Foreign companies in Laos given strict quotas to import tax-free fuel for their business projects are greasing the palms of corrupt officials to bring in additional supply to sell on the local market, officials said.
The mostly Vietnamese, Thai, and Chinese companies abuse the tax exemptions by exaggerating the fuel requirements of their investments and by importing more fuel than the quotas allow, shortchanging the government out of precious tax revenue, the sources said.
This year, up to 75 million liters (20 million gallons) of undeclared fuel is expected to be brought into the country, costing 20 billion kip (U.S. $2.6 million) in lost taxes, an official of the Ministry of Industry and Commerce told RFA’s Lao Service.
The ministry estimates that last year up to 56 million liters were smuggled in above the quotas, the official said.
Officially, some 1 billion liters (264 million gallons) of fuel are expected to be imported legally in 2013, a 51 percent increase from last year due to increases in energy and mining investments in the country, he said, speaking on condition of anonymity.
'Tokens of appreciation'
Lao officials accept bribes from the companies in exchange for turning a blind eye to the smuggled fuel, one official involved in enforcing the import trade said.
“Lao officials do not accept bribes, but won’t refuse tokens of appreciation,” he told RFA.
By skirting the toll, the companies avoid a customs tax of 250 kip per liter as well the consumption tax on fuel they are not using for their investments.
Foreign companies such as those working in special economic zones are eligible for tax exemptions for fuel they need for construction or other purposes.
The government grants them a quota based on their requirements, and the cost of the imported fuel is considered part of their investment.
A survey of fuel use indicates that the quantity of fuel that will be used in the country is far over the 1 billion liters that has been officially anticipated, leading the ministry to estimate the amount of fuel smuggled in could be as high as 75 million liters, the Ministry of Industry and Commerce official said.
But the amount does not take into account how much the foreign companies are inflating their quotas to begin with.
Sources said that aside from importing more than they are allowed, some companies also persuade officials to allow them to inflate their quotas beyond the needs of their projects, selling all the fuel they don’t use on the local market.
Officials at the State Inspection Agency told RFA that the companies bringing the most fuel into Laos are Vietnamese, Thai, and Chinese companies, who with the complicity of corrupt Lao officials import more than they declare.
Reported by RFA’s Lao Service. Translated by Viengsay Luangkhot. Written in English by Rachel Vandenbrink.