Euro Auto introduced new BMW without customs clearance

May 22, 2017 | 16:54
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Although Euro Auto’s imports do not receive customs clearing since November 2016, recently, the official BMW distributor in Vietnam has introduced a new model and customers are still receiving cars from the company.
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In the first week of May 2017, Euro Auto introduced the BMW 320i sport edition to the list of 3 Series (F30) cars for sale in Vietnam.

BMW 3 Series is one of the most successful car brands of the German automaker, selling 6,400 of them in the Vietnamese market.

The BMW 320i sport edition will be equipped with more modern and sporty features. No official price has been disclosed yet, but website shows that the 320i and 330i are sold at the price of VND1.439 billion ($62,565) and VND1.768 billion, respectively. In addition, Vietnamese customers can choose the special 320i-100 Year Edition at the price of VND1.658 billion.

Previously, on February 28, 2017, Euro Auto handed over two BMW 520i cars to Mövenpick Hanoi. At the end of March 2017, InterContinetal Nha Trang also added two BMW 5 Series to its collection of luxury cars for its luxury shuttle service.

The General Department of Vietnam Customs decided to stop clearing Euro Auto’s imported BMW units from December 1, 2016.

According to a source of VIR, Euro Auto has been found using fake papers, including contracts, invoices, packing lists, and certificates of quality (C/Q), to import BMW car units to Vietnam.

Euro Auto also sells and purchases VAT invoices from other companies to evade domestic tax. Besides, while investigating Euro Auto’s declaration of special consumption tax for domestic consumption in July, August, and September 2016, authorised agencies found that 93 of the 340 cars sold to Performance Motors Vietnam carried the wrong price tag. Accordingly, the cars estimated price contained 7 per cent less consumption tax than the average selling price. This is a violation of Circular No. 130/2016/TT-BTC issued on August 12, 2016 by the Ministry of Finance (MoF). This pricing mistake lead to a special consumption tax fraud of over VND6 billion ($260,870) in damages.

On December 20, 2016, the Anti-Smuggling and Investigation Department (General Department of Vietnam Customs) issued Decision No.18/QD-DTCBL to prosecute Euro Auto for smuggling. Case File No.03/QD-DTCBL was transferred to the Economic and Corruption Crimes’ Police Investigation Department (C46), which belongs to the Ministry of Public Security, for further investigation.

On January 11 and 12, 2017, a representative of BMW AG from Germany arrived to Vietnam to join in the investigation and then confirmed with MoF that some of the papers that Euro Auto used for customs procedure had not been provided by BMW AG.

C46 decided to prosecute three people, and detained two of them, including Nguyen Dang Thao, general director of Euro Auto.

Since December 1, last year, 470 BMW, 78 MINI, and 56 BMW Motorrad have been awaiting customs clearance. Explaining how the company managed to still introduce a new model and hand over cars to customers, a source of VIR said that the BMW cars were exported from European ports, travelled through Malaysia, and were finally transported to Vietnam. Thus, the question of how Malaysian Sime Darby Group, which holds an 82 per cent stake in Euro Auto, is involved in this case raises eyebrows.

Recently, BMW AG has sent a senior delegation to Vietnam to solve this problem.

In 2013, Euro Auto was charged VND80 billion ($3.51 million) in tax arrears by the Department of Customs of Ho Chi Minh City because of discrepancies between the contract it submitted for use in customs procedures and the contract it actually used in its actual transactions through HSBC. However, Euro Auto appealed to the Ho Chi Minh City People’s Court, which in turn found insufficient grounds for the charge and nullified the decision.

The Department of Customs of Ho Chi Minh City said that the post-clearance checks of Euro Auto’s imported cars between January 1, 2010 and June 29, 2012 showed many fees that should have been included in their import value and should be subject to tax and that Euro Auto “forgot” to declare these fees.

In addition, Euro Auto was accused of not declaring the insurance fees for goods transportation. This case involved Asia Auto Finance Ltd. of Hong Kong (AAF), an intermediary between Euro Auto and BMW.

According to the consultancy and services agreement between Euro Auto and AAF, the former pays AAF a monthly $25,000 and every quarter, Euro Auto pays a sum equivalent to total revenue of last quarter multiplied with 3 per cent of this total revenue. From January 1, 2010 to June 29, 2012, Euro Auto paid AAF $750,000 in monthly fees and $1.395 million in quarterly fees.

Recently, authorised agencies have submitted a letter to the Hong Kong Customs and Excise Department asking to verify the existence of Asia Auto Finance Limited Company from 2010 up till now, and its list of shareholders.

However, Hong Kong Customs has “not found any import-export figures of AAF, as well as any relevant information on this company.”

By By Hoang Nam

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