To help Customs Departments of provinces and cities have a basis for implementation as well as to guide enterprises when fulfilling customs procedures to avoid errors, the General Department of Vietnam Customs has given instructions on removing obstacles arising in the implementation of Decree 128/2020/ND-CP (referred to as Decree 128) stipulating on handling administrative violations in the field of customs related to the issue of "incorrect information".

Customs officials of Cau Treo Customs Branch (Ha Tinh Customs Department)
supervised and checked imported goods. Photo: H.Nụ

In the process of implementing Decree 128 from practice, several customs departments of provinces and cities encountered difficulties when implementing the provisions of Point b, Clause 1, Article 8 of Decree 128. Customs Departments of provinces and cities wondered in case of dossiers inspection but before conducting physical inspection of goods, the enterprise made a declaration on changing quantity, name, type, quality, and customs value, origin, code of goods, so, should a firm be sanctioned for administrative violations under Decree 128?

Besides that, in the case that the Customs Branch issues a notice of stopping taking goods through customs supervision area for conducting physical inspection, after the time of issuing notification about stopping taking goods through the customs supervision area, an enterprise makes a declaration for amending and supplementing information about goods name, type, quality, customs value, origin, and the code of imported goods subject to tax without affecting to the tax payable before the time of conducting a physical inspection. Will the company be sanctioned in this case?

With the above problems, the customs departments of the provinces and cities called for guidance and clarification of the concept of "doesn't affect the payable tax amount". In case of the incorrect information of quantity, name of goods, types, quality, customs value, origin, code of import goods subject to tax, resulting in an excess of payable tax or a reduction, exemption, refund in payable tax or not collected. Did it subject to manage as stated in the regulation?

Customs departments of the provinces and cities also gave examples. An X company imported Y item, declare a quantity of 100 units. Goods subject to tax with import tariff rate was 5%, VAT 5%. The amount of tax that needed to be paid was VND 20 million. However, in fact, imported goods were only 50 units and the amount of tax paid by enterprises was VND 10 million. Therefore, the incorrect information of the quantity of company X led to an excess of the payable tax amount. Thus, whether company X violated the regulations on incorrect information and the number of import goods was subject to tax but does not affect the payable tax amount or not?

In response to this question, according to the General Department of Vietnam Customs, in Clause 12, Article 4, Clause 2, Article 10, Point c, Clause 2, Article 18, and Clause 1, Article 29 of the Law on Customs stipulates that the customs declarant must be responsible for declaring accurately imported goods.

Also in the Law on Customs and the provisions of Circular 38/2015/TT-BTC, as amended and supplemented in Circular No. 39/2018/TT-BTC, the Customs authority should inspect and determine whether it is a violating regulation or not and handle violations in accordance with the provisions of law. Cases of making additional declaration outside the prescribed time limit would be sanctioned.

The phrase "incorrect information" specified at Point b, Clause 1, Article 8 of Decree 128 is inherited from Decree 127/2013/ND-CP (point a, Clause 2, Article 7 - violating regulations on customs declaration) and Decree 45/2016/ND-CP amending and supplementing Decree 127/2013/ND-CP (clauses 1, 2, Article 7- violating regulations on customs declaration). The phrase "without affecting the tax payable" is a sign to distinguish from acts specified at Point b, Clause 1, Article 8 from the acts of violations affecting the tax payable in Article 9, Article 14 of Decree 128.

The General Department of Vietnam Customs stated that incorrect information affecting payable tax (including cases of incorrect information leading to a lack of payable tax or an increase in the amount of tax exemption, reduction, refund, tax evasion) will be sanctioned in accordance with the provisions of Article 9, Article 14 of Decree 128. Regarding cases of incorrect information but not affecting the payable tax under Point b, Clause 1, Article 8 of Decree 128, General Department of Vietnam Customs suggested the Customs Departments of provinces and cities should base on the above provisions to understand and handle violations in accordance with regulations and case dossiers.

The Customs Departments of provinces and cities said in the process of implementing the provisions of Decree 128, some units claimed they were facing difficulties in applying the provisions of Clause 5, Article 9 of Decree 128 and Clause 5, Article 10 of Decision No. 166/QD-TCHQ. Clause 5, Article 9 of Decree 128 stipulates: "Implementation of sanctions as prescribed in Clauses 1, 2 and 3 of this Article only applies in case the tax amount is different from VND500,000/customs declaration for violations committed by individuals, from VND 2,000,000/customs declaration for violations committed by organisations”. Clause 5, Article 10 of Decision No. 166/QD-TCHQ dated January 18, 2021 stipulates: “Basis for determining the tax difference for violations specified in Article 9, Article 14 of Decree 128 is the tax amount declared by the taxpayer and the payable tax as shown in the tax assessment decision of the competent person or the tax payable as prescribed.

With these two provisions, many opinions arise. Firstly, the tax difference for the violations specified in Article 9, Article 14 of Decree 128 is calculated on the customs declaration (the total tax amount of the goods in the declaration, including the goods that are declared incorrectly in the customs declaration resulted in a lack of tax payable, and incorrect information led to an excess of payable tax). Secondly, tax difference for violations specified in Article 9, Article 14 of Decree 128 is calculated for items of goods declared incorrectly by enterprises, leading to a lack of tax payable.

Some units gave practical examples, company X import two items. Item one, company X declared incorrectly the amount, leading to a lack of tax payable of VND 50 million, and in item two, company X declared the quantity incorrectly, resulting in a tax excess of VND 50 million.

Some stated that the difference in tax amount on the customs declaration is 0 VND. The reason was that, according to Clause 5, Article 9, there was no penalty for company X for making incorrect declarations in quantity, leading to a lack of payable tax. However, many said that company X made an incorrect declaration of quantity, leading to a lack of tax payable for item one and sanctioning company X for this violation.

Regarding this problem, the General Department of Vietnam Customs said that the provisions of Article 9 of Decree 128 (including Clause 5) were applied to violations of regulations on tax declaration leading to lack of payable tax or increase the amount of tax exemption, reduction, refund. In other cases of incorrect declaration (did not understate the payable tax, did not increase the amount of tax exemption, reduction, refund), the provisions of Article 9 of Decree 128 would apply.