ZERA Warns Fuel Smuggling Cartels
The Zimbabwe Energy Regulatory Authority (ZERA) says the smuggling of fuel into the country has become rampant, with some cartels using the fuel sector to launder money.
Money laundering is the illegal process of making “dirty” money appear legitimate instead of ill-gotten.
“Dirty” money refers to funds obtained through criminal activities such as drug trafficking, corruption, or terrorist funding.
Speaking to Business Times, ZERA CEO Addington Mazambani said that the smuggling of fuel into the country hinders the Government’s ability to collect taxes and shortchanges consumers as they pay for poor quality fuel that has the potential to damage their vehicles. Said Mazambani:
We are experiencing a lot of fuel smuggling into the country causing unfair competition. We will be ruthless in cancelling offenders’ licences.
It’s a sector we have allowed to grow and it’s now an area (sector) where some elements are in to clean their money.
Various taxes are imposed on imported fuel, such as the carbon tax, ZINARA levy, and debt redemption tax, and excise duty.
However, fuel smugglers have set up elaborate schemes to enable fuel imports without paying duty, boosting their profits in the process.
According to Business Times, some smugglers declare fuel entering Zimbabwe as being in transit.
The fuel is then not subject to excise duties because the paperwork indicates the fuel will not be used or sold in Zimbabwe.
Taxes do not apply to goods that are in transit.
The report says the fuel is offloaded in Zimbabwe by the smugglers, who either use it or sell it here.
The fuel smuggling cartels allegedly include clearing agents, transporters, and some Zimbabwe Revenue Authority (ZIMRA) officers who have a habit of falsifying fuel quantities and descriptions.
The former deputy minister of finance Terrence Mukupe was recently sentenced to an effective three years in prison for fraudulently importing over 130 000 litres of diesel without paying duty.
In addition to the prison sentence, Mukupe was ordered to pay US$12 000 in restitution.
Some fuel dealers allegedly mix diesel with paraffin, taking advantage of paraffin’s low price and the fact that paraffin, regarded as a basic commodity, was exempt from duty and levies.
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