Evasion of customs and excise duties

When companies try to avoid paying taxes to the federal government in relation to the importation of goods brought into the country, it is customs fraud. This is a catch-all term for all kinds of fraud connected to tax evasion on imported goods. There are many different kinds of customs fraud, but the two major types are “antidumping” duties and “countervailing” duties.

To indicate their inexhaustible range, a list of some smuggled consignments could include butter, cocaine, machine guns, political manuscripts, escaped criminals, stolen art masterpieces, refugees, alcoholic beverages, protected species of animals, tobacco, abducted women and children, and diamonds. Because of the difficulty involved in detection, some countries (such as the USA and the UK) may have very few smuggling convictions when compared with the thousands of minor and hundreds of major undetected smuggling operations annually.

The USA Customs Service estimates that about 10% of all imports are fraudulent. In fiscal years 1984 and 1985, only 27% of the textile and apparel imports involved in customs fraud were even detected. In Italy in 1993, cigarette smuggling was estimated to have cost the treasury £685 million in lost revenue.

For several years a Japanese car manufacturer exported to the European Union, from Hungary, vehicles essentially Japanese in origin. The manufacturer claimed the cars were of Hungarian origin, in order to take advantage of the duty-free treatment enjoyed by Hungarian exports. The fraud was uncovered in 1998.