The unusual increase in the amount of imported raw cashew nuts, especially from the market that enjoys the 0% import tax rate is Cambodia, raising the suspicion of tax evasion of many enterprises. Customs authorities have actively grasped the situation, synchronously implemented professional measures to inspect and strictly handle violations.

Cashews are imported at Cai Mep International Port (CMIT), Ba Ria-Vung Tau.
Photo: Thu Hoa

Imports from Cambodia increased by triple digits

According to the latest data of the General Department of Customs, from the beginning of the year to July 15, the whole country imported more than 1.87 million tons of raw cashew nuts with a turnover of more than US$2.82 billion, an increase of more than 174% in volume and nearly 222% in turnover over the same period in 2020.

In 2020, the whole country imported only 1,450,463 tons of cashews with a turnover of more than US$1.8 billion, down 11% in volume and 17.1% in turnover compared to 2019.

The Cambodian market alone totalled 216,330 tons, with a turnover of nearly US$276 million.

The Cambodian market alone accounted for nearly 60% in volume and 65% in cashew import turnover of the whole country during the same period.Notably, the largest import volume came from Cambodia with 1 million tons, turnover of nearly US$1.7 billion (market update by the end of June 2021), up 422% in volume and up to 587% in turnover over the same period in 2020.

Before the news that cashew imports from Cambodia increased abnormally, talking to reporters, Vice President and General Secretary of the Vietnam Cashew Association (VINACAS) Dang Hoang Giang said that the association was also surprised by this.

According to Mr. Dang Hoang Giang, member enterprises still mainly imported cashew from the traditional markets in Africa and it had not recorded any member of VINACAS with an abnormal increase in import volume.

Although it is only half a year, the amount of cashew imports from Cambodia has exceeded 1 million tons, while in 2017, VINACAS itself signed a cooperation agreement to support this country to increase cashew production to 1 million tons by 2025.

People ask whether this item is actually of Cambodian origin or is borrowed from another country to enter Vietnam in case of Cambodia's limited production capacity and the sudden increase of cashew imports from this country.

Regarding importers, besides members of VINACAS, whether there are any new markets entering this field to push up the volume of imported cashew.

Creating a cover of manufacturing enterprises

Before the unusual situation of raw cashew imports, the General Department of Customs took the initiative to grasp information and synchronously develop professional measures to investigate and handle violating enterprises.

According to Deputy Director of the Anti-Smuggling and Investigation Bureau (General Department of Customs) Nguyen Van On, cashew nuts imported by ASEAN have an import tax of 0%, while those imported from non-ASEAN markets have a tax of 5%. Thus, it can be questioned whether enterprises "borrow" Cambodian origin to evade import tax on this item.

Regarding the violation, Mr. Nguyen Van On said that there were two main acts.

First of all, the objects set up companies and conducted business in accordance with regulations to create trust, create a cover in the first stage, after a time, they imported a large amount of goods and sold in the domestic market to evade taxes and owners would flee. The second trick was they established many “ghost companies” to make it difficult for the authorities in investigation and handling.

In addition to the involvement of the Anti-Smuggling and Investigation Bureau, the Post-Clearance Inspection Bureau (General Department of Customs) planned to inspect 130 cashew processing enterprises with suspicious signs in some localities.

Initial preliminary inspection of 30 enterprises found two enterprises showing signs of origin violations and five enterprises showing signs of tax evasion.

Deputy Director of the Post-Clearance Inspection Bureau Tran Manh Cuong said that most enterprises had been renting machinery and equipment to meet conditions of tax exemption standards for imported goods, then imported cashew nuts for domestic consumption.

Because enterprises that import raw materials for processing and manufacturing for export are entitled to 0% import tax rate, all finished products must be exported. In case enterprises consume domestically is a violation and will be severely handled.

“The reality of the recent inspection by the Post-Clearance Inspection Bureau shows that most of the enterprises are currently in a state of registration to stop operating or dissolve or go bankrupt,” added Mr. Tran Manh Cuong.

In addition to the enterprises that are inspected by the Post-Clearance Inspection Bureau, with more than 280 remaining cashew enterprises, the General Department of Customs will assign local customs departments to make inspection plans.

According to Mr. Tran Manh Cuong, in order to strictly handle violating enterprises and be able to deter the objects with violations, the Customs authorities would request the Ministry of Public Security and the Supreme People's Procuracy to coordinate in handling.

Not only is there the risk of fraud and tax evasion, but the violations of the objects also seriously affect the production and business of genuine enterprises and the lives of the cashew growers in the country.

Mr. Tran Huu Hau, Deputy General Secretary of VINACAS, warned that when customers in the EU and the US saw a lot of raw cashews imported to Vietnam and there was still a surplus, they forecasted that the price of cashew kernels would decrease in the future, so they now reduce buying volume to wait for price reductions, this would affect the export of cashew kernels of Vietnam.

Customs prosecuted two smuggling cases related to cashew nut import

In the first case, in 2018, the Anti-Smuggling and Investigation Bureau prosecuted a criminal case of "smuggling" related to Thai Binh Agricultural Products Import-Export Joint Stock Company (Binh Thanh District, Ho Chi Minh City).

According to the case file, from September 8, 2016 to January 15, 2018, Thai Binh Agricultural Products Import-Export Joint Stock Company opened 70 customs declarations at Chon Thanh Customs Sub-Department (Binh Phuoc Customs Department) to import unshelled cashews according to the type of import of raw materials for export production (the type with exempt from tax), the total value of goods was more than VND400 billion.

However, in fact, Thai Binh Agricultural Products Import-Export Joint Stock Company did not produce for export, but sold them to the domestic market for consumption and evaded tax with an amount of over VND21 billion.

At the first-instance court on November 26, 2019, the People's Court of Binh Phuoc province gave Chairman of the Board of Directors of Thai Binh Agricultural Products Import-Export Joint Stock Company a sentence of 16 years in prison.

The second case, at the beginning of 2020, the Anti-Smuggling and Investigation Bureau prosecuted a criminal case of "smuggling" that occurred in Chon Thanh district, Binh Phuoc province, related to Dai Tai Trading, Service and Production One Member Limited Liability Company (address: C23 Lam Van Ben, Tan Thuan Tay Ward, District 7, HCMC).

The company imported 35 containers of raw cashew nuts in the form of importing raw materials for export production, the total value of goods was over VND41 billion, and was exempted from import tax (5%) over VND2 billion.

However, the company did not open the export declaration for export production products according to regulations and showed signs of dissolution of the company to evade taxes.