“Zero tolerance to excise duty evasion”

HEIT-coordinator Heidie Pols and customs officer Gerard Klaver on supervising non-regular neighborhood supermarkets. “At these shops we often encounter many types of malpractice.”

Ever since the creation of the Economic Intervention Team of The Hague (HEIT) Customs is a constant value within this regional partnership. One of the current spearheads is supervising excise duty selling points and in particular neighborhood supermarkets, that are constantly violating numerous rules. In addition to cheating self-employed workers, large criminal networks turn out to be active in this world of illegal liquor and tobacco.

 “The HEIT combats undermining in the largest sense of the word”, says coordinator Heidie Pols. “With more than thirty people we are active in the entire region. Every year our team conducts hundreds of comprehensive business controls in sectors such as the restaurant and hotel business and retail. Malpractices are dealt with simultaneously as much as possible: ranging from unfair competition and benefit fraud to exploitation and human trafficking. To that effect we set off together with partners such as Customs, Police, the Employee Insurance Agency and the Inspectorate for Social Affairs and Employment. The starting point is that the control should be interesting for at least three of the aforementioned parties. Moreover they themselves supply indications as well. It was Customs that focused the attention on the specific problems around excise duty evasion at excise duty selling points.”

Window-dressing merchandise
“Every year our service controls 2,700 excise duty selling points nationwide. In more than twenty percent of the cases we find irregularities, in a few regions the rate of correction is around thirty percent”, says Gerard Klaver, Excise duty expert at Customs. “The HEIT actions in which we work together are focused primarily on non-regular neighborhood supermarkets. Like small shops specialized in the sales of products from the country of origin of their customers – very often from Eastern European countries – including vodka and cigarettes. In case of tobacco products it is reasonably simple: the lack of a Dutch tax seal or the presence of a fake seal means that such products are not subjected to Dutch taxation. Liquor is a more difficult story, since bottles don’t require such a seal. However, one should be able to prove that Dutch excise duties have been paid for them. Often people buy a small amount of liquor from an importer in order to be able to present an invoice during controls – even though they are not in line with the stock. Usually the official products are merely used as window-dressing; all kinds of stuff are sold under the counter.”

Multifaceted problem
“This illicit trade is worth millions of Euros, driving bona fide traders out of the market”, Pols knows. “Some owners tell me that they cannot break away because they cannot survive with the sale of legal products only. And usually there is much more wrong. It happens that we find staff claiming unemployment benefits, sometimes illegal aliens as well. Expansions have been made without a permit. Often the separate room – with a separate counter – required for the sale of liquor, is lacking.”

Klaver: “Pseudo management – where a shop is not operated by the entrepreneur in whose name the business is registered – seems to be more a rule than the exception. The neighborhood supermarket breaking systematically the law, often has an Arab or Asian background. Together with the Fiscal Information and Investigation Service we detected a criminal network which presumably engages in financing terrorism in the Middle East. And the problem will grow still further. In 2018 we dismantled an illegal warehouse containing seventeen million cigarettes. From there a van with one million cigarettes drove to The Hague on a daily basis – we took it off the road.“

Increasingly cunning
“With comprehensive controls we, as a government authority, make it clear that we don’t tolerate such malpractices” says Pols. “We always arrive with a large team, including several police officers. And we prepare ourselves well, for instance by gathering a lot of information on the property. The shop remains closed during the control – for everybody’s safety and to give the customs officers every opportunity to carry out their search.”

Klaver: “In almost all such stores we find hidden compartments – underneath workbenches, in shelf spaces, behind ceiling plates – where for instance counterfeit cigarettes are stored. With the help of hand scans and tobacco dogs we try to detect these stocks, but it is not always easy. Recently we found a secret hiding place we already looked for in vain at another occasion. Our luck was that the store operators had left the door ajar. It was an ingenious electric system, operated by pressing the head of a screw by a pen.”
“We have never seen a criminal sector that was able to adapt itself so quickly after our control operations”, Pols says. “When they understood that we were interested in the empty tobacco boxes they had left in the street, they removed the stickers from then on. Later on they no longer left any waste at all.”

More clout
Klaver: “Our approach works but at the same time it remains an ongoing race. We will therefore enforce even more effectively. However useful it may be to seize alcohol and cigarettes, at the end of the day you want to expose the network behind it. That is why in 2019 five hundred controls of the supply chain of the excise duty selling points are scheduled. Moreover: when at a later stage the Dutch Tobacco and Tobacco products Act will be modified, it will be possible to impose an additional fine for unpaid excise duties. Indeed, a European directive will be introduced stipulating that tobacco products have to be provided with an identification marking as well as a non-forgeable safety feature. This will give us more clout.”

The cooperation with HEIT is solid as a rock, Klaver stresses. “However, we are joining forces even more – with the bona fide businesses, with other government agencies. Together with the Association of Dutch Municipalities we will examine whether administrative law will offer additional possibilities to tackle ‘bad’ excise duty selling points. For instance, as we often find stolen property, can we lock a building down on the basis of fencing stolen goods? Meanwhile we have a better cooperation not just in The Hague, but also in cities like Rotterdam and Amsterdam – and in smaller provincial cities like Enschede. This is much needed, as this is a recognized problem across all of the Netherlands.”

This interview also appeared in our recently issued overview ‘Dutch Customs in 2018’. Click here to read the full publication.

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