China Cracks Down on Customs Valuation Fraud

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Last updated at: (Beijing Time) Friday, September 06, 2002

China Cracks Down on Customs Valuation Fraud

China's General Administration of Customs (GAC) named on Thursday a list of businesses convicted of customs valuation fraud.

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China's General Administration of Customs (GAC) named on Thursday a list of businesses convicted of customs valuation fraud.

Starting with this move, Customs nation-wide was launching a special campaign against valuation fraud smuggling, Sheng Guangzu, GAC deputy director, said at the State Council Information Office in Beijing.

Customs valuation fraud had become a new trend in smuggling in China since its entry into the World Trade Organization (WTO), Sheng said. Especially after the implementation of the WTO Customs Valuation Agreement, some dishonest businessmen were using false declarations to evade Customs duties.

A criminal offence fought by Customs worldwide, valuation fraud refers to smuggling by import and export businesses. When declaring to Customs the value of imported and exported goods, they deliberately under declare or over declare the actual transaction value to avoid paying Customs duties or evade foreign exchange regulation.

China's Customs launched a three-month special campaign against valuation fraud from May this year, according to Sheng.

In the first half of this year, Customs throughout the country uncovered 272 cases of valuation fraud, and suspected duty evasion amounted to 380 million yuan (about 45.9 million US dollars), an increase of 3.9 times and 4.2 times respectively.

Of these cases, 50 have been placed on file for investigation, an increase of 4 percent. Duty recovered by Customs from the valuation fraud uncovered amounted to 80.27 million yuan (about 9.7 million US dollars).

Sheng said from now on till the end of this year, Customs nation-wide would continue to fight duty related cases, with a special focus on "document laundering".

"Document laundering" was a typical form of valuation fraud that China Customs faced, said Sheng. The activity refers to smugglers, in collusion with dishonest foreign businesses, concealing original documents and producing fraudulent documents.

Through "document laundering", smugglers turned high value goods into lower value goods, a high rate of duty on certain goods became a low rate, and large amounts of goods shrank to small amounts, said Sheng.

Other forms of valuation fraud included concealing actual import costs that should be declared and devaluing imported goods.

Sheng expressed his hopes that all domestic trading companies would run their businesses legally and honestly, which was essential to stop the incidence of valuation fraud smuggling from growing in China.

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