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Customs Evasion

What is the penalty for undervaluation of goods?

Penalties typically range from 50% to 100% of the evaded tax amount, plus the obligation to pay the full tax. Criminal charges apply for evasion over 100,000 GEL.

Can I appeal a customs classification decision?

Yes, you can appeal the HS code classification. You will need technical documentation and expert opinions to prove that your classification was correct.

How long does a customs dispute take in Georgia?

Administrative appeals take about 1-2 months. If the case goes to court, it can take 6-18 months depending on complexity.

Will my goods be seized during the dispute?

Not necessarily. You can often release the goods by providing a bank guarantee or paying the disputed amount under protest while the case is ongoing.

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Customs evasion involves the deliberate avoidance of paying taxes and duties owed to the state budget by importers or exporters, constituting a serious economic crime in Georgia. This act harms the country's economic interests and creates an unfair competitive environment. Customs evasion can take various forms, such as artificially undervaluing goods, incorrectly specifying the Commodity Code (HS code), or concealing the actual quantity of goods. Georgian legislation takes a strict stance on such violations, imposing substantial financial sanctions and criminal liability, especially when large amounts of tax evasion are involved.

What Does Customs Evasion Defense Service Cover?

Lawyers registered on Legal.ge offer comprehensive services for companies and individuals accused of violating customs rules. The services include:

  • Tax and Customs Audit: Detailed examination of import/export documentation and identification of potential risks before a dispute arises.
  • Defense in Customs Disputes: Appealing decisions of the Revenue Service through administrative channels (Customs Department and the Dispute Resolution Council of the Ministry of Finance).
  • Criminal Defense: If a case is initiated under Articles 214 or 218 of the Criminal Code (Tax Evasion), the lawyer ensures the client's defense during investigation and court stages.
  • HS Code Classification Defense: Handling disputes regarding the reclassification of goods by customs, which often leads to increased taxes and penalties.
  • Alternative Tax Audit: Preparing independent audit reports to refute the position of the customs authority.

Common Situations and Scenarios

Customs disputes often arise from differences in interpretation or documentation errors. Typical scenarios include:

  • Valuation Disputes: The customs authority disagrees with the price stated in the invoice (Method 1) and uses backup methods to increase the customs value of the goods, automatically raising VAT and import duties.
  • Incorrect HS Code Classification: An importer brings in technical equipment at a 0% rate, but customs changes the code to a 12% category and imposes a fine for the unpaid difference.
  • Documentary Discrepancies: The invoice sent by the supplier and the transport waybill do not match in weight or quantity, which is perceived as an attempt at smuggling or tax evasion.
  • Rejection of Certificate of Origin: When using a preferential tax regime (e.g., with the EU or Turkey), customs rejects the Certificate of Origin (EUR.1) and demands full tax payment.

Georgian Legal Framework

The field is regulated by the Tax Code of Georgia and the Customs Code of Georgia. Understating taxes or incorrect declaration leads to financial sanctions, which can be up to 100% of the unpaid amount. If tax evasion occurs in large amounts (exceeding 100,000 GEL), criminal liability arises. Article 214 (Violation of Customs Rules) and Article 218 (Evasion of Taxes) of the Criminal Code of Georgia provide for severe penalties, including imprisonment. It is also crucial to be familiar with the orders of the Minister of Finance regarding goods clearance procedures, as precise knowledge is essential for successful defense.

Step-by-Step Service Process

Resolving customs disputes requires a systematic approach:

  • Documentation Review: Analysis of import declarations, contracts, and invoices.
  • Administrative Appeal: Initiating a dispute within the Revenue Service system (Mediation or Dispute Council).
  • Court Litigation: If administrative resources are exhausted, filing a lawsuit in court to annul the tax assessment.
  • Stay of Execution: Preventing or suspending the freezing of bank accounts during the dispute process.

Why Choose a Specialist on Legal.ge?

Customs law is a narrow and complex specialization. Legal.ge features lawyers with practical experience in disputes with the Revenue Service and criminal cases. A poorly managed dispute can paralyze a business due to asset freezes. Specialists found through our platform will help protect your business from unfounded fines and ensure the smooth movement of cargo.

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