Corruption schemes and violations: how much money disappears at customs

State Customs Service: How much money the customs did not receive in 2022 / Collage of Channel 24

The State Customs Service fulfilled the plan in 2022 by only 60%. Some people’s deputies called it a failure, calling the body the weakest link. Channel 24 I decided to figure out how much customs received less last year and why.

State Customs Service. The weakest link

Chairman of the Tax Committee Daniil Getmantsev criticized State Customs Service, noting that the body fulfilled the plan by only 56.9%. That is, the state received less than 227.5 billion hryvnia.

The People’s Deputy agrees that the so-called failure of customs in 2022 was affected by the three-month cancellation of customs payments. At the same time, he notes that with their resumption in July, the situation has not significantly improved.

Daniil Getmantsev
Head of the Verkhovna Rada Committee on Finance, Tax and Customs Policy

Systemic problems of the service and the inability of the body’s leadership to overcome them are having an effect. Obviously, among all the financial authorities, customs is the weakest point. Undoubtedly after BEB.

Yaroslav Zheleznyak also did not stand aside and commented situation. The people’s deputy noted that a number of factors influenced the work of the body, such as war, loss of transit, customs benefits, etc., but he does not believe that he represents 43% of the shortfall in funds from the plan.

• The plan comes out with 44 billion a month, which the body has not fulfilled even once in a year, Zheleznyak notes.
• Devaluation and inflation played a great role in favor of customs payments, but emphasizes that this is not visible as a result.
• Almost all customs privileges were canceled in July, which also, in his opinion, did not affect the amount of budget revenues.

“Not an outright failure”

Expert Tatyana Ostrikova thinksthat it is not worth talking about a “direct failure”, since the failure to fulfill the plan was due not so much to the work of the customs authorities as to the general drop in imports, the state of the economy, the benefits provided and the reduction in the VAT rate on fuel. However, she agrees that there is “room for efficiency gains.”

Ostrikova offers to take a look at what was written in the budget, how much revenue customs lost due to benefits and other factors.

The pre-war version of the State Budget for 2022 in terms of import VAT, import excise and taxes on international trade was UAH 519 billion against UAH 528 billion.

Tatyana Ostrikova
Member of the Supervisory Board of Altbank JSC

That is, the pre-war indicator for customs was not only not reduced, it was increased with the start of a full-scale war. In my opinion, the decrease in the VAT rate on fuel and oil products also had a great impact on the reduction of customs duties.

The effect of reducing the VAT rate on fuel

• For 9 months of 2022, they were imported for 6.1 billion dollars. This is 72% more than in 9 months of 2021.
• With a VAT rate of 20%, $1.2 billion of tax would go to the budget from this amount. And at a rate of 7% – only 427 million dollars.
• That is, due to this benefit, customs revenues lost 793 million dollars, or 25 billion hryvnias.

State Customs Service. Customs holidays

The so-called “customs holidays”, which no one asked for, but suddenly dumbfounded the business during April-June 2022, also affected,
— considers Ostrikov.

• Due to customs holidays, imports of goods for three months amounted to $11.6 billion. The average pre-war tax burden on imports was $0.26 in taxes per $1 of imports.
• That is, from 11.6 billion dollars, the customs authorities could theoretically collect 3 billion dollars, or 86 billion hryvnias.

In total, these factors ensured a “shortage” of UAH 116 billion. Together with the actual 301 billion hryvnia, this amounted to 417 billion hryvnia. And where did the more than 100 billion probable earnings go? I think we need to take into account the general decline in the economy and imports. I don’t give a figure, I want to hear them from the state bodies. And finally – benefits for the import of cars, generators, batteries, transformers and other “energy” and not very goods,
— summarizes the economic expert.

State customs service. Corruption schemes at customs

Yaroslav Zheleznyak
Economist, people’s deputy of the Verkhovna Rada of the IX convocation

And the main reason for such a failure of customs is very simple: they steal there. Billions are being stolen, and the leadership of the customs now looks more like a bunch of thieves than people related to power during the war.

Corruption at customs is also stated by Elena Shcherban, Deputy Executive Director of the Anti-Corruption Action Center. She stressed that the Bureau of Economic Security (BEB) should have dealt with such crimes, but does not show any results.

That is, there is no effect from customs and from the bodies that should be involved in bringing the economy out of the shadows. They don’t do their job, they do corruption,
— says Shcherban.

Ukrainian grain export scheme

Zheleznyak says that the VSK for economic security received a lot of material on corruption at customs when exporting grain. More than 10 high-ranking customs officials were involved in the latest scheme, which was exposed by the SBU along with the Bureau of Economic Security.

They set up a massive tax evasion mechanism for Ukrainian grain exports. Because of this, the state lost hundreds of millions of hryvnia. To implement the scheme, its participants involved more than 370 commercial structures with signs of fictitiousness,
— noted in the SBU.

The scheme for exporting grain through the capacities of grain terminals in Odessa, Chernomorsky and Yuzhny ports operated as follows:

• Through fictitious structures, businessmen massively bought wheat from private farmers, agricultural enterprises and large agricultural holdings.
• Then the products were transferred from one “laying company” to another in order to confuse trade chains and avoid paying mandatory payments.
• Then they sold the grain to exporters for sale abroad.

State Customs Service. Number of customs violations in 2022

In 2022, the rate of violations of customs rules increased by 5%, the State Customs Service states. Over the past year, 11,098 violations of customs rules were detected in the amount of UAH 2.9 billion. In total, objects of offenses worth over UAH 697.5 million were seized, in particular:

• industrial goods for UAH 457.5 million;
• food products and agricultural products for UAH 49 million;
  currencies for UAH 147.3 million;
• vehicles for UAH 43 million.

Violation of customs rules in 2022 / State Customs Service, Infographics

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