistent and that any emerging trends or tactics used to evade taxes are addressed in a timely manner. The increased collaboration between local and national customs agencies is seen as essential for strengthening the overall efficiency and effectiveness of the country’s customs enforcement.
The GDC’s crackdown comes at a time when Vietnam’s steel industry is under close scrutiny due to concerns about the growing volume of steel imports and the potential for trade distortions. As the country’s economy continues to develop, particularly in the construction and manufacturing sectors, the demand for steel has risen. However, this has also led to a surge in the volume of imported steel, creating opportunities for tax evasion that could undermine the competitiveness of local producers and reduce government revenue from import duties.
In response to these growing concerns, the GDC is focusing on improving the transparency and accuracy of the customs declaration process for steel products. One of the measures being implemented is the review and verification of product codes used in steel imports. These codes play a crucial role in determining the appropriate tax rates and ensuring that products are classified correctly for customs purposes. The GDC has emphasized the importance of accurate reporting, and any discrepancies or inaccuracies in product codes will be flagged for further investigation.
The focus on steel imports is part of a broader effort by the Vietnamese government to address compliance issues in various industries, with the aim of reducing tax evasion and boosting revenue collection. This follows recent actions in other sectors, such as wood products and electronics, where similar measures have been implemented to improve tax compliance. By tightening regulations and increasing enforcement, the GDC is seeking to create a more transparent and fair market environment, where both local and international businesses can operate on an equal footing.
Furthermore, the GDC has made it clear that these efforts are not only about improving tax collection but also about protecting the interests of legitimate businesses. By ensuring that only compliant steel imports are allowed to enter the country, the customs authority aims to prevent unfair competition and safeguard the domestic steel industry. The increased scrutiny of steel shipments is expected to help reduce the risk of market distortions, ensuring that Vietnam’s growing industrial base is supported by a stable and fair trade environment.
Overall, the General Department of Customs' recent directives signify a more aggressive stance on tackling tax evasion in the steel import sector. The department's focus on improving inspections and ensuring compliance is crucial for maintaining the integrity of Vietnam’s customs system, fostering fair trade practices, and safeguarding local industries. By cracking down on illegal tax evasion schemes, the GDC aims to bolster both the country’s economy and its standing in global trade, ensuring that all imports, including steel, adhere to the law and contribute to the nation's growth.
