Practical Application of Inspection and Examination Measures; Handling of Import Tax Obligations Violations and Compulsory Compensation for Damages

dated June 14, 2005; Tax Administration Law No. 78/2006/QH11 dated November 29, 2006 (amended and supplemented in 2012); Customs Law No. 54/2014/QH13 dated June 23, 2014. The above legal documents were issued on the basis of inheriting the advantages of the old regulations, and at the same time, there were amendments and supplements to suit the practical requirements of preventing import tax losses. Specifically, we can see through the following basic advances:

Firstly, unifying regulations on tax management in general and import tax in particular: Before 2006, our country did not have a unified legal document on tax management, regulations on tax management were scattered in legal documents on each tax. In addition, there are other legal documents with regulations related to tax management such as: legal documents on accounting, invoices and vouchers; documents on complaints and denunciations; documents on inspection and examination; documents on administrative sanctions... Such a system of legal documents will have many contradictory regulations, causing difficulties in implementation. The 2006 Law on Tax Management was developed to overcome the above limitations.

Second, innovation of the import tax management mechanism: The previous import tax management mechanism was managed under a specialized management regime (a specialized officer performed all stages and directly collected import tax from taxpayers and then paid it to the treasury) with the main nature of using State power to impose on taxpayers. On the contrary, current import tax laws uniformly apply a more modern and effective tax management mechanism of self-declaration and self-payment of tax. This mechanism has the advantage of simplifying administrative procedures to speed up customs clearance of goods and strengthen the State's inspection and supervision role in tax management. From practical implementation, through many amendments and supplements, the law on import tax management has built an increasingly complete legal corridor for the self-declaration and self-payment of tax management mechanism.

Third, perfecting regulations on inspection and examination of violations of import tax obligations: The subjects of inspection and examination are not as widespread as before, but mainly focus on subjects showing signs of violations through analyzing information about those subjects.

The Law on Tax Administration clearly distinguishes between tax inspection and tax audit, and clearly stipulates which acts are considered violations of tax law. The Law on Tax Administration and the Law on Customs have provided complete, specific and comprehensive regulations, covering all cases and contents of import tax inspection and audit. The 2014 Law on Customs clearly stipulates the promotion of customs procedure reform, modernization of customs management, and fundamental change in the method of implementing customs procedures from traditional, semi-electronic methods to electronic methods in order to continue to simplify customs administrative procedures and improve the effectiveness and efficiency of customs management activities, strengthen economic security, prevent smuggling, trade fraud, and tax evasion.

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In addition, the 2014 Customs Law stipulates 05 additional violations of Customs inspection and supervision: Using electronic Customs declaration software that has not been confirmed by the Customs authority to be compatible with the electronic Customs data processing system; failing to provide or not providing fully and timely documents, materials, and electronic data related to exported and imported goods, means of transport exiting and entering the country when requested by the Customs authority in accordance with the provisions of law; using access accounts and digital signatures granted to other organizations and individuals to carry out electronic Customs procedures; storing temporarily imported and re-exported business goods at incorrect locations; bringing foreign means of transport across land borders not on the correct routes and border gates.

Fourth, perfecting regulations on handling violations of import tax obligations.

and increase the penalty level. Specifically: The Law on Tax Administration has stipulated the basic principles for handling tax law violations to guide the innovation to improve the effectiveness of handling violations. The Law on Tax Administration as well as guiding documents have fully, specifically and consistently stipulated the handling of tax law violations; covering the cases and contents of handling tax law violations such as violations, authority, statute of limitations, exemption from penalties, handling of different subjects, etc. Regulations on increasing the penalty level for violations: For example, according to the Law amending and supplementing the Law on Tax Administration in 2012, it stipulates increasing the penalty level for late payment of taxes at a progressive rate, for false declaration leading to a shortage of tax payable or an increase in the amount of tax refunded.

Fifth, perfecting regulations on forcing taxpayers to compensate the State for damages caused by violations of import tax obligations:

- Change the order of tax and fine payments to increase the efficiency of tax debt collection. Accordingly, the order of payment is stipulated as follows: Tax arrears; tax arrears; late payment; tax incurred; fines.

- Stricter regulations on conditions for tax debt and fine cancellation: For tax debts that are difficult to recover after all enforcement measures have been applied and these debts have lasted for 10 years.

- Continuously improve and supplement regulations on measures to enforce administrative decisions on import tax. The 2006 Law on Tax Administration stipulates 7 measures to enforce taxes and each measure must be implemented sequentially. The 2012 amended and supplemented Law stipulates in the following direction: Supplementing the measure to enforce the suspension of customs procedures for exported goods. In case the taxpayer absconds or disperses assets, the tax authority can choose to apply appropriate measures to ensure timely collection of tax debts.

