- within Law Department Performance topic(s)
Introduction
One of the questions I hear most frequently from international manufacturers is:
“What happens if Vietnamese Customs audits our operations?”
The better question is different.
“Are we already operating today as if the audit were taking place tomorrow?”
Customs audits should not be viewed as extraordinary events.
They are an integral part of modern customs administration.
Well-prepared companies generally view audits as manageable compliance exercises.
Poorly prepared companies often discover weaknesses that originated years earlier—sometimes before production even commenced.
The difference is almost always preparation.
Customs Compliance Begins Before the First Shipment
Many companies believe customs compliance begins when goods arrive at the Vietnamese border.
It actually begins much earlier.
Compliance starts when management decides:
- where production will occur;
- how products will be manufactured;
- who owns the goods;
- which customs procedure will be used;
- which contracts will govern production.
Every one of these decisions may later be reviewed during a customs audit.
What Will Customs Authorities Typically Review?
Although every audit is different, manufacturers should expect questions regarding:
- HS classification;
- customs valuation;
- origin of imported materials;
- production records;
- inventory reconciliation;
- manufacturing activities;
- export documentation;
- import declarations;
- accounting records;
- supplier documentation.
The objective is normally to verify that the legal structure accurately reflects operational reality.
The Five Documents Every Manufacturer Should Always Be Able to Produce
Regardless of industry, every manufacturer should be able to produce immediately:
- Bills of Materials
These demonstrate precisely which components were incorporated into each finished product.
- Manufacturing Records
Authorities frequently wish to understand what manufacturing actually occurred in Vietnam.
- Supplier Documentation
The origin and commercial history of imported components should be traceable.
- Customs Documentation
Import and export declarations should remain consistent with operational records.
- Internal Procedures
Companies should be able to demonstrate that compliance forms part of normal business operations.
Common Findings During Customs Audits
Experience shows that audit findings frequently involve:
- inconsistent documentation;
- incorrect tariff classification;
- incomplete production records;
- insufficient origin evidence;
- discrepancies between commercial documents and customs declarations;
- poor inventory reconciliation.
Interestingly, many issues arise from documentation rather than intentional misconduct.
How Should Companies Prepare?
Preparation should become part of ordinary business management.
I generally recommend:
- periodic internal customs reviews;
- independent verification of HS classifications;
- regular origin reviews;
- documentation audits;
- supplier compliance reviews;
- employee training.
- Waiting until an audit begins is usually too late.
Audits Can Also Be Opportunities
A well-managed audit allows a company to demonstrate the strength of its compliance systems.
Companies that maintain accurate records and transparent procedures often complete audits efficiently and continue operations with minimal disruption.
Preparation therefore protects both legal compliance and commercial continuity.
Final Thoughts
Manufacturing excellence depends upon precision.
The same principle applies to customs compliance.
The companies that consistently succeed in Vietnam are not necessarily those with the largest legal departments.
They are those that recognise that customs compliance is part of operational excellence.
Good documentation.
Good procedures.
Good governance.
Those three principles remain the strongest preparation for any customs audit.
Ultimately, the best customs audit is the one for which your company has already prepared—long before the authorities arrive.
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For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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