The Bureau of Customs (BOC) is working to collect some P2.4 billion in tax deficiencies uncovered in a post-clearance audit of cooperatives that imported rice in 2019 and 2020.
BOC Commissioner Rey Leonardo Guerrero said a post-clearance audit done on rice imports for 2019 showed 48 cooperatives with tax deficiencies totaling P1.4 billion.
These 48 cooperatives came from an initial batch of top 60 importers out of the list of over 320 cooperatives that imported rice last year, Guerrero said in his report to Finance Secretary Carlos Dominguez III.
“They have been issued audit notices and subsequent demand letters for the payment of additional duties and taxes as a result of the under declarations (of their imports),” Guerrero said during a recent Department of Finance (DOF) Executive Committee (Execom) meeting.
Guerrero said several of the importers with tax deficiencies are contesting the demand letters, which has slowed down the Bureau’s efforts to collect the additional duties and taxes from them.
For this year, Guerrero said the BOC estimates that a post-clearance audit of another set of top 60 importers would yield an additional P1 billion in tax deficiencies on undervalued rice imports.
Agriculture Secretary William Dar earlier issued DA Administrative Order (AO) No. 34 suspending the issuance of sanitary and phytosanitary import clearances (SPSICs) to cooperatives and irrigators’ associations, effectively barring them from importing rice, after the DA received reports that these organizations have resorted to rice imports rather than carry out their purpose of procuring local rice from farmers.
Both the DOF and DA have also received reports that the SPSICs issued to cooperatives have been misused by traders to avoid legal responsibilities and evade the payment of the correct amount of import duties.
Earlier, Dominguez directed the BOC and Bureau of Internal Revenue (BIR) to assist the DA in investigating the reported use of cooperatives by private traders as dummies for rice imports.
According to Finance Undersecretary Antonette Tionko, while cooperatives are not exempted from paying duties for importing rice, they can be exempted from paying the income tax subject to certain conditions.
All import duties collected from rice imports go to the annual P10-billion Rice Competitiveness Enhancement Fund (RCEF), which aims to raise palay productivity and sharpen the global competitiveness of local farmers by providing them with inputs, farm equipment, credit and mechanization program.
As a result of the improved rice valuation system implemented by the BOC, the average value of rice imports grew by 6.8 percent from January 1 to October 31 this year, Guerrero said.
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