The Department of Finance has ordered the Bureau of Customs to intensify data sharing with the country’s top trade partners such as Japan, South Korea and the United States to narrow discrepancies in trade data.
In a statement Monday, the DOF said Finance Secretary Carlos G. Dominguez III had instructed Customs Commissioner Isidro S. Lapeña to establish data exchange arrangements with the three countries akin to the one with China.
“China, South Korea, Japan and the US represent the Philippines’ top four trading partners that Dominguez wants the BOC to closely work with in monitoring shipments and checking discrepancies in trade data,” the DOF said.
“These include, among others, data on the volume and value of goods exported by these countries to the Philippines and the import volumes from these countries reported by revenue authorities here to check against possible illegal trade practices,” the DOF added.
According to Dominguez, the BOC “should establish communication lines and coordinate with the heads of the customs agencies of these four countries to accomplish this goal.”
“You have to be able to pick up the phone and call them [the heads of the four countries’ customs agencies] personally,” Dominguez told BOC officials in a recent meeting.
Early this month, the DOF said the Philippines’ and China’s respective customs agencies already “agreed to set up a data exchange system to facilitate the timely sharing of trade information and aid them in their respective campaigns against smuggling and tax evasion.”
In particular, the BOC requested the following data from its Chinese counterpart: Chinese commodity imports and exports to the Philippines between the years 2015 and 2017; monthly or quarterly export and import data of China to the Philippines by commodity for 2018; as well as export data on all shipments going to the Philippines and manifest of vessels carrying cargoes bound for the Philippines, according to the DOF.
In December, Dominguez ordered the BOC to immediately double-check trade figures with its Chinese counterpart to get to the bottom of possible technical smuggling of goods from and to China, thus depriving the government of billions of pesos in tax revenues.
“Official trade data show that the estimated discrepancy between registered Chinese exports to the Philippines and registered Philippine imports from China has been declining but still very large, with the gap reported at 60 percent in 2010, 57 percent in 2015, 48.7 percent in 2016 and 48 percent in the January-July period of [2017],” Dominguez had explained.
Citing Philippine Statistics Authority data, the DOF noted that as of July 2017, imports from China supposedly reached $9.24 billion, which is 48 percent lower than Chinese figures showing exports to the Philippines at $17.77 billion.
The DOF had quoted Lapeña as saying that “the wide discrepancy between China’s recorded exports and imports to the Philippines may be attributed to the gross misdeclaration or undervaluation of goods in terms of either volume or weight.”
Also, Lapeña had 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 “allow 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,” Lapeña had explained.