Recommendations promote prevention of cigarette smuggling

I. The production business for 5 months 2015: Efforts to strengthen the domestic market and boost exports

In the first 5 months of 2015, despite the sharp rise in smuggling and complicated, whole Complex Corporation has attempted to overcome difficulties, to implement solutions and key tasks as: Focus consolidation and stable development of business activities in the field of tobacco, food, confectionery;effectively expand consumer markets beverage products, contributing to image building, brand food industry sectors of TCT; Development of export activity towards efficiency and sustainability; Continuing to improve the management system oriented strategy TCT: One organization – One Vision – One team – a management system; Continued implementation of effective restructuring scheme TCT as a basis for implementing development strategy TCT 2020 and Vision 2030; Focused research and development of new cigarette products; investing in research and application of scientific and technical advances contribute to improving the competitiveness …

The results of implementation of production and business activities of all complexes stability, some indicators have growth over the same period last year (CKNT):

– Total revenues: reached 11 217 billion, with 38% and by 95% CKNT KH.

– Submit budget reached 3204 billion, completed over 42% of the plan and 99% CKNT.

– The export turnover reached nearly 67 million, with 38% of the plan, 91.4% as compared CKNT.

Also in the first 5 months of 2015, the Corporation has actively implemented the important parts, such as actively implementing restructuring scheme under the roadmap set out, ensuring the prudent and efficient manner. Accordingly, in the future, Mekong Tobacco Company became a subsidiary of Saigon Tobacco Company; the Bac Son Cigarette Company and Da Nang become a subsidiary of Thang Long Tobacco Company; Finalize plans for equitisation Corporation

II. Some proposals to promote prevention of cigarette smuggling:

Contraband tobacco situation:

2014, smuggled cigarettes increases of 30-40% (over 1 billion bags). Contraband cigarettes appear spread in most provinces across the country, increasing in number and variety. Previously contraband cigarettes mainly HERO, JET (cost about 14.000-18.000d), recently has appeared many cheap contraband cigarettes, poor quality such as: League, Luxury, Cambo, Ram, Rainson (rates from VND2,700 – VND4,000 / bag), Mine, Gem (VND4,000), Golden Deer (VND5,000), Elephant (5.500d) ….

Investigations by Oxford Economics in 2014, Vietnam has become the market for contraband tobacco among the top 14 Asian countries surveyed (including Indonesia, Thailand, Cambodia, Taiwan, Laos, Australia, Philippines, Singapore, Viet Nam, Myanmar, Pakistan, Hong Kong, Malaysia, Brunei).

Cigarette smuggling for tax evasion (65% excise tax, 10% VAT, import duty of 135%, 1% of the tobacco control fund) should be able to sell much cheaper than domestically produced tobacco (same category, same segment) . In particular, smuggled cigarettes are not printed health warnings, not controlled in the levels of tar, nicotine be harmful to public health, does not ensure food safety. According to the analysis results of the Institute of Economic Technical Tobacco contraband tobacco is in some toxins have banned the use and content of Tar, Nicotine far exceeding the permitted level: Two types Most smuggled cigarettes now as JET and HERO Tar content is 19-20mg / cigarette, nicotine is 1.9 mg / cigarette (current rules: Tar 12mg / d, Nicotine 1,0mg / e). Condition smuggling, trafficking in contraband cigarettes illicitly blatantly state budget losses of 10,000 billion / year, affecting employment and life cua1,5 million workers in the sector.

The decision to push back illegal tobacco

Recognizing that tobacco smuggling is increasingly serious and negative impact on the society, in 2014 the Government, the Prime Minister has taken timely, wise to stop the smuggling activity, illegal trade in cigarettes. Specific:

– Establishment of the National Steering Committee 389 on prevention of smuggling, commercial fraud and counterfeiting;

– Issuance of Directive No. 30 / CT-TTg on strengthening the fight against cigarette smuggling.

– The decision to stop the pilot re-export of smuggled cigarettes were seized.

The correct policy decisions of the government was quick to come to life, promptly remove difficulties for enterprises in the country and gradually reverse the tobacco smuggling. With the bulk of the troops 389 Steering Committee, ministries and local departments, the amount of smuggled cigarettes in Vietnam fell sharply during Tet Lunar Hare before 2015. Many objects magnates, object transportation, trafficking contraband cigarettes captured and processed.

Online conference at preliminary 6-month implementation of Directive 30 / CT-TTg of September 30, 2014 by the Prime Minister on strengthening the fight against cigarette smuggling, Prime Minister Nguyen Tan Dung made the Comments: Implementation of Directive No. 30 / CT-TTg, the ministries, branches, localities and functional forces were urgently evil deploy combat cigarette smuggling and achieved positive results: from October 2014 to March 2015 have captured more than 5.1 million packs of smuggled cigarettes rose 45% yoy), the amount of cigarettes sold by domestic enterprises rose by over 5%. However, this is only the initial results, smuggling, commercial fraud and counterfeiting in general and in particular tobacco products still complicated, causing great damage to economic development – social and domestic production, reduce growth rate, revenue loss and affect the life, the employment of labor. Status of smuggled cigarettes are still sold openly in many areas in the locality in the country and increase in variety with tar levels, nicotine repeatedly exceeded allowable seriously affect human health People.

Some suggestions to strengthen the fight against cigarette smuggling

To directive of the Prime Minister really come to life, contribute to support businesses, government revenue enhancement and protection of consumers, the Corporation Vietnam Tobacco Government proposals, the Steering Committee 389 countries and the ministries and localities continue to be interested in directing and promoting the fight against cigarette smuggling:

1. To recommend to the Prime Minister directed the ministries and localities to continue to strictly implement and effectively Directive 30 / CT-TTg of the Prime Minister on strengthening the fight against cigarette smuggling .

