To put it simply, customs risk refers to the uncertain factors that affect the realization of customs planning goals. The existence of these uncertain factors will have an adverse impact on enterprises in terms of tax expenditure, customs clearance costs, logistics efficiency, etc., and may even hold operators and related personnel legally responsible.
1. Risk of potential underpayment and non-payment of taxes
Paying taxes in accordance with the law is a basic obligation of enterprises. If an enterprise underpays taxes or evades taxes, the customs still reserves the right to pursue them. The Customs Law stipulates that after the release of imported and exported goods and inbound and outbound articles, if it is found that taxes are underpaid or missed, the customs may collect the taxes from the taxpayer within one year from the date of payment of taxes or release of goods and articles; if the underpayment or missed taxes are caused by the taxpayer’s violation of regulations, the customs may collect them within three years. If the amount involved is relatively large, the taxpayer’s behavior is deemed to be smuggling, and the customs’ retrospective period is not limited to three years.
The harm of potential underpayment or non-payment of customs duties lies in the fact that enterprises cannot calculate the cost of goods in a timely and accurate manner, and make wrong decisions on production and sales. In addition, if the customs finds that the enterprise has underpaid or failed to pay taxes during the inspection or smuggling, they will not only recover the tariffs or other taxes, but also impose fines or other penalties on the enterprise, which will have a negative impact on the enterprise’s future financial situation.
As shown in the following case 1, the enterprise classified the goods into a tax number with a low tax rate during the import process, paid tariffs at that rate, and used this rate to calculate costs and determine sales prices. After verification, the customs required the payment of tariffs, but the goods had already been sold and the corresponding costs could not be adjusted, which was a loss for the enterprise.
The main potential issues for enterprises to underpay or fail to pay customs duties include:
(1) Failure to declare imported goods to the customs;
(2) Underreporting or understating import quantities through false declarations;
(3) Underreporting or missing taxable external payments;
(4) Declaring prices of goods imported from overseas affiliated companies or other special relationship companies are too low;
(5) Failure to declare royalties to the customs;
(6) Classifying goods with the wrong low-tax rate tax number;
(7) Importing taxable goods as non-taxable items, such as ordinary goods imported as samples or advertising materials;
(8) Using the national tax exemption policy to import equipment for non-tax-free items, etc.
2. Overpaying taxes and bearing inappropriate tax burden
Due to a lack of understanding of laws and regulations, improper customs arrangements and use of tax rates, some enterprises may overpay taxes, which results in net losses for the enterprises, causing them to bear unnecessary tax burdens and undermining the interests of shareholders.
In actual business operations, the following are the main reasons for overpayment of taxes:
(1) Due to improper customs planning, the tax preferential policies that should be enjoyed are not enjoyed;
(2) The imported goods cannot enjoy the preferential tax rate of the free trade zone because the supplier cannot provide qualified certificates of origin, or the documents provided are incomplete, or the direct transportation terms cannot be met;
(3) The goods are classified into tax numbers with higher tax rates;
(4) The declared price includes non-taxable prices, etc.
3. Additional losses of value-added tax and export tax rebates
The value-added tax payment certificate at the import and export stage is an important document for enterprises to handle customs procedures and is also an important document for value-added tax declaration. The value-added tax at the import stage can be used as value-added tax input to offset the value-added tax output tax, but these value-added tax payment certificates must be reported and certified to the tax authorities within the prescribed period. The export tax rebate and foreign exchange slip of the export declaration form are the main documents for handling export tax rebates. If these documents are incomplete or cannot be provided within the specified time, it may lead to VAT losses, such as:
(1) The VAT invoice for imported goods is not reported to the tax bureau within the specified time, resulting in the inability to use the import VAT as input tax deduction.
(2) The export tax refund copy of the customs declaration form cannot be submitted within the specified time, resulting in the inability to complete the export tax refund; the loss of the import VAT tax form or customs declaration form causes tax losses.
(3) The loss of the import and export customs declaration form makes it impossible to complete foreign exchange payment, foreign exchange settlement, and foreign exchange collection and payment verification.