Customs Compliance: A Foundation for Sustainable Business Growth and Legal Risk Prevention

phanhoainamba
Jun 14
3 min read

In today's increasingly globalized economy and the dynamic landscape of import-export activities, adhering to customs regulations is not merely a legal obligation but a critical factor in enhancing corporate reputation, minimizing risks, and fostering sustainable development. However, many enterprises still underestimate this aspect, leading to significant violations and unwarranted sanctions from regulatory authorities.

What is Customs Compliance?

Customs compliance entails the thorough adherence to customs laws, including accurate declarations, timely tax payments, proper documentation retention, and cooperation with customs authorities during inspections. According to Vietnam's Customs Law 2014, Decree 08/2015/ND-CP, and Circular 38/2015/TT-BTC (amended by Circular 39/2018/TT-BTC), customs compliance encompasses:

Accurate declaration of HS codes, customs values, and product origins.
Full payment of applicable taxes (import duties, VAT, special consumption tax).
Retention of documents such as invoices, contracts, bills of lading, and certificates of origin for a minimum of five years (Article 36, Customs Law 2014).
Support for post-clearance audits within five years from the date of customs declaration registration (Article 78, Customs Law 2014).

The Importance of Customs Compliance

For Businesses:

Risk Mitigation: Reduces the likelihood of tax arrears, administrative penalties, and post-clearance audits.
Operational Efficiency: Enhances customs clearance processes, saving time and costs.
Preferential Programs: Qualifies for Authorized Economic Operator (AEO) programs, benefiting from reduced inspections and expedited clearance.
Reputation Building: Strengthens credibility with international partners and customers.

For Customs Authorities:

Effective Management: Ensures efficient oversight and reduces trade fraud.
Revenue Assurance: Enhances tax collection from import-export activities.

For the Economy:

Transparent Trade: Promotes fair and transparent international trade practices.
FTA Implementation: Facilitates the execution of Free Trade Agreements (FTAs) like CPTPP and EVFTA.

Example: A medical equipment importer complying with accurate HS code and origin declarations benefited from a 10% import tax reduction under the EVFTA and achieved customs clearance within 24 hours instead of the usual three days.

Common Risks of Non-Compliance

Many enterprises, especially small and medium-sized ones, often face common pitfalls due to a lack of understanding or negligence:

Incorrect Customs Valuation: Misunderstanding valuation methods can lead to under-declaration, resulting in tax arrears and late payment penalties.
Misclassification of HS Codes: Inaccurate HS codes can cause incorrect tax rates, directly impacting costs and leading to penalties.
Incorrect Origin Declarations: Errors in origin can disqualify businesses from FTA tax incentives and may trigger anti-fraud investigations.
Incomplete Document Retention: Failure to provide valid documents during post-clearance audits can result in penalties.
High-Risk Enterprise Classification: Repeated violations may place businesses on watchlists, subjecting them to stringent inspections and affecting clearance times and operational costs.

Strategies for Effective Customs Compliance

To proactively mitigate risks and establish a foundation for sustainable growth, businesses should:

Stay Informed on Legal Regulations: Regularly update knowledge on customs laws and related decrees and circulars to ensure accurate application.
Establish a Dedicated Customs Department: Assign specialized personnel to oversee declarations, document verification, and ensure legal compliance in import-export processes.
Conduct Internal Risk Assessments: Periodically review and refine internal procedures, including document handling, HS code verification, valuation, and origin determination.
Leverage Technology: Implement customs declaration management software integrated with internal data to minimize errors and enhance compliance.
Engage Professional Consulting Services: Collaborate with customs and compliance consultants for in-depth reviews and tailored strategies aligned with specific business operations.

Conclusion

As customs authorities intensify oversight and adopt advanced technologies for risk management, customs compliance has become an imperative for every import-export enterprise. Beyond avoiding violations and penalties, compliance enables businesses to build a professional image, gain recognition, and capitalize on international trade incentives.

W&A Consulting's Customs & Compliance Advisory Services

With extensive experience in import-export and a deep understanding of Vietnam's legal framework, W&A Consulting offers comprehensive Customs & Compliance Advisory solutions:

Review and assess current compliance systems.
Develop tailored compliance strategies for each enterprise.
Provide guidance on accurate HS code classification, valuation, and origin determination.
Assist in preparing documentation for post-clearance audits.
Advise on legal risk prevention and resolution related to customs matters.