2. Recommendations localities nationwide implementation of Directive 30 synchronization and more drastic. Steering forces in the province functionality resolutely fight, timely detect and strictly handle acts of smuggling, transporting, storing and selling smuggled cigarettes (especially the strengthening check presentation and sale of contraband tobacco in the cabinets, counters, stores, restaurants, hotels …).

3. Proposing local agencies have a written request of officials and Party members, employees working in state administrative apparatus is not contraband tobacco (smoking is abetting illegal smuggling and evasion tax), to take measures to prioritize the use of legal products, implementing the campaign “The priority for Vietnam Vietnam.”

4. Recommendations to deduct 50% funds for tobacco control prevention and smuggled cigarettes.

Under the provisions of the Law on Tobacco Control, businesses producing or importing tobacco tobacco control funds to pay the premium rate is: 1% since 01/5/2013; 1.5% from 01/5/2016; 2% from the date of 01/5/2019 (calculated on the price of cigarettes SCT). Currently each year there are about 400-500 billion fund, and used whole for tobacco prevention activities, communication activities, policy development, research, surveys of foreign experience ( New use of 10% funds) …; whereas the unused funds for activities against cigarette smuggling. Tobacco Corporation Vietnam

recommendations to the Government, the Ministry of Finance, Ministry of Health research financing mechanism that would allow 50% of funds for tobacco control prevention smuggled cigarettes because smuggled cigarettes have greater harm caused by tax evasion, uncontrolled quality, hygiene, food safety, health hazards to the community ..

5. To recommend to the Government instructed the Ministry of Industry and Trade and relevant ministries amendments Joint Circular No. 36/2012 / TTLT BCT-BCA-BTP-BYT-SPC-VKSNDTC date regulatory 07.12.2012 sanctioning of administrative violations in commercial activities, production and trafficking in counterfeit goods, prohibited goods and to protect the interests of consumers in the direction of regulation reducing the number of smuggled cigarette pack as a basis for prosecution 1,500 criminal sacks 500 bags.

At the Joint Circular No. 36, Article 7.2 provisions for criminal prosecution as trade, transport, storage of smuggled tobacco products with the amount from 1,500 bags or more. Therefore, the subjects were divided smuggling and traffic volume for many different transport or storage below the 1,500 bags to avoid criminal prosecution. This sophisticated method of the object smuggling has caused many difficulties for the raids, smuggling prevention of organ function and no serious basis for handling objects smuggling. According to the authorities, in recent years the number of cigarette smuggling cases handled accounts for 0.95% of criminal cases of arrest.

Therefore, the Corporation Vietnam Tobacco recommend criminal prosecution for acts of transporting and trading in smuggled cigarettes have between 500 bags or more instead of the current level of 1,500 bags to increase deterrence.

6. Recommendations to the Government and the Ministries to consider increasing staffing and support tool for police forces, border guards, customs and QLTT; financial support, equipment and vehicles, payroll for directly test force control against cigarette smuggling.

7. To recommend to the Government, the Ministry of Finance for consideration retain the old regulations on the calculation of SCT.

In 2014, Congress adopted the Report of the Government on the excise tax law amendments, including increasing the excise tax on tobacco was performed according to a suitable schedule. This has reduced the profit difference between smuggled cigarettes and domestically produced cigarettes, is very important condition for promoting effective measures against cigarette smuggling and contribute to the success of the Directive 30 / CT-TTg.

The Finance Ministry is currently drafting and consulting with other ministries and localities in guiding the Law Decree No. 30/2014 / QH13 amending and supplementing some articles of the Law on excise tax, including changes in the price calculation SCT. Content changes are detailed and technical points, but can summarize the following main changes:

Special Consumption Tax Law No. 70/2014 / QH13 dated 11.26.2014 prescribed price as a basis for calculating tax on domestically produced goods prices by selling production facilities.

But according to the draft decree, the excise taxed price is defined as follows:

– Where establishments produce goods subject to SST sales through affiliated institutions dependent cost, the price used for calculating the excise tax rates by accounting attached base depends sold.

– Where establishments produce goods subject to SST sales through sales subsidiaries or through other subsidiaries of the same parent company, associated companies, the price used for calculating the price of SCT by public subsidiaries or associated companies marketed but not less than 5% compared to the highest price of the commercial business establishments.

– Where establishments produce goods subject to SST sales to commercial business basis, the prices used for calculating the price of SST products manufacturing base to SST but not less than 5% compared to the highest price of the commercial business establishments sold.

Thus, the amendments to the price used for calculating the SCT in draft decree is not very consistent with the provisions of the current excise tax law.Regulations to control from 10% to 5% will cause many difficulties for business, because the level of 5% is not sufficient to cover costs not to mention maintain minimum profitability for distributors

– So when this adjustment takes effect, the profitability of the distributors (business commercial establishments) will decline, or a loss, the distributors can be transferred to the business of drug items smuggled tobacco have better profit than domestic products produced. At that time, manufacturing companies must build entirely new distribution system, the cost will be very large, the risk of high losses, which reduces the competitiveness of products.

In the situation of the state is pushing against cigarette smuggling, increased recreational route SCT to facilitate domestic tobacco enterprises improve competitiveness of products and gradually replace tobacco products smuggled, if amended regulations excise taxed under a new draft decree domestic enterprises will face many difficulties, contraband tobacco has the opportunity to increase profits, grow back. Therefore, the Corporation Vietnam Tobacco Government proposals, the Ministry of Finance for consideration retain the old regulations on the calculation of SCT.