Animal feed businesses are in a precarious situation due to HS code confusion.

Following the issuance of Government Decree 144 on November 1st, animal feed businesses were "paralyzed" as their goods were held up for inspection, resulting in a series of additional costs.

Businesses importing animal feed hope that authorities will soon resolve the obstacles – Photo: TM

Businesses raised this concern at the 2024 Dialogue Conference on Tax and Customs Administrative Procedures, jointly organized by the Ministry of Finance and the Vietnam Chamber of Commerce and Industry (VCCI) on December 13th in Ho Chi Minh City.

Businesses can't wait.

As many as 450 businesses from the South, from Quang Ngai southward, attended this annual conference. Although the chairman announced that time was up, requested businesses to submit questions on paper, and promised to provide answers on the website, hundreds of hands were still raised. They had so many concerns that they needed the leaders of the tax and customs departments to address directly at the conference.

Ms. Nguyen Ly Long Khanh, representative of GAD Vietnam Joint Stock Company (Binh Thuan province), expressed frustration after submitting three questions but not being invited to a dialogue.

Speaking at the end of the dialogue, Ms. Khanh stated that after the Government's Decree 144 (on export tariffs, preferential import tariffs, list of goods and absolute tax rates, mixed taxes, and import taxes outside the tariff quota) was issued on November 1st, the general situation for animal feed businesses has been very chaotic.

She stated that the business imports raw materials for animal feed production, HS code 23040090. Following this decree, goods arriving at customs offices specifically for this item are now subject to commercial analysis, and all businesses importing soybean meal are required to undergo inspection. Each customs declaration incurs additional fees of approximately 7-8 million VND per shipment, and the goods have not yet been cleared.

“So what is the objective of Circular 144, which product is it targeting, and why are customs offices still confused and applying HS code 2304029 as raw soybean meal when there is no scientific documentation classifying it as meal? We request that the Ministry of Finance and the General Department of Taxation intervene immediately in this matter; businesses cannot be allowed to suffer like this,” Ms. Khanh requested.

According to Ms. Khanh, the strange thing is that businesses haven't faced these problems before, but since the tax exemption regulations came into effect, they've been stuck. This difficulty isn't unique to her company ; many others are experiencing it too. As soon as goods arrive at the port, customs officials send them for analysis and classification, even though no one in the production process grinds the goods into powder.

According to Tuoi Tre 's research, HS code 23040090 refers to soybeans in the form of flakes, obtained from the soybean oil extraction process, not powder.

After the conference concluded, Ms. Khanh continued to question the leaders of the General Department of Customs and requested that the Ministry of Finance and the General Department of Customs immediately find solutions due to the urgent situation – Photo: AH

The hassle of verifying VAT refunds.

Mr. To Vinh Hung, Deputy General Director of Southern Steel Company (VNSteel), said that the company's VAT refund application has been stalled since August 2022, amounting to nearly 200 billion VND. The main reason is that the company's input materials are scrap metal, which is considered high-risk and therefore subject to inspection before a refund can be granted.

At the time the company engaged in scrap metal trading, all its records and procedures complied with tax refund regulations, the company provided explanations for the activity, and the input invoices from the suppliers were all valid. However, when the tax authorities inspected the company at the time of the tax refund, they discovered that the suppliers had ceased operations and were awaiting bankruptcy or dissolution procedures, raising doubts about the legality of the invoices. As a result, the tax authorities withheld the refund.

Furthermore, VNSteel is also facing issues related to input invoices because the company's purchasing partner has been identified by the Ho Chi Minh City Tax Department as being involved in illegal invoice trading and the case is being transferred to the investigative agency. This has caused the Ba Ria - Vung Tau Provincial Tax Department to temporarily suspend tax refunds for VNSteel.

“At the time the company engaged in scrap metal trading, all the necessary documents and procedures were correct and explainable. The entity that made the tax declaration error is responsible. We propose that the investigation and verification should only take place during the tax audit. Afterward, it should be separated. The principle is that the entity at fault should be held accountable. If there is no basis to conclude that the input invoices of the business requesting the refund are illegal, then we request that the tax refund be considered for the business ,” he suggested.

In response, Mr. Mai Son, Deputy Director General of the General Department of Taxation, said that they would consider the businesses ' suggestions and refine the legislation during the drafting process. However, Mr. Son stated that because the company purchases goods, scrap materials, and products from other entities, the tax authorities identify these businesses as having risk indicators when processing tax refund applications. In fact, in recent times, many businesses have been established solely to buy and sell invoices and fraudulently obtain tax refunds.

However, currently, the tax authorities only have the authority to verify, but not the authority to determine whether a business is using illegal invoices. Therefore, in some cases, the tax authorities can verify and refund taxes to businesses , but in other cases, they need to cooperate with the police to investigate. The Ba Ria - Vung Tau Provincial Tax Department transferring the case file to the police is to ensure compliance with regulations.

Mr. Son also suggested that the Ba Ria - Vung Tau Provincial Tax Department should actively coordinate with VNSteel to resolve issues promptly and in accordance with regulations, ensuring the rights of businesses .

The tax authority's requirements are too difficult.

Ms. Cao Thi Theu, representative of Namtex Company, raised the issue that the company has been exporting locally for over 20 years. When filing the customs declaration, there was no requirement to verify whether the foreign trader was present in Vietnam. Now, after a long time has passed, this verification is only being requested in July 2023.

"So what about the tax declarations that businesses filed before 2023? When businesses have already settled all declarations and completed the entire production process, and now they are being asked to pay back the VAT, are the declarations from 2023 and earlier correct or incorrect? If they were incorrect, why didn't they stop the businesses instead of letting them continue and then now they're being asked to pay back the tax ?" Ms. Thieu asked angrily.

Businesses cannot wait for a written response.

Not content with merely reflecting on the conference proceedings, after the closing remarks by the Ministry of Finance leader, Ms. Nguyen Ly Long Khanh continued to meet with and directly question the leaders of the General Department of Customs who were present at the dialogue.

In response to Ms. Khanh's complaint, the customs agency stated that it could not provide a detailed explanation without specific documentation and requested that the business provide the information so that the customs agency could respond in writing. A representative from the customs agency also suggested that they sit down with the business to specifically examine the origin of the issue, the HS code classification over the past fifteen years, and if it remains unchanged, then the matter should be considered resolved. "The customs agency can only speak in principle because there are no specific records," explained Mr. Dang Son Tung, Deputy Director of the Import-Export Tax Department (General Department of Customs).

However, Ms. Khanh disagreed because the situation was very urgent. “The company has a shipment arriving on December 15th and 16th, so we can't just sit here discussing theory or waiting for a written response from the authorities.”

“Authorities may say that in principle, businesses can request inspections and have the right to appeal, but in reality, even just half an hour of docking at the port incurs significant fees, all calculated in USD. Businesses cannot complete the procedures, and the shipping company imposes penalties for delays in cargo release. I urge the Ministry of Finance and the General Department of Customs to intervene immediately; this cannot be allowed to drag on any longer. This product cannot possibly be classified as powder, yet 100% of inspections result in HS code 2304029, meaning powder. Businesses declaring HS code 2304009 will be penalized for ‘incorrect’ declaration. Is there any way to correct this immediately?” Ms. Khanh urgently requested.

Source: https://tuoitre.vn/doanh-nghiep-thuc-an-chan-nuoi-ngoi-tren-dong-lua-vi-roi-ma-hs-20241213220841252.htm