Customs Commissioner Rey Leonardo Guerrero has initiated reforms at the bureau as corruption continues to hamper the agency’s operations.
With the new BOC project of no face-to-face transaction through its online processing and payment services, the bureau hoped to stem corruption, Guerrero said.
This service prevents any contact between the brokers and the customs personnel. It means that without any broker or representative going online to process the shipment, the Customs will have to either upgrade or apprehend the goods.
“This will definitely earn the ire of the players and smugglers. The truth of the matter is that smugglers are undervaluing their shipments due to the bidding and packaging for the cost of brokerage and logistics of shipments. If you package the deal with the cost of duties through bidding, the invoice must be falsified. The brokers and importers also use the word “transaction value”,” Guerrero said.
What is declared in the invoice or the falsified invoice must not be upgraded as per World Trade Organization agreement, he said.
“The tariff rates are known and fixed and the importers know the real amount of the imported goods. There is no need for bidding because all you have to do is to multiply the invoice price with the tariff rate in order to know how much duties and taxes to pay. When you look for the broker with the lowest quotation, you are looking for the broker who has the guts to undervalue and falsify the invoice,” Guerrero said.
He added that the falsified invoice will then be furthered manipulated and lowered by other brokers in order to get the client. This will go on until the duties and taxes are already very low.
Guerrero said this is due to the fact that Filipinos buy the cheapest products. Owing to the competition, Guerrero explained, the importers will undervalue in order to corner the supply agreement.
This affects even the legitimate manufacturers as they seek for the lowest bidder/broker/supplier in order to be competitive.
“This system makes the BOC a problematic agency. The truth is, it takes two to tango but the blame is always on the corrupt Customs men. How about the buyers who want the cheapest product and the traders who want to import even to the point of falsifying the invoice just to earn?,” he said.
The decision to remove face-to-face contact made life hard for smugglers. The duties and taxes on 1×40 container during the time of then Commissioner Nicanor Faeldon was only P40,000. Now, the lowest is at P120,000, or up by 300 percent as against the 2016 to 2017 duties and taxes for every 1×40 container.
This will further go up, as soon as full automation and nationwide implementation of no face to face transaction and other programs are fully implemented, Guerrero said.
Guerrero also introduced the “dashboard” where the BOC officers and collectors are given updated data for monitoring purpose.
The undervalued shipments are detected but the word “transaction value” is being used by the brokers as defense. This was because the brokers presented falsified invoice. However, the process of upgrading can be questioned as arbitrary due to the presentation of a presumed legitimate invoice. This meant that the invoice must be contested and attacked through audit.
Under the WTO, undervalued shipments can be released and upgraded with penalty once audited. But under the CMTA, the BOC has three years to go after undervalued shipments.
Guerrero said that the WTO wants a faster release with a good post- entry audit mechanism. Trade facilitation is also required under the Ease of Doing Business Act. This meant that the BOC has to balance trade facilitation, collection of revenues and border security.
“Smugglers will benefit if trade facilitation is prioritized. With the computerization and no face to face transaction, the goods are released without negotiation,” he said.
Guerrero added that he is ready to face the anger of illegal smugglers who might attack him like what they did to Faeldon and also former Commissioner Isidro Lapena.
Guerrero then called on the Bureau of Internal Revenue to conduct tax mapping or investigate bogus importers/ suppliers.
“They will not include it in their tax efficient ratio or in their collection performance. It can be considered as “tax avoidance,” he said.