The Bureau of Customs is looking into possible technical smuggling of goods from and to China, which deprives the government of billions of pesos in tax revenues, the Department of Finance said yesterday.
The DOF cited a recent report of Customs Commissioner Isidro Lapeña to Finance Secretary Carlos G. Dominguez III as saying that the wide discrepancy between China’s recorded exports and imports to the Philippines could be attributed to the gross misdeclaration or undervaluation of goods in terms of either volume or weight.
Also, Lapeña said the discrepancy in trade figures was due to “the possible use of ’consignees for hire,’ which leads to goods released to ’hidden’ traders and not to the consignees on record.”
The hiring of consignees and hidden traders allowed the importer to evade the scrutiny of the Bureau of Internal Revenue, according to Lapeña.
“In both instances—misdeclaration or undervaluation and the use of consignees for hire—“benchmarking” and the submission of fake documents allow traders to get away with these underhanded schemes,” he added.
Lapeña said he would go to China this month to personally look into this matter and check the Philippine export records of the BOC’s Chinese counterpart agency.
For his part, Dominguez ordered Lapeña to focus on China’s trade records and arrange a meeting with the Customs chief of that country to discuss and find possible solutions to bridge the massive trade gap.
Lapeña said that under his watch, the BOC was gradually doing away with the practice of benchmarking, which allows traders to expedite the processing of their imports without the required inspections, so that the correct valuation of goods at the ports could be done.
Lapeña already directed Customs officers to ensure a five-day processing period for imports to cut the usual time of one to two months.
Last year, Dominguez said the DOF wanted to sharpen its teeth against smugglers as the government lost about P231 billion yearly to technical smuggling.
Dominguez had said that the foregone revenue, which was reflected by discrepancies between the import volume reported by local traders and actual figures recorded by their overseas suppliers, accounted for 2 percent of the gross domestic product, highlighting the need to improve Customs and the tax systems’ efficiencies.
The Finance chief had also cited UN Comtrade data showing a P1.8-trillion gap in 2014 between the value of importers’ shipments and those reported by the exporting countries.
Dominguez had acknowledged that part of such gap could be the result of timing issues and the inclusion and exclusion of particular commodities in reporting, and not outright evidence of smuggling.