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Mobile phone registry turns a profit

File - A man works on his mobile as he walks in front the alfa company in Beirut, Tuesday, March 19, 2013. (The Daily Star/Mohammad Azakir)

BEIRUT: Customs and VAT revenues on imported mobile phones to Lebanon have increased by a whopping eight-fold in the first three months of a Telecoms Ministry initiative to curb the smuggling of handsets, figures released Wednesday showed. VAT and Customs revenues in the June-August 2013 period rose to LL15.87 billion compared to LL1.983 billion during the same period of 2012, according to a joint statement by the Finance and Telecom Ministries.

Requests for licenses to legally import handsets, which cost around LL10 million, have also increased from an average of two per month to more than six, the statement added.

In June, the Telecoms Ministry joined with importers and the Customs Department to create a database of legally imported phones, using the International Mobile Station Equipment Identity, a unique number assigned by manufacturers to every handset.

The new measure requires large importers or individuals to register the IMEI of new mobile phones to the database before they can be used on both touch and Alfa networks.

However, despite the success of the initiative in largely increasing the treasury’s revenues, attempts to bypass the system continue, industry experts told The Daily Star.

A telecoms expert who spoke on condition of anonymity told The Daily Star that several attempts to illegally feed the database with the IMEI of untaxed mobiles had been uncovered since the Telecoms Ministry started enforcing the new decision.

The source, however, didn’t specify which channel the perpetrators used in their attempt to feed the database with new IMEI that can be registered either with mobile telecoms operators Alfa and touch or the Customs department.

Before the database was created, mobile phones were often mislabeled as computers, which are subject to a Lebanese tax exemption, and imported through a complex smuggling web at the Rafik Hariri International Airport.

Customs agents complicit in smuggling in the past could also be involved in adding IMEIs of untaxed mobiles to the new database, the source added.

Another way to bypass the system is to legally import cheap mobile phones, register their IMEIs in the database and then use those IMEIs to connect expensive smuggled phones to the network, the source said.

However, such attempts remain limited since smugglers require high tech equipment to swap IMEIs between smuggled expensive phones and cheaper, legally imported handsets.

Eddy Cherfan, CEO of Cherfane, Tawil & Co., the official distributer of Samsung, told The Daily Star that the market share of illegally imported mobile handsets had largely dropped from a previously estimated 90 percent.

“80 percent of the job has been done,” he said.

However, despite the large drop in the smuggling of mobile phones, Cherfan said some were circumventing the new measures by under-invoicing imported devices by some 50 to 70 percent, which drastically lowers the VAT and Customs tax being paid on them.

Cherfan estimated that some 40 percent of mobile phones enter the Lebanese market this way.

Caretaker Telecoms Minister Sehnaoui had estimated that the crackdown on smuggling would boost state revenues by $60 million a year.

Tourists and visitors wishing to use devices purchased outside of Lebanon would need to register their handsets at the airport’s Customs department and would be allowed to use them for a limited period of time.

 
A version of this article appeared in the print edition of The Daily Star on November 14, 2013, on page 5.

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