Finance Secretary Carlos Dominguez III said Friday he asked the Bureau of Internal Revenue and Bureau of Customs to help the Department of Agriculture in investigating the reported use of cooperatives by private traders as dummies for rice imports.
Dominguez issued the order during a recent executive committee meeting of the Department of Finance, following the DA’s decision to temporarily suspend the issuance of sanitary and phytosanitary import clearances to farmers’ cooperatives and irrigators’ associations for commercial purposes.
Finance Undersecretary Antonette Tionko said while cooperatives were not exempted from paying duties to import rice, they could be excluded from paying the income tax on these imports if they were registered with the BIR as tax-exempt entities.
“There’s this question now as to why traders are using coops to import rice …. Let’s look into that because they might be using the tax advantage on rice imports,” Dominguez, a former agriculture secretary, told BIR Commissioner Caesar Dulay and BOC Commissioner Rey Leonardo Guerrero during the meeting.
Agriculture Secretary William Dar issued Department Administrative Order (AO) No. 34 in October to suspend the SPSICs to coops and irrigators associations, effectively barring them from importing rice, after the DA received reports that these organizations had resorted to rice imports rather than carry out their purpose of procuring local rice from farmers.
Both the DOF and DA also received reports that the SPSICs issued to cooperatives were misused by traders to avoid legal responsibilities and evade the payment of the correct amount of import taxes.
Dar also directed the Bureau of Plant Industry to conduct an investigation and consult with affected stakeholders, “to come up with new policies and rules to avoid circumvention of the laws and to protect not only the farmers and their cooperatives from exploitation and abuse but [also] the welfare of all Filipinos.”
Senator Cynthia Villar filed Senate Resolution No. 536 calling for an inquiry into the possible abuse by rice traders of the SPSICs and other privileges enjoyed by cooperatives and associations.
Guerrero reported during the Execom meeting that from Oct. 1 to 31, the collection from rice imports grew from P505 million in the same period last year to P630 million, representing a 24.9-percent increase.
This was the result of the 17.5-percent increase in volume of rice imports from 84 million kilograms in October 2019 to 98 million kg in October 2020.
Total import duties from rice in the first ten months amounted to P14.31 billion.
All import duties collected from rice imports go to the annual P10-billion Rice Competitiveness Enhancement Fund, 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 in the 10-month period, according to Guerrero.