The Department of Finance (DOF) directed the tax authorities to assist the Department of Agriculture (DA) in investigating the alleged use of cooperatives by private traders as dummies for rice imports.
In a statement, Finance Secretary Carlos G. Dominguez III said he ordered the Bureau of Internal Revenue (BIR) and Bureau of Customs to uncover unscrupulous rice traders in the country.
Dominguez issued the order following the DA’s decision to temporarily suspend the issuance of sanitary and phytosanitary import clearances (SPSICs) to farmers’ cooperatives and irrigators’ associations (IAs) for commercial purposes.
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 on these imports if they are 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 and Customs commissioners in a meeting.
Agriculture Secretary William Dar issued Department’s Administrative Order (AO) No. 34 last month suspending the SPSICs to coops and IAs, effectively barring them from importing rice.
The DA had received reports that these coops and IAs 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 taxes.
In his AO, Dar also directed the Bureau of Plant Industry (BPI) 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 has also filed Senate Resolution (SR) No. 536 calling for an inquiry into the possible abuse by rice traders of the SPSICs and other privileges enjoyed by cooperatives and associations.
Meanwhile, Guerrero reported that collection from rice imports grew by 25 percent to P630 million in October from P505 million in the same month last year.
This was the result of the volume of rice imports increasing by 17.5 percent from 84 million kilograms (kg) in October 2019 to 98 million kg in October 2020.
Total import duties from rice collected from January to October 2020 now stand at P14.31 billion.