The Bureau of Customs (BOC) is now checking the massive gap it has uncovered between China’s export volumes to the Philippines and the shipment figures officially reported here by importers, as part of its ongoing efforts to institute reforms in the agency, run after smugglers, and improve revenue collections.
In a report to Dominguez, Customs Commissioner Isidro Lapeña said 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; and the possible use of “consignees for hire,” which leads to goods released to “hidden” traders and not to the consignees on record.
The latter practice allow the importer to evade the scrutiny of the Bureau of Internal Revenue (BIR), Lapeña said.
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 said.
Lapeña told Dominguez at a recent Executive Committee (Execom) meeting of the Department of Finance (DOF) that he is soon going to China to personally look into this matter and check the Philippine export records of the BOC’s Chinese counterpart agency.
In response, Dominguez instructed Lapeña during the Execom meeting 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 he was invited to meet with his counterpart this November.
The BOC chief said that he 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 can be done.
Lapeña said that at the BOC national office in Manila, he has 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’s ongoing efforts to improve the efficiency of the tax and customs systems have revealed alarming discrepancies totaling P1.8 trillion between the volume of imports reported here and actual figures recorded by countries exporting to the Philippines.
This massive value gap translates into foregone revenues estimated at around P231 billion, representing 2 percent of the gross domestic product (GDP), Dominguez had said.
Official 2014 records alone of the UN Comtrade World Exports showed a gap of P1.8 trillion between the value of imports as reported locally and the value of shipments to the Philippines by exporting countries.
Dominguez, however, raised the possibility that the trade gap could just be the result of timing issues and the inclusion and exclusion of particular commodities in reporting.
