Malacañang has ordered the transfer of the post-entry audit function of the Bureau of Customs (BOC) to a unit headed by Internal Revenue Commissioner Kim Henares.
“I received a copy of the executive order on the transfer of the function just this [Friday] morning,” Henares told reporters.
The directive from Malacañang effectively dissolves the Post-Entry Audit Group (PEAG) of the BOC and transfers its function to the Finance Intelligence Unit (FIU), which is a unit of the Department of Finance.
FIU is concurrently headed by Henares, who also serves as commissioner of the Bureau of Internal Revenue (BIR).
Post-entry audit—a crucial function to determine smuggling, technical smuggling, and under-declaration—involves the audit of import duties and payments that is conducted after goods have been released by the BOC.
Audit is done after, rather than before, goods are released to help ease trade.
The directive from the Palace came amid the Aquino administration’s struggling campaign against smuggling, which critics blamed on corruption in the BOC.
The government foregoes revenue of about P200 billion a year due to smuggling.
With the dissolution of PEAG, the BOC will still be in charge of assessing and collecting duty and tax liabilities of importers, but will no longer be responsible for determining whether assessments, as well as the duties and taxes paid on imports are accurate.
The transfer of the post-entry audit function to the FIU is aimed at plugging revenue leakages arising from smuggling, technical smuggling, and under-declaration.
The BOC was tasked to collect P340 billion in revenues this year, but is expected to fall short of the target.
Latest report on customs collections showed that import duties and taxes collected in January to November amounted to P280.74 billion. The figure was up by about 6 percent year-on-year but was seen insufficient to place the BOC on track of its full-year collection target.
The BOC accounts for nearly 30 percent of the national government’s tax revenues, with the bigger share of 70 percent being accounted for by the BIR.