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Customs guarantee – one more lever for trade facilitation

Could you specify the concept of customs guarantee?

Customs guarantee is a form of financial guarantee commitment required by the Customs for importers and exporters that have not completed Customs procedures as prescribed but want their goods cleared and released.

Guarantee commitment is a tripartite agreement whereby one party (guaranteed party) as importer/exporter or authorized party of goods import-export, committed the customs authority (the guarantee accepting party - the second party) to fulfilling compulsory obligations on customs procedures according to law provisions (such as payment of taxes, fees, other charges, late submission of specialized management and inspection to be released and cleared import and export goods. The third party (the guarantor is usually a credit institution / insurance company) committed to fulfilling the obligations of an importer or an exporter with the Customs authority if the importer and exporter fail to fulfil their obligations on customs procedures.

In order for the guarantee documents to be accepted by the Customs authority, the guarantor must satisfy certain criteria and standards in accordance with the provisions on financial insurance and be authorized by the competent agency (Ministry of Finance) for granting the guarantee certificate to the guarantee accepting party (Customs authority)

Customs guarantee is to implement the two main purposes which are a tool that helps Customs ensure the budget revenues related to import and export duties, charges and other fees in accordance with the law on import and export goods. And a tool that ensures the compliance of importers and exporters in the implementation of the specialized legal provisions required for importers and exporters on the submission of import and export licences, provisions on import and export conditions, quality certificate or certificate of quality exemption for import and export goods.

Could you detail more about the benefits of Customs guarantee for state enterprises and state management agencies?

Customs guarantee brings many benefits to the parties directly involved. On the side of importers and exporters, the Customs guarantee will help them have time to complete their dossiers and documents while still enjoying tax incentives, late fine payment and late submission of documents in accordance with the provisions of the specialized law. Moreover, they are allowed to take the goods for storage or their goods are released, particularly for goods subject to specialized inspection.

If an enterprise uses a guarantee certificate (on tax and fee) granted by banks, that enterprise must pay a certain fee or deposit in cash for guarantee. Therefore, working capital of the enterprise is kept at banks and not used for import and export import activities. Customs guarantee replaces bank guarantee and usually does not require an enterprise to deposit cash; the cost of customs guarantee is usually lower than that of bank guarantee. In addition, when goods are quickly taken to storage, it will ensure the quality of goods, and when the goods are quickly cleared, they will be quickly put into production or put into circulation on the market, thereby, an enterprise can quickly withdraw its capital to invest in continuous operation and shall not be fined for delayed delivery. Due to the encouragement and support from the guarantor, the enterprise can reduce mistakes that lead to fines, additional costs, etc. These are really significant economic benefits, helping enterprises save a lot of time and costs.

In terms of the Customs authority, Customs guarantee is an effective way to ensure full collection of import and export taxes and fees, including fines imposed on enterprises for violations of current regulations for import-export activities in general, as well as in specialized management activities in particular.

In terms of guarantor, the party shall receive a guarantee fee in line with the guarantee scope for importers and exporters, and shall take responsibility on behalf of the guaranteed enterprise (within the guarantee scope) if the enterprise fails to fulfil the requirements according to current regulations. Customs guarantee will be a new potential market in the insurance sector, especially in the context of maximizing trade facilitation in Viet Nam.

With the above characteristics, Customs guarantee can be considered as a useful tool to facilitate trade and increase the competitiveness of the economy.

In the current context that the Government is stepping up the implementation of measures to facilitate enterprises, reduce and simplify the specialized inspection procedures for import and export goods, what are difficulties and facilities in the application of Customs guarantee in Vietnam? What will the Customs do to soon apply the Customs guarantee in Vietnam?

As we know, the Government and the Prime Minister have strongly directed the specialized management ministries to accelerate the reform of specialized inspection procedures for import and export goods. The ministries have reviewed and cut down the number of goods subject to specialized inspection before customs clearance to transfer to post Customs clearance inspection, and changed the inspection method from pre-inspection to post-inspection. However, the number of goods subject to specialized management and inspection is still significant. If in 2017 the number of import-export declarations subject to specialized management and inspection at the border gates accounted for 19% (nearly 2 million declarations), in 2018 it was required to reduce 10%, the number is still considerable. (around 1 million declarations).

While the administrative reform has not caught up with the development of trade, the declaration, reception of dossiers, exchange of information on the results of specialized inspection between specialized management and inspection agencies and the Customs authority is still not consistent and electronized, and the National Single Window mechanism has not completely been deployed, the application of Customs guarantee is to contribute to facilitating trade, reducing time and costs for enterprises.

The application of Customs guarantee in Vietnam still faces some difficulties, such as lack of legal system relating to the the Customs guarantee (currently there is a Customs guarantee on taxes under the Law on Import-Export Duties in 2016.). In order to develop the Customs guarantee, one of the first tasks that must be done is to develop legal documents that allow insurance companies to participate in guarantee activities.

Customs offices will chair and coordinate with relevant ministries and sectors to submit to competent authorities for pilot implementation; propaganda and training for enterprises and other related parties. At the same time, insurance companies also need to set standards and conditions as the basis for enterprises joining the customs guarantee system.

Thank you Sir!

Source: Customs News