Customs Crack Down on False Trade More Stringently, Inspection and Valuation Proportions Significantly Increased

Export tax rebate is one of the measures generally adopted by countries around the world to enhance the competitiveness of their domestic products. China's implementation of export tax rebate mainly balances the tax burden of domestic products by refunding the taxes already paid on exported goods, allowing products to enter the international market at tax-free prices, so as to enhance product competitiveness.

　　However, this policy dividend of the state to support domestic products has become a "funnel" for illegal enterprises to siphon off illicit profits. According to the current situation seized by customs, false trade is mainly manifested as illegal activities of defrauding export tax rebates through means such as falsely reporting commodity names, concealing the quantity, overstating prices, etc. through the general trade channel.

　　To earnestly safeguard national security and the interests of the people, the General Administration of Customs deployed customs across the country to launch the "Sword 2016" joint special operation against smuggling starting in March this year, among which cracking down on illegal activities of export tax rebate fraud and false trade is one of the tasks of this joint special operation. It is learned that the "Sword Operation", originally scheduled to end at the end of June, will not stop in July; on the contrary, the crackdown will be even stricter. At present, in the initial stage of the special operation against false trade, the proportion of inspection and price verification will definitely increase significantly. However, it is of far-reaching significance for regulating the entire foreign trade environment and protects the long-term interests of honest and law-abiding enterprises.

At present, the three most serious types of false trade methods include: 1. Exporting by buying other enterprises' export qualification; 2. Using one container to import and export back and forth to exploit exchange rate differences; 3. Overstating the actual price of goods under the model of national interest subsidy.

　　In this special operation, one phenomenon has also attracted great attention of the customs: trading enterprises with registration places far in Chongqing, Guangdong, Gansu and Qinghai frequently appear on the "list" of false trade manipulators. The investigation found that most of these business units are enterprises that sell and buy enterprise qualifications for declaration, do not collect foreign exchange, do not apply for tax rebates, have no fixed foreign trade business, and cannot provide value-added tax invoices.
　　Apart from the interest inducement of export tax rebate, overstating export prices, in addition to falsifying trade statistics, some enterprises overstate prices to inflate export data to defraud local government subsidies.
　　To encourage exports, some local governments give cash subsidies or financial preferences to enterprises based on their annual export volume, helping enterprises improve their international competitiveness. However, this incentive policy has been exploited by illegal enterprises as a new "profit point". To evade supervision and obtain local subsidies by fraudulent means, illegal enterprises make false customs declaration documents, overstate commodity prices and declare the involved goods through multiple customs declaration companies in a mixed way, attempting to reduce the probability of being investigated and punished by the customs; once the goods are exported, the enterprises apply to the local government for high subsidies. 　　"Recently, we often receive calls, emails or QQ messages, where the other party says they can provide enterprise qualifications for declaration that can get high local subsidies. These behaviors have greatly disrupted the customs declaration market." Said the deputy general manager of a customs declaration co., ltd. in Ningbo Bonded Area angrily, "The actual status of the goods declared by these qualification-trading enterprises is not guaranteed, and the customs declaration risk is very high. If these enterprises cannot be found during customs inspection or subsequent verification, it will be the reputation of customs declaration enterprises like ours that will be ruined."

In addition, at the policy briefing on severely cracking down on false trade held recently, Shenzhen Customs revealed the rectification measures:

　　1. The customs will review the unit price and total price of each commodity name of the goods under a single declaration. If the declared unit price and total price exceed the normal price range of the actual goods, this shipment will be inspected. If the overstatement of price is verified to be true, the first and second violation of the operating entity will be recorded, and the third violation will be directly transferred to the anti-smuggling department for handling.

　　2. The commodities subject to customs price review are mainly concentrated in the following categories: daily necessities, clothing, shoes and hats, lamps, hardware, Christmas supplies.

　　3. The scope of operating entity qualifications subject to control for export by buying qualification covers: Chongqing, Anhui, Jiangxi, Yunnan, Gansu, Quzhou, Zhoushan.

　　4. If the total declared amount of a single customs declaration exceeds 100,000 US dollars, it will enter the manual review process and will not go through the rapid computer review channel.

      5. For declarations with excessively high unit price of a single shipment, if the declaration is true, the customs will require the operating entity to provide the corresponding value-added tax invoice for the shipment or the bank proof of payment transaction.