Illegal trade in tobacco continues despite strict ban

HA NOI — Illegal tobacco continues to flood the domestic market despite a crackdown on smuggling that began one month ago, according to local media.

In accordance with Decree No 76, those who smuggle, trade or store less than 1,500 illegal cigarette packs will be fined up to VND100 million (US$5,200) and prosecuted if they are in possession of a larger quantity.

Smokers can still easily purchase illegal tobacco at small shops along many streets in Ha Noi, including Hang Hanh, Hang Buom and Nguyen Sieu, according to municipal market watchers.

Illegal tobacco vendors have been forced to operate more carefully to cope with the crackdown.

Head of Market Watch Team No 2 in Ha Noi Luu Bach Chien said several tobacco shops that were selling illegally-imported tobacco purchased small quantities, which were difficult to detect.

The Ha Noi Market Watch Department has busted 17 smuggling operations, seizing more than 2,300 packs, since early September.

HCM City's Market Watch Team 5B busted an operation at Ta Uyen-Pham Huu Chi crossroads and seized 8,890 cigarette packs in late September.

Deputy head of the Ha Noi Market Watch Department Vuong Chi Dung said the new ban would help discourage smugglers.

However, Dung said it was difficult for officials to identify and punish tobacco magnates because illegal cigarettes are often traded by vendors or sold at small shops that purchase small quantities.--VNS

According to the Viet Nam Tobacco Association, illegal cigarettes make up 20 per cent of the domestic market share, which accounts for VND3-3.5 trillion ($153-178 million) in losses from the State budget because the cigarettes are not taxed. — VNS

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Tobacco firm ordered to pay over $18.2 mil in overdue tax, fines

The Dong Nai Tax Agency has ordered British American Tobacco - Vinataba (BATVJ) to pay over VND263 billion (US$13.5 million) worth of overdue taxes from 2005-2008.

The joint venture between the London-headquartered British American Tobacco and Vietnam Tobacco Corporation, set up in 2002, was also fined over VND91 billion ($4.7 million), the agency said.

According to Dong Nai Tax Agency, BATJV was allowed to enjoy income tax exemption for the first two years of operation and pay 50 percent of income tax for three years thereafter, if they met certain conditions.

The conditions were that the company should be using at least 40 percent of locally grown tobacco plants for operations by 2009.

They were required to set up contracts to buy from Vietnamese tobacco farmers, according to the agency.

However, an agency investigation last month found that the company did not buy tobacco leaves from farmers but from local companies.

In 2008, the company spent VND126 billion out of VND2.8 trillion on locally grown tobacco. This amounted to 4.4 percent instead of the committed 40 percent, it said.

BATJV also failed to teach farmers modern techniques for growing tobacco as committed, except for a VND2.7 billion ($143,737) project in 2008 to train farmers and technicians, the agency said.

The tax agency has reported the case to the Dong Nai People’s Committee. A source told Thanh Nien that BATJV has also lodged a complaint with the provincial authorities about the agency’s decision.

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