Under the Organic Criminal Code, breaches are divided into offenses and infractions. Offenses involve intent, i.e. when there is the intention to cause harm, and therefore can be punished with a custodial sentence. Infractions constitute a violation of a regulation.
In customs matters, a main difference between offences and infractions is the amount involved. For example, customs fraud is an offense when the value of the goods exceeds 150 basic consolidated salaries, that is USD 59,100 (for 2019). When this amount is not exceeded, it is an infraction with a penalty incurred simply for the violation of the regulation. In this regard, if an incorrect amount of goods has been declared upon import and if the amount of undeclared goods exceeds USD 59,100, the importer may be subject to a custodial sentence of three to five years plus a fine equal to 10 times the amount of tax it attempted to evade.
There are many cases where an incorrect amount has been declared not necessarily with the intention of misleading or defrauding the Customs Authority, but because the supplier simply didn’t inform the importer of the correct amounts. But at the end of the day, it is the supplier who ships the goods and who reports the content of the shipment. If the undeclared goods exceed USD 59,100, the importer in Ecuador will face a criminal proceeding.
Regarding infractions, one of the most common issues for importers are the durations of special regimes: under each regime the import must stick to the term and must be offset. If goods are imported under a temporary import regime, the goods enter Ecuadorian territory and the payment of tax is suspended but the regime needs to be offset, i.e. the goods need to be re-exported abroad or otherwise need to clear customs. This entails numerous formal obligations that the importer is often unaware of and thus the process is not completed correctly. These processes are also very formal, and a failure means an infraction that the importer is often unaware of. The applicable fine is one basic consolidated salary per day of delay. Sometimes the fine is up to 10 times the value of the goods, as there is no limit on the collection of fines. In practice, Customs calculates the term until guarantees are enforced.
So, failing to comply with customs obligations can result in very serious consequences. The importer must know the law to avoid failures that incur fines or even criminal consequences, even if they concern administrative matters.
Gianella Gallegos-Santos