In addition to the above Laws, it is also necessary to mention the important role in preventing import tax losses of guiding legal documents such as: Decree No. 87/2010/ND-CP detailing the implementation of a number of articles of the Law on Export and Import Tax; Decree No. 83/2013/ND-CP detailing the implementation of a number of articles of the Law on Tax Administration and the Law amending and supplementing a number of articles of the Law on Tax Administration; Decree No. 08/2015/ND-CP detailing and providing measures to implement the Customs Law on Customs procedures, inspection, supervision and control; Circular No. 129/2013/TT-BTC regulating administrative sanctions for tax violations and enforcement of tax administrative decisions; Circular No. 156/2013/TT-BTC guiding the implementation of a number of articles of the Law on Tax Administration, the Law amending and supplementing a number of articles of the Law on Tax Administration and Decree No. 83/2013/ND-CP dated July 22, 2013 of the Government; Circular No. 166/2013/TT-BTC of the Ministry of Finance detailing administrative sanctions for tax violations; Circular No. 38/2015/TT-BTC regulating customs procedures; customs inspection and supervision; export tax, import tax and tax management for exported and imported goods.

In general, national legal regulations have created a legal corridor for the work of combating import tax losses by regulating basic issues such as: subjects subject to import tax; rights and obligations of subjects participating in import tax relations; tax calculation for imported goods; procedures for collecting and paying import tax; inspection, examination and supervision of imported goods; violations of import tax laws and sanctions.

International legal documents on import tax that Vietnam has participated in

Originating from the practical requirements of trade exchange and world economic integration, the international legal system has become an important part creating a legal basis for import tax collection activities. International legal norms on import tax management regulate the relationship between countries with

each other in the determination of taxing rights and tax collection - payment relationship between a country and organizations and individuals of another country.

In Vietnam, international legal regulations on import tax mainly come from international treaties, typically: General Agreement on Tariffs and Trade (GATT), Agreement on Common Effective Preferential Tariffs (CEPT), Vietnam - United States Trade Agreement, Vietnam - Japan Economic Partnership Agreement, Vietnam - Chile Free Trade Agreement (VCFTA), Agreement on Customs Valuation (ACV) and Agreement on Pre-shipment Inspection (PSI)... In general, international legal regulations on import tax regulate the following basic issues:

- Determine the principles governing the application of tariffs on imported goods such as: most-favored-nation (MFN) treatment principle, national treatment (NT) principle, tax calculation principle based on customs value...

- Determine the list of goods subject to import tax, goods subject to tax reduction or exclusion...

- Determine the principles of choice of law applicable to import tax legal relationships, such as: the principle of the law where the party is a citizen, the law where the legal event occurs...

In addition, since the early 1990s, Vietnam Customs has successively signed cooperation and professional support agreements with the Customs of France, the UK, China, Korea, the US, Japan, India, Taiwan, the Russian Federation and the Customs of ASEAN countries. At the same time, it has actively participated in the activities of the World Customs Organization (WCO), Customs cooperation in APEC, ASEAN. Through bilateral and multilateral Customs cooperation relationships, Vietnam Customs has quickly integrated into the international Customs community, sought legal assistance and accessed modern Customs management methods, contributing to bringing Vietnam Customs to a higher level.

progressing to the level of Customs of advanced countries. As of 2010, Vietnam Customs has signed 42 multilateral treaties with international Customs organizations such as WCO (10 treaties), WTO (12 treaties), regional (16 treaties) and other multilateral treaties (4 treaties), along with bilateral treaties related to Customs activities with many countries in the world. Through actively participating in this international Customs cooperation, not only can we see the important role of Vietnam Customs, but on the other hand, it is a good basis to contribute to promoting the reform and modernization of import tax management of the country's Customs [53, pp.21-23].

2.1.2. Practical application of inspection and examination measures; handling of violations of import tax obligations and forcing compensation for damages

Over the past 70 years, at any stage, the Customs sector has always successfully fulfilled its mission of "border gatekeeper on the economic front". With the flow of import and export goods, passengers, and means of transport constantly increasing, the Customs procedures have always tried to be carried out quickly, smoothly, ensuring safety, in accordance with legal regulations, and in accordance with the Party's guidelines, policies and guidelines on the development of the country's economy. In recent times, the inspection, examination and handling of violations of import and export tax obligations of the sector have achieved many encouraging results, but there are also some limitations that need to be overcome.

