Thursday, February 9, 2012

Bethel Finance: Tax Authority probes mobile phone smuggling

www.bethelfinance.com
The Israel Tax Authority has opened an investigation into the smuggling of mobile phones, which has resulted in a halt of deliveries of mobile phones, causing shortages of some models. Sources inform ''Globes'' that the investigation was launched following complaints by certain importers, which showed customs that the prices declared for some mobile phone models were understated, reducing the amount of customs paid on them.

Competition between the authorized importers of mobile phones and unauthorized importers has greatly intensified in recent years. The structure of the Israeli mobile phone market has distorted the market, intensified competition, and led to mutual suspicion and accusations, and the intervention of Customs.

Customs was reportedly told that certain importers declared the price of mobile phones as $200, whereas their list prices were 2-3 times higher. Customs suspects that the lower declared prices were intended to evade payment of customs duty, and that part of the money was paid to dealers as kickbacks.

The Tax Authority has asked authorized importers for the official price lists of mobile phones in order to compare prices. The inexplicable differences led investigators to examine how a manufacturer can sell a mobile phone for $500 to its dealers or representatives in other countries, while the unofficial price in Israel is half that figure.

Following the investigation, customers stopped deliveries by certain importers. It is also investigating how certain models entered Israel without approval from the Ministry of Communications - in other words, they were smuggled into the country, apparently in luggage. An example is the Samsung Nexus, which has no Ministry of Communications certification, and Samsung's authorized importer Suny Electronics Ltd. (TASE: SUNY) does not import.

The Tax Authority said in response, "Suspicions are being investigated of serious allegations that prices of mobile phones were lowered and that they were smuggled into the country. Customs is investigating the various cases at both the civil and criminal levels.'

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