Gov’t uncovers rice importers’ tax deficiencies

Published December 11, 2020, 2:53 PM

by Chino S. Leyco

The Bureau of Customs wants to collect several tax deficiencies uncovered in a post-clearance audit of cooperatives that imported rice since last year, the Department of Finance (DOF) said.

In a statement, the DOF quoted Customs Commissioner Rey Leonardo Guerrero as saying that 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 G. 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. 

The Customs chief 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 estimated 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 released an order suspending the issuance of sanitary and phytosanitary import clearances (SPSICs) to cooperatives and irrigators’ associations, effectively barring them from importing rice.

The suspending order was following 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 Department of Agriculture (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 Customs and Bureau of Internal Revenue  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.

As a result of the improved rice valuation system implemented by the Customs, the average value of rice imports grew by 6.8 percent from January to October this year, Guerrero said.