After the detection of some tax evasion cases, the General Directorate of Customs (DGA) established, through General Resolution 4764/2020, a minimum reference value for onion exports destined for Bolivia, Brazil, Colombia, Chile, Paraguay, Peru, Uruguay, and Venezuela to avoid under-invoicing in exports.
According to the resolution, "onions not suitable for sowing, in immediate containers with a net content of more than 2.5 kilos, cannot be exported to the aforementioned destinations for a FOB value that is lower than US $ 0.19 per kilo."
In the coming months, other products and destinations will be incorporated into the resolution, according to local sources that are concerned about the impact that the regulations will have on the companies that aren't evading taxes.
According to statistics prepared by ProMendoza, in the first four months of the year, local producers exported 9,755,824 kilos of onion. Even though this product only accounts for 2.2% of all exports, it managed to stand out for its year-on-year growth (50.3% improvement in volume), thanks to the greater demand from the markets of Brazil and Paraguay.
In terms of value, onion exports increased by 15% in the first four months of the year, going from $ 1,259,369 FOB in 2019 to $ 1,449,035 FOB in the same period of 2020. The average price of the kilo of onion exported between January and April stood at US $ 0.15. Thus, local exporters will be affected by the floor established by the DGA.
Mario Lazzaro, the director of ProMendoza, acknowledged that tax evasion is a real problem, but said that there were more effective ways to control it without jeopardizing the commercial operations of all exporters. “In the particular case of onion, the established floor coincides with last year's average value. Onion prices could easily fall below $ 0.19 per kilo because of fluctuations in the international market and our exporters would be out of competition," he added.
Mario Bustos Carra, the general manager of Cuyo's Chamber of Foreign Trade, also spoke out against the measure. “The State believes that there is under-invoicing to take advantage of the parallel dollar market, but evasions occur in very specific cases. In addition, Customs and AFIP have all the tools to detect irregularities without having to resort to a reference value," he said.
Guillermo San Martin, the manager of the Association of Producers and Exporters of Garlic, Onions, and Related products said Customs had consulted the Chamber to establish the reference value for onions and that they would soon discuss garlic prices.