The Bureau of Customs (BoC) has confirmed that there has been undervaluation of rice imports in the country and vowed to address the issue.
A statement from the Federation of Free Farmers (FFF) revealed that BoC Commissioner Rey Leonardo Guerrero has already initiated to plug loopholes in the government’s current import assessment system that has resulted in huge amounts of uncollected tariffs from rice imports.
In a dialogue with FFF officials, Guerrero promised to implement key measures to stop the tariff leakage even as he reported that the Bureau had already adopted several suggestions of the FFF.
The FFF emphasized the need to curb the undervaluation before shipments are released from the piers, instead of relying on post-audits to detect and prosecute violators.
Based on the group’s estimates, the BoC lost nearly P6 billion since the enactment of the Rice Tariffication Law (RTL) in March 2019 due to the rampant undervaluation of imports, the wrong application of tariffs, and deficiencies in classifying rice shipments.
The FFF’s analysis also revealed that the extent of undervaluation had worsened over the years despite an apparent increase in tariff collections.
The tariff shortfall increased from an average of P1,197 per metric ton (/MT) in 2019, to P1,671/MT in 2020 and further up to P2,202/MT in the first two months of 2021.
According to FFF, BoC now plans to use an updated and standard tariff classification for rice imports, and provide reference or indicative prices for each variety and grade of rice imported from specific countries.
It also plans to require importers to fully divulge the variety, grade, and other specifications of their shipments so that a proper comparison can be made between their declared import costs and BoC reference prices
At the same time, BoC will strictly require importers, whose declared import costs are found to be below BoC reference prices, to post bonds equivalent to the estimated tariff discrepancy before their shipments can be released.
BoC will likewise pursue the audit and collection of unpaid tariffs, surcharges, and other penalties from erring importers and blacklist them from future transactions with the government.
According to FFF, Guerrero further clarified that all collections arising from the audit of import entries, including penalties and surcharges, will be added to the pool of funds to help rice farmers affected by the RTL.
“We are hopeful that the BoC under Commissioner Guerrero’s leadership will seriously address the problem of undervaluation not only in rice but also in many other agricultural products,” said FFF National Manager Raul Montemayor.
“This will provide much-needed funds for the government in addressing the COVID pandemic and other urgent concerns. In the case of rice, the collection of proper tariffs will generate more resources to help farmers affected by the drop in prices caused by excessive imports,” he added.