Tighter controls on import maneuvers: corporate fines top US$1 billion

Customs fines on companies have increased six-fold in six months. There were more than 33,000 operations for over-invoicing maneuvers, mostly focusing on imports. Technology aid is being sought to add more controls on foreign trade.

The Economy Ministry, led by Sergio Massa, issued fines of more than US$1 billion in just one semester for maneuvers in foreign trade, both for over-invoicing and under-invoicing of exports. While the ministry claims the solution is to lower the exchange rate gap that has held at 100% for three years, the Customs office headed by Guillermo Michel is issuing fines, complaints, new port controls and changes in the SIRA import system.

According to a Customs report, fines in foreign trade operations increased six-fold, comparing the first and second semesters of 2022. There were 33,150 operations carried out between July and December, a 135% increase from the 14,134 conducted between January and June. These were contentious and criminal complaints and supplementary charges.

Of the operations, 26,953 (81%) targeted imports, while the rest was focused on exports. In the previous semester, operations surveying imports were less than half that number: 10,956.

In the last months of 2022, the audited amount rose to US$4.75 billion, with fines issued for US$1.02 billion –667% more than the previous semester’s US$133 million in fines. Fines on exports increased the most, by 4476%. Exporting companies had to face fines for US$613 million, while the figure for importers was US$405 million.

Mining, agricultural products, capital goods, medical and sanitary supplies and agrochemicals were the areas most targeted by legal actions. The common denominator was “harmful” commercial triangulation, with purchase invoices issued mostly from the US. There were also invoices issued, to a lesser extent, from Hong Kong, Uruguay and Panama. 

“These maneuvers aim to establish financial assets abroad (in foreign currency), leveraging on the exchange rate gap,” said sources from Customs. In order to perform massive audit and detection operations, they observed triangulation operations, successive sales in which the third operator lacks economic substance, precedents and prior reports, percentages on applicable rights and the companies’ general risk index.  

While Massa is trying to reduce the exchange rate gap using macro-economic and financial tools, such as the buyback of foreign debt on Wednesday, Customs is trying to “prevent the improper outflow of currency”, or what vice president Cristina Kirchner called “the import festival”. Last August, when Massa took office, these measures, which were widely promoted in the media, aimed to create a “perception of risk”. Five months later, sources in Customs say that was successfully established among companies. 

In fact, they are seeing this with the issue of the precautionary measures request filed by the companies in order to be able to import. There have been 3,146 precautionary measures issued in the last two years linked to the previous imports system –called SIMI– for a total amount of US$2.52 billion.  

Sources in the government say they have managed to either win those judicial battles, or get the companies to desist. Most of the requested injunctions were concentrated on almost 100 companies, mostly from the textile and electronics areas. 

Customs has 300 lawyers, of whom 16 are “focused” on this issue. “They can’t deal with it all, they are scrambling to manage,” an official source said. One of the reasons companies stop presenting protective actions is that in the new SIRA importing system, their operations are complicated if the system shows that they made “abusive use” of protective measures. The Economy Ministry is celebrating that SIRA, which was launched last October, has not had a protective action that has favored companies so far.

Furthermore, customs is seeking to move forward with new physical controls. On this front, it has required all ports in the country to install giant scanners, a technology which can cost some US$6 million, and for it to scan 160 trucks an hour, when a normal device can only handle around 30. At present, the only one is in terminal 4 of the port of Buenos Aires, where around 800 containers are circulating per day, over half of which contain imported goods.

By requiring ports to do this, customs is attempting to bring the scanners owned by private ports to new border points, where they do not yet exist. One example is the Jama border point in Jujuy, which large volumes of lithium are expected to cross, but which currently does not have a scanner. Customs will use a loan from the Inter-American Development Bank to invest in these technologies, which they claim have not been updated since 2015. “There’s a significant shortcoming in technology and infrastructure, there’s been a lack of management,” internal sources admit.


Author: Florencia Barragán / Originally published in Ambito.com / Translated by Agustín Mango

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