Specifically:

- In 2010, the whole industry detected and arrested 12,502 violations, the value of violated goods was estimated at more than 418,308 billion VND; handled 9,696 cases, the amount of fines collected for the budget was nearly 64 billion VND [43].

Regarding inspection and examination work: In 2010, the whole industry carried out 170 planned and unscheduled internal inspections and examinations at 188 units; conducted 44 specialized inspections and examinations at 86 units. Through

Thereby, a number of shortcomings and problems were discovered in the implementation of regulations and professional procedures; enterprises declared incorrect tax codes, tax rates, and tax exemption lists, leading to excess or shortage of tax payable [43].

Regarding the work of document review and post-clearance inspection: In 2010, the post-clearance inspection force of the entire industry carried out many major topics such as: copyright fees and amounts that must be added to the value of exported and imported goods; imported cars declared as vans; gaps in customs management for imported and exported goods via ICD; discounts on imported cars... The results of the above efforts were that from December 16, 2009 to November 30, 2010: the post-clearance inspection work carried out 806 inspections at the Customs headquarters and 31 inspections at the headquarters of enterprises, the amount to be collected was 261.90 billion VND, of which 240.03 billion VND was collected; 3,789,723 records were reviewed, reaching a rate of 93.64%. Through the review of records, it was discovered that 30.84 billion VND had to be collected, in fact 29.63 billion VND had been collected [43].

Regarding tax debt collection: As of November 30, 2010, the total amount recovered from overdue debts under enforcement was about 1,257.2 billion VND; it is expected that by December 31, 2010, the total amount recovered will be 1,442 billion VND, of which the amount recovered from bad debts is about 1,000 billion VND. By the end of October 2010, the total amount of tax debt collected by the entire Customs sector was 4,330 billion VND, an increase of 3.2% compared to 2009 [43].

- In 2011, the whole industry arrested 19,485 cases of violations, the value of infringing goods was estimated at over 639,580 billion VND (the number of cases increased by 39.9%, the value increased by 35.8% compared to 2010). The number of cases handled and paid to the budget was estimated at 119 billion VND. The number of cases that the Customs agency decided to prosecute was 07 cases, and 75 cases were transferred to other agencies to prosecute [44].

Regarding inspection and examination work: Innovation in inspection and examination work has received much attention and focus. Accordingly, innovation in the development of inspection and examination plans has had clear changes compared to previous years.

In the past year, from comprehensive and widespread inspections and examinations, to specialized inspections and examinations, the results of which have achieved high efficiency. The results of the work of the Customs sector's inspection in 2011 achieved encouraging results in many areas. The total number of inspections and examinations in 2011 was 315; of which the General Department of Inspection conducted 36, local Customs conducted 261, and 433 units were inspected. Inspection results by sector: The total number of inspections was 121, of which the units in the

The sector conducted 103 self-inspections (the General Department Inspectorate conducted 10 inspections; localities conducted 93 inspections). The number of units inspected was 135. The General Department Inspectorate recommended collecting 199 billion VND, with actual collection of 91.7 billion VND [44].

Regarding the work of document review and post-clearance inspection: Implementing the strategy of reforming and modernizing the Customs sector until 2020 and the reform and modernization plan for 2011 - 2015, the leaders of the General Department of Customs have chosen 2011 as the "Year of Post-clearance Inspection". After one year of implementation, it can be assessed that the "Year of Post-clearance Inspection" has been very successful, creating remarkable changes. During the year, the entire force inspected and evaluated 2016 enterprises, equal to 241% compared to 2010, reaching 110% of the registered target. Of which, the number of post-clearance inspections at the enterprise headquarters was 140, equal to 500% compared to 2010; the Customs departments that performed well include: Hanoi (13 inspections), Hai Phong (12 inspections), Quang Ninh (12 inspections), Ho Chi Minh City (30 inspections). However, there are still a few units that have not conducted inspections at the enterprise headquarters such as Ca Mau, Hue, Binh Phuoc, Gia Lai, Quang Ngai. The revenue from post-clearance inspections increased sharply during the year: the whole industry issued decisions to collect 512.5 billion VND, reaching 163% of the registered target and equal to 176% compared to 2010. The whole industry has re-collected 4,024,821 records, reaching a rate of 92.98%. Through the work of re-collecting records, 47.5 billion VND has been collected for the budget. Of which, the two units with the largest revenue are: Quang Nam (20.5 billion VND) and Ho Chi Minh (12.8 billion VND) [44].

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