“Non-tariff” duties evasion: importers now at increased risk of criminal liability

A federal law* (the “Law”) has extended criminal liability in the customs domain to failure to pay special, anti-dumping and/or countervailing duties owed by organisations or individuals upon importation of certain goods. Previously, criminal liability only applied for evading customs payments.

According to the explanatory note* of the Law, the need for this amendment stems from the rise in outstanding debts on this type of duty. In particular, between 1 May 2020 and 1 January 2021, debts of this kind more than doubled from RUB 152m (EUR 1.8m) to RUB 384m (EUR 4.4m). The note states that the unscrupulous actions of importers not only negatively affect budget revenues, but is also causing direct economic damage to the Russian Federation.

Essence of the changes

From 1 July 2021, importers can be held criminally liable for evading payment of customs payments and special, anti-dumping and/or countervailing duties on a large and especially large scale. When the declarant is a legal entity, the risk of criminal liability arises for those executives responsible for customs payments.

Previously, criminal liability only applied to evasion from making customs payments (i.e. import and export customs duties, customs fees, “import” VAT and excises).

Unlike import customs duties (by way of example), special, anti-dumping and countervailing duties do not belong to customs payments and are paid for imported goods in addition to customs duties as a measure to protect Russian producers of goods in certain sectors of the economy.

Importers now find themselves at risk of criminal liability when they owe customs payments and fees exceeding RUB 2m (EUR 23,045), which qualifies as a wrongdoing committed on a large scale. For commission of a wrongdoing on a particularly large scale, the threshold is RUB 6m (EUR 69,137).

Depending on the damage caused, in addition to fines and community service, a wrongdoer faces imprisonment of two to five years under Article 194 of the Russian Criminal Code (in the absence of other qualifying signs of the wrongdoing).

Comments

The adopted amendments are primarily aimed at unscrupulous importers who through non-payment of customs duties unlawfully understate the value of imported goods, by-passing established state protective measures and obtaining an unjustified economic benefit.

However, under the Law, it is possible to calculate a large and/or particularly large amount of unpaid customs payments and fees both separately (on one of these types of payments) and in the aggregate (both on customs payments and customs duties). As a result, the risk of criminal liability may arise for importers even if they are not involved in criminal schemes, but the total amount of unpaid customs payments and duties for some reason exceeds a large or especially large amount. Note that for the purposes of criminal liability under Article 194 of the Russian Criminal Code, debt is defined as the total of all mandatory payments payable by the declarant (customs duties plus “non-tariff” duties), rather than separately for each type of payment or duty.

Good-faith importers should therefore carefully monitor their customs payments to avoid falling behind payments and having their executives risk criminal liability.

For further information, please email the authors or your usual contact at CMS Russia.

* In Russian