Lubricants Cover Up Fuel Smuggling in Mexico

Almost half of the gasoline That Mexico imports is contraband, and since 2020 there has been an increase in imports of lubricants, without any support for economic activity.

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Fuel smuggling in Mexico
Foto: Cuartoscuro

Fuel smuggling in Mexico

Fuel smuggling in Mexico – According to a report published Tuesday by the Tax Administration Service (SAT), at least 47% of the gasoline that was imported into the country during the past year was smuggled. The illegal import of gasoline, diesel and gas condensates has reached a new record in recent years.

The oversight body estimates  the smuggling of fuels and other oil during the past year at 102 million barrels, an increase of 122% compared to 2018, when the reported figure was 45.8 million barrels.

The federal government has set as one of its main goals to reduce illegal imports of fuels, known colloquially as ‘fiscal huachicol’, which occurs under the mechanics of internalizing the product to the country under other tariff headings and thus avoid paying the taxes that are set on gasoline and the rest of the products of the type. Those who illegally import fuels often declare them as “lubricants”, which avoids the payment of the Special Income Tax (IEPS).

Foto: Pixabay

“Since 2020, there has been an increase in imports of lubricants, without any support in economic activity. These products are not subject to the payment of IEPS, so they are used as a means of evasion to introduce hydrocarbons through land customs,” says the SAT in the document.

Since the beginning of 2021, the Ministry of Energy, the Energy Regulatory Commission (CRE) and the SAT began a process of periodic verifications to the storage, import, transfer terminals and other points of the logistics chain to supervise the procedures of internment of gasoline, in search of irregularities related to the illegal import of fuels.

It has also tightened foreign trade rules, including the elimination of some gasoline import points. Among other things, it limits the participation of private companies in the internment of hydrocarbons, petroleum products and biofuels in places other than those authorized, such as customs or audited areas.

Under the new rules, only the two state-owned companies – Pemex and CFE – and all their subsidiaries will be able to be authorized to enter these goods through these sites, which are used when goods cannot enter the country due to their nature or volume and which involves less surveillance of what is imported.