At the seminar “Solutions to limit Trade Remedy investigations for Vietnam’s exported agricultural and aquatic products” Ms. Nguyen Hang Nga, Deputy Head, Trade Remedy Handling Department, Trade Defense Department Trade remedies, the Ministry of Industry and Trade believes that recently there has been a clear trend in trade remedy lawsuits. I would like to point out some trends. Previous trade remedy cases mainly focused on anti-dumping and anti-subsidy self-defense, but recently anti-tax evasion investigations have become more and more common and the United States is the country investigating anti-dumping and anti-subsidy. self-defense and anti-tax evasion the most with Vietnam.
Ms. Nguyen Hang Nga, Deputy Head, Trade Remedy Handling Department, Trade Remedies Department, Ministry of Industry and Trade
According to experts on trade remedies, the investigation against tax evasion on goods from the second importing country is only initiated when the plaintiff notices abnormalities in goods exported to their country of the same type and size. and similar origin to businesses and import partners who have been investigated, concluded and imposed large taxes in lawsuits on anti-dumping and subsidies…
Due to origin factors, these exported goods are subject to high taxes, high prices, and are unable to compete in the import market. They will find ways to move part of the raw materials, auxiliary materials or the entire product to other countries. Third, where there is a cheap tax rate to enjoy surplus value when exporting back to the main import market. From here, the investigation of origin evasion and tax evasion arose.
According to experts on trade remedies, trade remedies lawsuits appear often when trade wars break out between the US and China, between some industries and sectors of the US – Japan, India and some countries of Bangladesh, China, and the EU. with a number of textile exporting countries including China, India and Vietnam as parties identified as related.
The investigation of tax evasion on steel billets, bicycles, and some US seafood products to China and Vietnam has significantly affected the production, processing and export of these products. This is from Vietnam.
According to statistics from the Department of Trade Remedies, Ministry of Industry and Trade in 2021, for the first time, Vietnamese honey was subject to an anti-dumping investigation conducted by the United States, although this product was investigated in 2021 by the US Department of Commerce. (DOC) has a conclusion at the end of 2021 and by mid-2022 DOC will impose an official tax on honey, the preliminary tax is 400%, the final conclusion has been reduced to 60%.
Ms. Nga said that currently, Vietnam has faced more than 11 tax evasion investigation cases. This is a trend that Vietnamese businesses need to pay attention to because anti-tax evasion investigations and investigation processes are quite different. Much more than a normal anti-dumping and anti-subsidy investigation.
In particular, in the past, it was mainly the United States, the EU and developing countries that conducted investigations to prevent conflicts of origin, but recently, developing countries that have FTAs with Vietnam have been investigating more and more.
According to a trade defense expert from the WTO Center, under VCCI, if the plaintiff discovers that goods with fraudulent origin are imported into Vietnam and exported to the US to avoid taxes, it is certain that the enterprise and type Those imports will be taxed at the same rate. This is an extremely large cost for an industry or field.
“Usually countries will investigate and impose sanctions on violating businesses and when there is a preliminary conclusion, they will apply a tax rate. When there is a final conclusion, they will officially impose taxes on that business and its products. But in this case, businesses do not improve and still increase origin fraud and tax evasion activities. The government, industry, and businesses do not eliminate this problem, the plaintiff has complete grounds to sue. The investigation is expanded to other businesses doing business honestly, which will greatly affect the entire industry,” said the VCCI expert.
Vietnamese plywood may face the risk of US anti-tax evasion lawsuits (Photo: Ministry of Industry and Trade).
In addition, the Ministry of Industry and Trade also warns that if any product or industry is found to have tax evasion elements, the US Department of Commerce (DOC) or US associations or businesses can unilaterally request an investigation. , review other products and industries imported into the US market regardless of whether the goods have low added value and low market coverage.
Faced with this great challenge and risk, according to the representative of the Department of Trade Remedies, Ministry of Industry and Trade: Vietnamese businesses need to proactively say “no” to origin fraud and tax evasion because this is directly harmful to businesses, in the long run. extends to the industry, field and can affect the national brand.
In the legal regulations, there is currently a Circular on “made in Vietnam” – Made in Vietnam”, production content in Vietnam, how much added value in Vietnam is in the product and supply chain. Therefore, when importing raw materials and accessories from abroad, Vietnamese enterprises need to comply with C/O rules, production rules and added value of the manufacturing country to ensure compliance. in accordance with WTO regulations, and at the same time have enough grounds to pursue lawsuits if they arise.
In a proactive direction, there is a trend of multilateral products originating from many different countries. Therefore, Vietnamese businesses need to avoid being completely dependent on an importing country. Maximizing production costs must be accompanied by regulations and standards on production and added value, to protect themselves against potential future complaints.
