Tax evasion suspected in import of luxury cars

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PHOTO: DAO NGOC THACH
A Rolls Royce Phantom imported into Vietnam through Tan Son Nhat International Airport. Increasing imports of luxury cars under the names of repatriating Viet kieu have raised suspicion of tax evasion.

Last year, the arrival of a 2008 Bugatti Veyron, one of the world's fastest cars, in Vietnam made headlines in the local media.

The car's cost was US$800,000 and under Vietnamese law, used luxurious cars are subject to import taxes which can be higher than 100 percent of their value. If the law was applied in this case, the owner would end up paying more than $1.6 million for the car.

But the law also says cars are exempted from import and value-added taxes, if they are imported as used assets by overseas Vietnamese citizens who had moved back permanently to Vietnam.

Although the car's arrival made headlines, there was not much more information reported, except that its owner was an overseas Vietnamese, Viet kieu, who had returned to settle down in Vietnam.

So the owner of the super fast car ended up paying no import duties, just a special consumption tax of around $480,000 (which meant he spent $1.28 million on the car).

The Bugatti Veyron is not the only luxurious car that has been imported by such immigrants in recent years, receiving several tax exemptions.

Vietnam is currently home to 70 Rolls-Royce cars, but only two of them were brought in by official importers (authorized car dealers or representatives of car makers). The rest were imported "unofficially," by others, including repatriating overseas Vietnamese citizens.

According to the Vietnam Customs, in the first 11 months of last year, Viet kieu brought in over 70 cars as vehicles they had used abroad before returning to settle down in Vietnam. It was nearly six times the figure in 2010.

Ninety percent of these imported cars were luxurious products like Lexus, Porsche, BMW and Audi.  

The increasing trend has prompted local agencies to start reviewing all vehicle imports made by repatriating Viet kieu, on suspicion that the imports are a ruse to import luxury cars into Vietnam without paying taxes for reselling at a profit.

Vietnam Customs said they are actually looking over the records of all "questionable" cars and motorbikes, and applying stricter checks on vehicles that are waiting for import permits.

Earlier, the agency received reports from customs divisions in Ho Chi Minh City, Hanoi and the southern province of Dong Nai saying many imports of cars by repatriating Viet kieu were suspicious.

According to the reports, the value of the imported cars which were almost new was much higher than their owners' income. Also, the owners had returned to live in Vietnam shortly after they were granted permanent residence status in foreign countries.

Furthermore, the Viet kieu had registered their residences in localities other than their hometown in Vietnam.

Some 20 cars, mainly luxury brands, were brought into Vietnam through the Dong Nai Customs Agency last year, a local officer told Thanh Nien, adding that most of them were bought just one or two months before being sent to Vietnam.

The HCMC Customs Department said they had recently halted the import of four cars on similar suspicions.

Meanwhile, the Ministry of Public Security's investigators have requested Vietnam Customs to provide them with documents relating to several dozens of cars allegedly smuggled in under the names of repatriating Viet kieu.

The ministry has also ordered police departments across the country to review all vehicle imports by Viet kieu residents.

A source told Thanh Nien that inspectors are investigating a ring that paid Viet kieu tens of thousands of dollars to import cars into Vietnam.

A woman who runs a nail shop in Portland, Oregon, the US, told Thanh Nien that she was once offered $8,000 to import a car into Vietnam, and move to live in her home country for four weeks until the car was brought in "safely." She refused after hearing that local police are investigating such cases.

Loopholes

An employee of a car trader, who did not want to be named, said that under current laws, each repatriating Viet kieu is allowed to import one car, but since Vietnam has five ports, some have registered their permanent residence in five different places to bring in five cars.

This "trick" was possible because local governments do not scrutinize permanent residence registrations very closely, he said.

He said that as of now, only four car manufacturers have their official representatives in Vietnam Audi, BMW, Mercedes-Benz and Land Rovers, so other luxury cars must have been imported into Vietnam "unofficially," or even smuggled.

With each car imported in such "unofficial" ways, Vietnam must be losing tens or even hundreds of thousands of dollars in taxes, he said

A Vietnam Customs official, who also spoke on condition of anonymity, said although the law says that repatriating Viet kieu can only enjoy the tax exemption when importing used vehicles, there is no "proper" definition of what used vehicles are.

This has allowed Viet kieu to register the cars abroad just months before they are imported and to "adjust" the odometers to show that they have been already used, he said.

However, a car dealer told Thanh Nien that the meter trick is quite "simple," but it cannot deceive quality inspections.

Furthermore, any imported car has to be scanned by customs and the Vietnam Register, the national vehicle quality inspection agency, so the conversion of a new car into a used one is only possible when related parties join hands, he added.

An official with the Department of Road Traffic Police under the Ministry of Public Security said they have discovered several cases in which vehicles were totally new, but customs agencies had still allowed them to be imported as used ones.

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