Gov’t tightens watch

THE GOVERNMENT will soon allow importation of “sensitive” commodities prone to smuggling only through select ports, the Department of Finance (DoF) said in a statement yesterday.

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“The DoF will soon implement a system of port accreditation for commodities at high risk of smuggling,” the statement quoted Finance Secretary Cesar V. Purisima as saying.

“Only particular ports will be accredited for importation of sensitive commodities such as oil and steel, subject to standards and technical requirements.”

Mr. Purisima said such ports will be required to submit monthly reports of all importations to the DoF, which will then compare data from the Energy department and the Philippine Ports Authority on a per-volume and even per-vessel basis.

“The port accreditation system will prevent ‘port shopping,’ and hinder unethical importers from literally evading tax collection,” Mr. Purisima said.

The department reiterated that the Bureau of Customs (BoC) will hold oil shipments until value-added and excise taxes are paid, the Finance department said further.

Firms bringing in high-risk commodities, the Finance chief said, will also have to submit annual plans for importing these products. Such plans should indicate quantity, type, and source of shipments, as well as intended port of arrival.

Mr. Purisima said this latest tack forms part of the administration’s campaign against smuggling.

“One of this administration’s priorities is to combat smugglers directly, especially in high-risk commodities such as oil. We in the DoF and its attached agencies are using a proactive, information-driven approach to fight oil smuggling,” he said.

The Finance chief said that he, along with the heads of the Customs and Internal Revenue bureaus, has been visiting major ports throughout the country to gather data on importations and corresponding tax and duty collections as part of efforts to increase state revenues. The visits, noted Mr. Purisima, include ports through which oil is imported.

DISCREPANCY

“According to the latest data from the Department of Energy, Philippine oil demand amounted to 106.9 million barrels in 2011. However, current Customs data only records 67.6 million barrels of oil imported in the same year, signifying a discrepancy of 39.3 million barrels that is likely made up through smuggling,” he said.

The Finance chief said that the Bureau of Internal Revenue (BIR) and BoC have been taking steps to curb oil smuggling.

“As part of the DoF’s Run After the Smugglers (RATS) campaign, nine cases have been filed against oil smugglers since the start of the Aquino administration, with total dutiable value of products amounting to P37.97 billion,” Mr. Purisima said.

In addition to smuggling cases filed, the BIR has also been tasked to conduct detailed audits on companies suspected of smuggling, he added.

Last year, the BIR also issued Revenue Regulation (RR) 2-2012, which requires firms to pay up-front tax and duties on imported oil. If the oil is to be used only in special economic zones — hence, tax-exempt — importers concerned have to apply for refund.

Implementation of the BIR issuance, however, was delayed for nearly a year after the Angeles City Regional Trial Court (RTC) Branch 58 issued a temporary restraining order on March 16 last year, granting a petition by Pampanga Rep. Carmelo F. Lazatin (1st district). The same court later issued a writ of preliminary injunction against RR 2-2012 on April 4.

CORRECTIVE MEASURE

Last Feb. 14, the Court of Appeals reversed the RTC’s decision, noting that “the contested RR was issued as a corrective measure to ensure the collection of correct taxes from whom they are due, as explicitly delineated in the introduction of said rules.”

The decision further stated that “[i]t cannot be overemphasized that any injunction that restrains the collection of taxes, which is the inevitable result of the suspension of the implementation of the assailed RR, is a limitation upon the right of the government to its lifeline and wherewithal.”

“Following the Court of Appeals decision, the Bureau of Customs has begun full implementation of RR 2-2012,” Presidential Spokesman Edwin Lacierda said in a briefing in Malacañang yesterday.

“[A]part from Revenue Regulation 2-2012, we have stepped up physical visitation on those ports…where oil importation is being done,” he added.

“We’re making sure that all these ports are visited and that efforts are made to curb smuggling.”

State revenue collections totaled P1.535 trillion last year, up by 12.9% from P1.36 trillion in 2011 but still short of a P1.56-trillion program for 2012 as both BIR and the BoC missed their targets.

The BIR collected P1.058 trillion in tax revenues last year, up by 14.48% year-on-year but P8 billion or 0.75% short of its P1.066-trillion goal.

The BoC raked in P289.9 billion in 2012 against its P347-billion target. This was, however, 9.3% more than the P265.1 billion recorded in 2011.

This year, the government hopes to increase its revenue take to P1.746 trillion. The BIR has been assigned a full-year goal of P1.253 trillion, while BoC has been mandated to collect P340 billion. — Bettina Faye V. Roc, Businessworld