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China’s minimum import prices stopped it without affecting retail prices
SINCEAn office company imports 80,000 pairs of shoes, duty-free at BGN 1.20 per pair, originating in China, declared under a specific customs regime established in Greece. It allows the payment of VAT when goods produced outside the EU enter the territory of the Union in one country but are destined for another, where the goods will be consumed. Days after importation, the trader stated that the shoes had been exported to Hungary in two trucks registered in Macedonia. An inspection by Macedonian services found that
A vehicle
the remedy is a cure
car,
and the second registration number does not exist. The Hungarian tax administration does not confirm that the receiving company has a contract with Bulgarian traders. The accounting and transport documents do not confirm this version. Customs and tax inspectors suggest that the shoes were sold without invoices in Bulgaria.
Until recently, these Chinese and Turkish cargo cases were common.
Since the beginning of this year, such scams have been impossible. The result – despite the crisis due to the pandemic, customs revenues for the first half of the year were BGN 104.2 million, which is 55.6% of the annual estimates, and VAT revenues – BGN 5, 2 billion, or planned. At least BGN 30 million of the duties collected come from the new regime to control Chinese and Turkish cargo, customs experts estimate.
Under the new regime, anyone who imports cheap Chinese and Turkish goods can no longer pay taxes at symbolic prices and is repeatedly screened, at the border by customs officials and inland by NRA tax agents. At the same time, the prices of Chinese and Turkish products have not increased significantly, experts say.
The reason for the increase in customs revenue is the Brussels requirement in mid-2019 for a new mechanism for customs clearance of Chinese cargo in each EU country. A 2019 OLAF report announced that the annual losses of Chinese cargo at symbolic prices for the European Union exceed 1.2 billion euros.
To this end, Bulgaria amended the Customs Law and the Code of Tax Procedure and Social Security.
In 2019, the Tax and Pension Procedure Code was modified for the first time. The amendment went almost unnoticed, but it seriously changed trade in certain products. One of the new texts requires that the list of products with high risk for the financial interests of the EU be published on the websites of the Ministry of Finance and the Customs Agency. When checking the data in a customs declaration it is established that the prices indicated are lower than the so-called fair, valid in the EU, the customs authorities
demand
Provide
warranty
It amounts to the payment of the customs debt and other credits that may be derived from the import, calculated on the basis of fair prices. Customs formalities continue after security has been provided. According to the definition written in the law, fair prices are estimates derived from COMEXT, a special Eurostat database for international merchandise trade.
Prices are given for each product, origin and country and generally for four consecutive years. They are used by all EU countries.
The changes do not affect the goods that are actually monitored by the tax administration: grains, meat and other food products. They mainly refer to Chinese and Turkish cargo, which enters the country and is declared at much lower market prices. It is clear from customs information systems that these are mainly textiles and household items. According to the documents, they cost pennies for many years, but then they were sold for ten times more without paying the corresponding taxes.
Another change foresees that the revenue administration receives information about cross-border tax regimes with a potential risk of tax evasion. Two days ago the deadline for the consultants and intermediaries of these transactions to submit information on each cross-border tax scheme expired. The summary information will be available from the NRA in November, as the deadline for collecting and analyzing this information is October 31, 2020.
The other important amendment to protect against cheap cargo fraud was made in the Customs Law. It has tightened the conditions to import all risk products from non-EU countries. Under the new provisions, when the verification of the data in the customs declaration shows that said risk goods are declared at prices below fair,
of importers
they are wanted
evidence
for the deal
During the discussion of the correctness of loyal business at the Budget Committee meetings, surprising facts about the burden of China were presented. After their introduction, a regular importer of socks from China must insure a product whose minimum customs value is already 120% higher. Another importer of plastic products had to prepare minimum prices four times higher for the items it had been offering for years. Thus, its customs debt jumped from BGN 19,000 to BGN 82,000.
The Brussels decision and the amendments to our laws followed large-scale revelations about the Beijing project, which gained popularity as the “New Silk Road.” In 2018-2019, the EC suspects that China is using the project to connect infrastructure between the two continents to smuggle it into Europe. The large-scale scheme includes a reduction in the value of imported goods in order to pay lower duties and taxes on sales. It was discovered in Britain, where it has been applied for years. Investigators from the European Anti-Fraud Service suspected that the largest Greek port was being used for black trade: Pipeia, which is a major city. The investigation is still ongoing and Brussels has taken preventive measures against this practice.
Transactions with China, Turkey, India or Bangladesh are considered risky
The list of assets with high tax risk has been updated for several years. Since January this year, it has listed the most frequently imported products from China, Turkey, India and Bangladesh. There are several reasons to enter the risk profile for importers and customs and tax traders. First, they are most often used to defraud by changing the customs regime or customs position.
The difference can benefit the importer in hundreds of thousands of leva. The second reason is customs duties at unrealistically low prices. Therefore, anyone who imports those goods must now test the reality of the prices. The list for January this year, for example, includes traders who import carpets from Bangladesh, bags, toys, clothing and plastic products from China, Bangladesh, Serbia, Turkey, India and Pakistan.
All merchandise arriving by unusual routes by land and water, as well as those destined for re-export, are already marked as risky. Most of the time because the latter is only in documents and they are retailed in the country.
The latest additions to the list are plastic products, especially imports from third countries. On May 21 of this year the EU Council approved the introduction of new restrictions on 10 disposable plastic products for which there are substitutes. After some of the countries introduced a complete ban on many plastic products, some of them turned to other countries, including Bulgaria.
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