Customs bureau starts audit of imports last year

Posted on May 04, 2011

THE BUREAU of Customs (BoC) has begun checking all shipments that entered the country last year to ensure that preferential tariffs were applied only to qualified imports.

The audit seeks to verify reports that tens of thousands of imports last year were erroneously granted reduced tariffs, particularly those from China, South Korea and Vietnam under free trade deals, Customs Commissioner Angelito A. Alvarez said in a statement yesterday.

The Philippines has free trade agreements with the three countries as a member of the Association of Southeast Asian Nations.

The agreements allow for preferential tariffs for products identified under the Normal Track or Inclusion List.

However, Mr. Alvarez said that reduced tariffs were allegedly granted to products under the Sensitive List which are otherwise supposed to enjoy temporary protection.

Philippine products under this list are given such protection -- through either gradual or deferred implementation of tariff reduction -- in order to give affected local industries time to prepare for foreign competition.

"...Those that are listed under the Sensitive List are granted preferential tariff only when the exporting party has reduced its Most Favored Nation rate to 10% or less in the case of (South) Korea and China and 20% or less in the case of Vietnam," the Customs chief said.

"This is in accordance with the reciprocal treatment provisions stipulated in the free trade agreements," he added.

Commodities in the Philippine Sensitive List coming from China which were wrongly classified as qualified for preferential tariffs included corn flour, sweet corn powder, prilled urea, diammonium phosphate, x-ray film green sensitive, plywood veneer, cotton fiber and color televisions, the Customs statement read.

Mr. Alvarez cited an unnamed company that saved more than P9 million in duties and taxes for one shipment of bulk urea alone.

There were more than 118,000 import entries granted preferential tariffs last year.

The audit is expected to uncover up to P600 million in foregone dues, the bureau said further.

Customs examiners and appraisers will be guided in their audit by reference material for Sensitive List products from China, South Korea and Vietnam to be provided by the Bureau of International Trade Relations of the Department of Trade and Industry, Mr. Alvarez said.

BoC, which accounts for a fifth of state revenues, missed its collection target last year, netting P258.98 billion out of its P280.7-billion goal. The bureau also missed its first quarter target this year, collecting P62.618 billion against a P63.388-billion goal. -- D. C. J. Jiao