Under the mechanism, issued in November 2013, enterprises are required to submit documents on imported goods to customs agencies 90 days before the arrival of the goods. — Photo dddn

HA NOI (Biz Hub) — Viet Nam should widen the application of its pre-classification customs mechanism, as it could serve as a foundation for the country to promote international trade.

At a press conference on the mechanism which was held here yesterday, Adrian Ball, ASEAN Tax Managing Partner for EY, also said pre-classification customs mechanisms helped businesses to classify the codes, taxation values and origins of imported goods before allowing them into Viet Nam.

Under the mechanism, issued in November 2013, enterprises are required to submit documents on imported goods to customs agencies 90 days before the arrival of the goods.

Under the same mechanism, customs agencies and businesses will have a unification in the number of tax payments. This could also help businesses to avoid risks if goods are stuck at port or the tax payments are higher than initial estimates.

According to current regulations, goods could be cleared and investigated within one to three years. If the customs agencies uncover any tax arrears, businesses could be fined up to 20 per cent of the total value of goods. Sometimes, the fines could reach several millions of dollars.

However, the Vietnamese business community thought the mechanism has not really been effective, and the policy has not been applied to all businesses.

At the press conference, Pham Thi Thu Trang, deputy general director of EY Viet Nam, said responses from businesses showed that none of the applications made under the mechanism were accepted.

Trang attributed this to "several impossible conditions that Viet Nam has stipulated for enterprises to be eligible under the mechanism".

She noted that the first requirement was for importers to submit documents 90 days before the arrival of the goods, along with formal contracts with seals.

Normally, businesses do not decide on import-export transactions 90 days before arrival, making the requirement difficult to meet, Trang explained.

In addition, in terms of taxation value, the mechanism only accepts goods which had not been imported before. Enterprises are required to make payments using letters of credit 90 days in advance.

Ball agreed, saying the United States and European Union have not imposed such conditions in their respective pre-classification customs mechanisms. Most of the countries maximise conditions under the World Trade Organisation.

"The most important thing is to classify based on whether it is a real company with a real transaction," he added. — VNS