Using the definition of the Federal Customs Service "gray imports" are the goods taken through the country with understating tariff payments due to inaccurate / false declaring.
The "gray imports" in terms of the Customs and Criminal Code could be considered as the same as smuggling but disguised as legal importation.
At various times since the late 90s of last century, the average level of such imports has reached up to 30%. And if you take the individual product groups, such as home appliances, electronics and consumer goods (FMCG) the share of illegal shipments could have reached up to 90%. Usually the obvious discrepancies may be found within foreign trade statistics, for example, when China claims to have sold to Russia home appliances and consumer goods in the amount of $ X and Russian importers are legally imported goods only for $ Y amount.
The most common schemes of "gray imports" are the following:
- Understating the customs value of the goods;
- False declaring of goods when importer intentionally gives incorrect description, country of origin and/or HS code of the goods, thereby reducing the tariff payments to the budget.
All these import operations are performed by those fly-by-night companies that prefer to remain silent about the schemes they used.
We are against “gray imports” because:
- It is unacceptable that competitive advantages are achieved by the use of such schemes.
- State budget is forfeited by due and payable revenues.
- Domestic manufacturers really sustain losses losing a fight to the domestic suppliers who practice such customs clearance (or even avoiding it). Foreign manufacturers often do not realize exactly how their products are imported, and find out about it only when they are getting "involved" at the stage of the legal proceedings incurring huge reputational loss.
- When working with fly-by-night companies (very frequently used in such schemes) their customers would definitely have problems with tax authorities.
- Companies which become accustomed to build their procurement activities based on artificially optimized pricing jeopardy their business.
- Namely because of such "gray" schemes all legal importers have to face many bureaucratic customs procedures (such as, for example, evidence of the customs value), suspicious attitude from customs or even off-the-record recommendation to look for a different customs post for clearance.