After diplomatic cars, it's turn of Viet Kieu imports to invite Vietnam gov't wrath

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Soon after cracking down on illegal sale of diplomatic cars, authorities have turned to dubious imports by overseas Vietnamese

Ho Chi Minh City customs officials inspect a car imported by an overseas Vietnamese. The Ministry of Finance is seeking to stop cars being imported into Vietnam by overseas Vietnamese by abusing the tax-waiver policy. Photo by CTV

The Ministry of Finance plans to seize or re-export hundreds of cars imported by overseas Vietnamese that have been detained at ports because of suspected violation of tax laws.

Viet Kieu have imported a large number of cars under dubious circumstances since June 2011 when the Ministry of Industry and Trade slapped strict regulations on imports of vehicles with nine seats or fewer, according to the finance ministry.

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As a result, customs then stepped up examination of import documents, leading to the temporary seizure of hundreds of cars.

It received applications for the import of more than 1,400 cars in 2011-12, more than 10 times the average number in previous years.

"Customs agencies found many individuals and organizations abusing tax breaks offered to Viet Kieu to evade billions of dong worth tax," Ha Noi Moi (New Hanoi) newspaper quoted an unnamed customs source as saying.

Viet Kieu who reside permanently in Vietnam are allowed to import used cars without paying import or value-added tax.

But in recent years there has been widespread abuse of this regulation to bring in cars, especially luxury ones, without paying taxes to resell at a profit.

Last year an unidentified Viet Kieu imported a 2008 Bugatti Veyron. The car cost US$800,000 and used luxury cars are subject to import taxes in excess of 100 percent under Vietnamese law, meaning an importer would have to pay more than $1.6 million for the car.

But the owner of the superfast car ended up paying no import duties, just a special consumption tax of around $480,000.

According to the finance ministry, there has been an "abnormal" increase in the import of cars into Vietnam in the past two years, mostly of top-end cars like Porsche, Bentley, and Mercedes manufactured in 2011 and 2012.

It has coordinated with the Ministry of Public Security to inspect Viet Kieu's car import documents and found most violations related to falsifying permanent residency papers by people who do not actually live permanently in Vietnam.

Last year Nguyen Quang Vinh, a deputy police chief of a commune in Chau Thanh District, Ben Tre Province, and Tran Minh Nhut, an officer under him, were dismissed and arrested for allegedly accepting $3,900 in bribes to help a woman bring foreign cars into the country without paying taxes.

The woman, Tran Thi Hoang Phi, was also arrested.

Vinh and Nhut allegedly took bribes to register 37 people of Vietnamese origin who lived in foreign countries in the residence books of 31 local families. Phi used them to import cars without taxes.

According to reports from 19 of the 34 customs offices in the country, 47 cars and two motorbikes have been imported by Viet Kieu who have not wound up their business abroad or do not reside permanently in Vietnam as required.

The finance ministry has sought the government's permission to order the re-export of these vehicles. The re-export should be done within 30 days after it issues a notice to owners, it has suggested.

"The vehicles should be seized if the owners cannot re-export them," the proposal says.

The ministry has also asked for instructions from the government to deal with 208 cars and 11 motorbikes that Viet Kieu imported but have left behind at three ports.

"They have satisfied [import] requirements, but customs will inspect each case to verify if they are smuggled vehicles," the ministry said.

The finance ministry's proposal to bust illegal imports of cars by Viet Kieu to evade tax follows a recent proposal to prevent another ploy to abuse tax breaks illegal reselling of diplomatic cars.

According to a government decision to take effect in November, diplomatic agencies and diplomats are only allowed to resell cars brought into Vietnam without taxes after two years if embassy owned and after one year if individually owned.

Cars used for more than five years cannot be resold and have to be scrapped or re-exported.

Around 4,000 cars were imported into Vietnam between 1998 and 2009 the last year for which official figures are available for use by diplomats and diplomatic agencies.

Many have been sold to locals without registration or paying the taxes that had been waived for the diplomats.

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