BES reveals a scheme of duty evasion in scrap exports

In particular, three enterprises were identified that evaded payment of UAH 65 million in customs duty

The Bureau of Economic Security of Ukraine (BES) has uncovered a scheme to evade paying customs duties on scrap exports. This is stated in the report of the agency.

Since the beginning of 2022, more than 220 thousand tons of scrap worth UAH 2.3 billion have been exported from the customs territory of Ukraine, BES analysts have found. At the same time, the risk associated with the export of this raw material under the guise of “cover” goods can reach hundreds of millions of hryvnias.

As the BES reminded, since scrap is a strategic raw material for the country’s steel industry, in order to provide domestic enterprises with sufficient volumes of it, the export duty rate for ferrous waste and scrap is set at €180 per ton.

«However, a number of companies use “cover” codes and descriptions of goods in their customs declarations when exporting scrap. This manipulation allows them to export goods without paying export duties. The most common schemes include declaring scrap metal to the customs authorities under the guise of used metal products or primary steel forms,» the message says.

In the course of information and analytical work, the Bureau’s employees identified three companies that, by manipulating the nomenclature of goods, carried out export operations without paying customs duties in the amount of more than UAH 65 million. It is noted that the analytical information was passed to the BES detectives.

In January-November 2023, scrap collection in Ukraine increased by 27.3% compared to the same period in 2022, to 1.13 million tons. Exports of raw materials during this period amounted to 161 thousand tons, which is 3.8 times more than in the previous year, and imports amounted to 0.9 thousand tons (-60.9% yoy).

As GMK Center reported earlier, in 2022 collection of scrap in Ukraine decreased by 75.9% compared to 2021 – to 996.7 thousand tons. The export of raw materials for the year decreased by 11.4 times y/y – to 53.6 thousand tons, import – by 92.1% y/y, to 1.8 thousand tons.