Exporters must currently ship grains and sub-products within 45 days of declaring an export sale and pay the tax when the goods are actually loaded.

 

 

The change is designed to "guarantee transparency in the exporter operations, dynamism of futures markets, prevent tax speculation and avoid tax evasion," ONCCA said.

 

The new regulations come amidst a government campaign to crack down on what it claims are speculative maneuvers and tax evasion on the part of grain exporters.

 

The government has launched a series of measures to clamp down on the sector - invalidating export permits made before a November tax hike, shutting down processing plants where it suspects irregularities, launching a wave of audits of exporter books by the tax authorities and backing a congressional investigation into allegations of fraud.

 

Last month, the government announced plans to collect retroactive taxes from exporters that had declared cereal and oilseeds sales before a November increase in grain export taxes. Those unable to show that they had already purchased the grain on the local market before making export-commitment declarations will have to pay the higher tax.

 

With some US$1.77 billion at stake, exporters have reacted angrily. The grain- and vegetable-oil-export chambers, Ciarra and CEC, said the government had miscalculated the amounts owed and contended the early export declarations were not done to avoid taxes.

 

Ricardo Echegaray, head of the government's agriculture trade office, or ONNCA, replied that the firms should accept the risk involved with speculation and the failure of their evasive maneuvers instead of pushing their tax obligations onto the farmers.

 

Of the 30 million tonnes of grain declared for export before the November tax hike, 24 million tonnes had not been previously purchased and will be subject to the new, higher tax, according to ONCCA.

 

Farmers have long complained that exporters take advantage of the export-permit system to reap sharp profits at their expense. When an exporter declares an export commitment to the government, a permit is granted locking in a reference price and export tax rate.

 

When exporters purchase grain at the local exchanges, the value is calculated based on a theoretical FOB price on that day minus export taxes.

 

In a period of rising grain-export values and rising export taxes, as was the case during the end of last year and early this year, exporters were able to bank the wide margin between the tax on their declared export sales and the theoretical tax discounted from the purchase price on the day when they actually bought the grain from farmers.

 

Late last year, exporters submitted an unprecedented flood of export commitments to the government amid speculation that the government was poised to raise grain-export taxes. On November 7, 2007, the government did increase the export tax on soy to 35 percent from 27.5 percent and soy oil tax to 32 percent from 24 percent. Wheat export taxes were raised to 28 percent from 20 percent, while corn taxes rose to 25 percent from 20 percent.