• Costa Rica Real Estate

Finance Ministry proposes tougher sanctions to crack down on contraband smuggling

September 30, 2014

Finance Ministry officials say they will send a bill to the Legislative Assembly in coming days that would impose severe sanctions for the smuggling of contraband products into Costa Rica.

The bill proposes prison terms of up to 15 years for those convicted of illegally transporting goods into the country. Current legislation sets maximum jail terms at eight years.

The proposal also would reduce the minimum amount of seized items required to prosecute a case from the equivalent of $50,000 to $10,000.

The reform was one the business sector’s main requests for the administration of President Luis Guillermo Solís. Business owners had lobbied Solís to ammend a 2012 change in Costa Rica’s Tax Administration Law that increased from $5,000 to $50,000 the minimum amount of seized contraband required for judicial authorities to prosecute a case.

“That change likely caused many crimes to go unpunished and it boosted smuggling,” said Francisco Llobet, president of the Costa Rican Chamber of Commerce.

Ministry officials announced the bill on Monday evening, following a meeting with representatives of the Inter-American Development Bank.

“The proposal aims to increase tax revenue by 1 percent of the country’s gross domestic product,” Finance Vice Minister Fernando Rodríguez said at a press conference.

The draft bill proposes increasing penalties from 3 to 10 years in prison for anyone caught smuggling medicines for human and animal consumption. It also seeks up to 15 years in prison for smugglers who use hidden compartments or false bottoms in vehicles.

The bill proposes a $500 fine for anyone caught lying or providing incomplete information on customs declarations for imported products.

“This is a simple but innovative proposal. We know it will be widely accepted at the Assembly, and we hope it can be approved quickly,” Rodríguez said.

Liquor, beer and cigarettes are the three most common items that smugglers transport across the border. Fiscal Control Police last year confiscated 123,072 bottles of beer, 36,464 bottles of whisky and more than 21 million cigarettes. An estimated 22 percent of alcohol sold in Costa Rica is contraband, according to a 2013 Euromonitor report.

So what happens to all that booze seized by authorities?

It’s sold at public auction. Those auctions are announced in the official government newspaper, La Gaceta, under the heading “Contratación Administrativa.”

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