Big losses on levy evasion

DUBAI — Leading steel scrap business houses of the UAE have approached the government to take stern measures to check the evasion of the levy of Dh250 per metric tonne on the export of scrap from the UAE, so that a level playing field is created for all exporters.

By M. A. Qudoos

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Published: Fri 15 Jul 2005, 12:56 PM

Last updated: Thu 2 Apr 2015, 4:41 PM

According to industry estimates, some 50,000 metric tonnes of steel scrap is exported every month from the UAE and the evasion of export levy is resulting in a monthly loss of more than Dh12 million to the government exchequer. "Due to certain malpractices being adopted by relatively smaller scrap exporters who are resorting to unscrupulous measures and tactics in order to evade payment of the export levy our business has come to a complete halt," major scrap houses, who used to handle 80 per cent of the scrap business, have said in a written letter to the Sharjah Chamber of Commerce and Industry for the matter to be taken up with the director general of Customs Department and other related departments.

"The evasion of export levy is resulting in huge revenue losses to the government as well as to genuine scrap exporters like us who are unfairly suffering from such malpractices," they said in the letter written collectively on behalf of a group of leading companies in UAE who are actively involved in the procurement and export of steel (ferrous) scrap from UAE to various destinations, and contributing in a small measure to the development of trade and economic growth of UAE over the years.

They said that they have been paying the export levy, imposed in September 2004, as law abiding corporate citizens of UAE and continuing their business. However, they have been thrown out of business due to unfair practices.

Some of the instances of the unfair methods being adopted for evasion of the export levy which have come to the notice of the group are: The bills of lading are changed at the last moment and not as declared hitherto at the time of customs inspection/approval; Export Declaration Passing System — wrong definition of cargo viz, cargo that should be defined as HMS (Heavy Melting Scrap) is wrongfully defined and declared as textile machinery pieces etc. which amounts to wilful misdeclaration of facts and deceit.

The material being exported is also declared as computer sheets, used machinery spare parts, textile parts, cast iron steel, used auto parts, auto parts, wire rods, rerollable material, and rerollable steel, they said.

Some of the unscrupulous exporters file their export declaration as any one of the above goods. Later on, after the shipment, the export declaration is corrected as heavy melting steel scrap. This procedure should be investigated.

"We believe that such malpractice not only deprives the UAE government of tax resources, it also makes a mockery of the law and intended purpose of these export obligations by these very same people. Unfortunately, we as genuine exporters and business houses of repute and long standing, despite abiding by the law and paying the taxes, are affected by being equally aligned with and bracketed along with these few small players who seem to adopt every kind of unscrupulous methods to evade taxes," they said.

To safeguard the respective interests, the business houses have proposed that the following measures should be reviewed and considered by the department:

(I) The export declaration filed with the customs by the exporters should be supported with an invoice duly attested by the Chamber of Commerce and the Customs. The shipping line should issue the bill of lading according to the export declaration and chamber attested invoice.

(II) The shipping companies should be instructed strictly to issue the bill of lading with the same nomenclature as mentioned in the pre-inspection certificate issued by the Inspection agency. In other words, the customs office may need to initiate firm control over the shipping companies to ensure that the bills of lading issued by them are completely in accordance with the export declaration filed with the customs. The adoption of this practice would give a level playing field to all genuine exporters who would not be bracketed with or aligned to unlawful activities that are perpetrated by others, it would also check as well as negate any intentions of malpractice thought of, they said, adding that in the event that the authorities come across the cases of mis-declaration and other malpractices, they should take strict penal action on the company concerned. The group hoped that suggestions will be considered and suitable action will be initiated so that a level playing field is created for all scrap exporters with the new system.

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