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In the world of international trade, two illegal practices can result in serious consequences for businesses: smuggling and undervaluation.
While both involve violating customs regulations, understanding the difference between them is crucial for identifying risks and avoiding penalties.
In this blog we show how to distinguish these practices and prevent them in your operations.
What is smuggling?
Smuggling refers to the import or export of goods without going through official customs procedures, including declarations and tax payments. In other words, it means bringing goods into or out of the country illegally, without proper authorization.
Common examples:
- Bringing in electronics without declaring them at customs.
- Exporting auto parts without proper documentation.
- Importing restricted or prohibited goods, such as weapons or unauthorized medications.
What is undervaluation?
Undervaluation occurs when a company declares a product at a lower value than its actual worth in order to pay less in taxes and duties. Unlike smuggling, undervaluation involves going through customs, but with false or misleading information.
Common examples:
- Declaring a laptop as a cheaper tablet.
- Presenting altered invoices with lower prices.
- Underreporting the value of luxury or electronic goods.
What’s the difference?
| Aspect | Smuggling | Undervaluation |
| Customs declaration | Not performed | Performed with false information |
| Tax payment | Completely avoided | Paid, but partially or incorrectly |
| Legal consequences | Serious crime with criminal penalties | Administrative violation or criminal case |
| Example | Hiding goods in a shipment | Declaring a lower product value than real |
How can you prevent these practices?
Working with a reliable customs broker in Mexico is essential to ensure your company avoids these risks—even unintentionally. Here are some tips:
- Ensure your suppliers issue accurate and legitimate invoices.
- Confirm your product values align with international market standards.
- Understand and comply with customs regulations and import/export requirements.
- Avoid working with suspicious or altered documentation.
- Rely on experienced professionals to guide your customs and logistics processes.
While they may seem similar, smuggling and undervaluation are distinct practices—both with serious consequences for businesses involved in international trade.
Partnering with a trusted customs agency in Mexico like Remar International can help you protect your operations, ensure legal compliance, and maintain control of your international shipments.
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