Economic policies encouraging under-invoicing by Argentine fruit growers

An increasingly tough raft of economic policies is pushing Argentine fruit growers into under-invoicing their exports to maintain profits.

Barriers to exports recently introduced, including the imposition of withholding taxes as well as several indirect obstacles to exports, have led to an increase in tax evasion through the under-invoicing of exports.

Data discrepancies

Under-invoicing is assumed by many to be rife in the sector because the value of fruit exports has reduced from US$0.97 per kilo in the period January-September 2018 to just US$0.78 per kilo in the following year, a 20 per cent year-on-year fall.

Over the same period, production costs and domestic wholesale and consumer prices have remained stable or increased slightly.

There have been price falls in some markets. The average values of apples have decreased by around 8 per cent in the northern hemisphere markets for example. But industry experts say such price falls are not common across all markets.

Export tax

Under-invoicing has become more common due to several factors. Most of the blame is pinned on the government’s imposition of 4 pesos per dollar tax on exported fruit.

When it was introduced, the tax represented approximately 10 per cent of the declared value of exports, although it has now fallen to three pesos, representing 5 per cent of the declared export value.

Exchange rate controls

Recently imposed exchange rate controls are also seen as motivator of under-invoicing. The latest controls widened the gap between the official and unofficial exchange rates by an average of 20 per cent.

This may have prompted some exporters to declare a lower value of exports than their true market value, repatriate some of their earnings at the official dollar rate but smuggle the rest of their income back home or leave it in an account abroad.

Categories: Trade Based Financial crimes News

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