Despite US exports rise, VN is urged to tighten origin rules to avoid investigations
Despite US exports rise, VN is urged to tighten origin rules to avoid investigations
Some Vietnamese exports have been investigated for origin fraud and tax evasion, which requires tougher action from the Vietnamese Government to settle the problem and keep its exports growing.
According to the Trade Defence Department, Ministry of Industry and Trade (MoIT), there were 15 tax evasion investigations on Vietnamese exports between 2000-16. Between 2016 and 2017, six companies were investigated.
The number of cases targeting Vietnamese exports is forecast to increase because firms have begun shifting their production to Viet Nam and the number of suspicious products has risen.
The ministry has recently sent a request to city/provincial people’s committees of the list of products at risk of investigation.
There are four levels with the last two (level 3 and 4) being the most critical. Among the 13 listed products, hard-wood plywood is classified as level 4.
The US started investigating Chinese plywood items for anti-dumping and subsidy in December 2016 and officially imposed tariff on the products a year later.
The declining amount of Chinese plywood exports has boosted Viet Nam’s exports to the US. That makes Viet Nam a new target for the US anti-tax evasion campaign.
“The US Customs and Border Protection have begun investigating Vietnamese plywood exports so local authorities must tighten the control,” the ministry said in the request.
Some foreign companies have tried to obtain Certificate of Origin (C/O) to export their plywood products to the US and avoid tax.
In other cases, local firms have helped foreign producers cheat on US partners in plywood exports, Nguyen Ton Quyen, vice chairman cum general secretary of the Vietnam Timber and Forest Product Association, told Hai Quan (Customs) newspaper.
“Total value of timber exports in 2019 is forecast at US$11 billion, of which plywood exports are valued at hundreds of millions of dollars,” Quyen said.
“But origin fraud must be dealt with to deter local companies and avoid potential consequences.”
Statistics by the ministry show the US was Viet Nam’s biggest export market in the first eight months with total export turnover of $38.6 billion – up 25.3 per cent yearly. It was followed by the EU ($27.7 billion, down 0.5 per cent) and China ($23.8 billion, down 2.5 per cent).
Though Viet Nam should be happy with the increase, many experts have expressed concerns as the growth of the US market means more risky for the economy given the pressure of the US-China trade war.
According to the European-American Market Department, the increase requires the Government to pay more attention to whether the products are actually originated from Viet Nam or the companies just try to use the country to commit origin fraud and tax evasion.
Deputy Minister of Industry and Trade Tran Quoc Khanh said investigations into Viet Nam’s steel exports may happen as well as other products such as textile and garments, footwear and cashew.
To fight origin fraud and tax evasion, the Government in July 2019 issued Decision 824/QD-TTg to improve the State control over the origin of products, which stresses the co-working between the Government, local authorities and the business community.
“Management measures must be improved to predict, prevent and deal with tax evasion and origin fraud cases more seriously to keep Viet Nam’s exports competitive, especially when trade protectionism has become dominant in many economies and the US-China trade war has turned unpredictable,” Minister of Industry and Trade Tran Tuan Anh said.
The ministry will set up an inter-sector working team to review the policies and C/O regulations and upgrade penalties on origin fraud actions. The team will also enhance the inspection of local production and export activities, especially towards the groups of product that are likely investigated for origin fraud, Anh said.
In addition, the ministry will develop a co-working mechanism and constant communication between sectors, ministries, government agencies, local authorities, business associations and banks, he said.
Business associations urged the ministry to finalise criteria on origin certificates and match them with international practices to boost Vietnamese exports in the global market.
They said the Government should diversify the export markets for local producers to lessen their dependency on some key markets. In addition, they suggested MoIT simplify the procedures on C/O granting.
