Alcohol importers sound alarm - official distributors suffer losses due to smugglers


November 6, Fineko/abc.az. Unjustified tax inspections, sanctions, and any barriers to legal activity have been eliminated due to the measures taken by Azerbaijan, particularly the measures concerning the reform of tax and customs systems.

Importers of alcoholic beverages say that as a result of the measures taken, the smuggling of tobacco products has been completely eradicated. But, unfortunately, the smuggling of alcoholic beverages not only exists, but also develops, capturing an increasing share of the market.

"Increase of excise duties earlier this year has created favorable environment for bootleggers and manufacturers of counterfeit alcohol products and served a reason for the rise in their income. The current situation was obvious, as the increase in excise duties amid the absence of effective control mechanisms provoked the growth of shadow business in this area. In the end, among the victims were importers and the State Budget, and consumers are forced at their own risk to consume products of unknown origin," importers say.

To date, official importers are losing market share, as they cannot compete with smugglers who do not pay any duties and taxes, and do not bear any operating costs. Bootleggers even manage to stick illegally acquired excise stamps to their products. They apply both fake and genuine excise stamps.

According to available information, they manage to sell products by 20% or even 30% cheaper the prices offered by official importers, and importers, in turn, trying to maintain their positions, suffer losses as they are forced to sell products cheaper, that is, with a lower margin.

It is obvious that decrease in the level of mark-up also leads to large fiscal losses.

Unfortunately, the process of sales of counterfeit products involves not only retail and wholesale sales channels, but also hotel and restaurant business, which in turn testifies about the scale of the problem. The market share of contraband products is few-fold higher than the official segment.

Experts think that during monitoring and operational measures tax authorities should not be satisfied only with the fact that products have an excise stamp, they also have to check the origin of brands and, in general, conformity of the brand a particular drink.

"The only way out of this situation will be use of product marking registration in the country, and before that strengthening of control at border customs posts, as well as operational measures to identify a group of persons engaged in this illegal activity," experts consider.