The Bureau of Customs (BOC) has expressed readiness to adopt the cross border electronic invoicing (e-invoicing) in a bid to simplify and speed up facilitation of trade and eliminate technical smuggling.
BOC Assistant Commissioner Philip Maronilla said the e-invoicing is part of the digital transformation program of the agency which is also aimed at improving its system, particularly in dealing with its clients.
E-invoicing refers to the electronic authentication of tax invoices through an invoice registration portal. Each invoice is issued a unique invoice reference number which is later used for invoice matching and auto populating tax return and waybill forms.
“This concept is the same in almost all countries that have implemented e-invoicing,” said Maronilla who also acts as BOC spokesperson.
The system is already being used by some countries in Asia that include Singapore, India, South Korea, Japan and Vietnam. In European Union member countries, e-invoicing on business to government transactions is mandatory. Recently,Finland, Italy and France, among other EU countries, have expanded the purview of e-invoicing to business-to-business transactions.
Citing the experience of Indonesia, which lost US$12 billion in duties and taxes on gold imports, Maronila explained that it could have been prevented by cross border e-invoicing which prevents the tampering of goods description and HS codes.
HS codes are standardized numerical methods of classifying traded products used by customs authorities around the world to identify products when assessing duties and taxes and for gathering statistics.
A 2021 report by the UN Comtrade Data on meat trade, covering HS Codes 0201 to 0210, showed that all countries reported exports to the Philippines amounted to US$ 2,265,193,202 but the reported Philippines import from all countries was only showed US1,850,598,993 or a difference of US$414,594,209, which is equivalent to around P20.730 billion.
The same report also showed a big disparity in 97 other different HS Codes wherein the all countries reported export to the Philippines amounted to US$149,866,915,512 while the reported Philippine imports from all countries was only US$124,390,447,217 or a disparity of US$25,476,468,295. The disparity is attributed to the tampering of the HS codes.
"It is new to us but we are open to it. We can integrate it in our system. Any innovations or upgrades in our system that would speed up trade and eliminate corruption is always a welcome development. We are ready for it,” said Maronilla.
Maronilla admitted that undervaluation and misdeclaration were the most common schemes used by unscrupulous importers and brokers to evade payment of correct customs duties, resulting in billions of pesos in tax losses that could have otherwise been used to fund vital government projects and provide assistance to the marginalized sectors of society.
Samahang Agrikultura ng Pilipinas (Sinag) president Rosendo So welcomed the BOC move, saying that tampering of HS code is common in the importation of meat and steel products.
"Tampering of the HS Code is very rampant. It is done by unscrupulous importers in connivance with some corrupt customs personnel," said So.
On a yearly basis, the BoC is losing billions of pesos in foregone duties and taxes, due to undervaluation, misdeclaration, misclassification and underdeclaration as shown in a 20-page report of the Federation of Philippine Industries (FPI), headed by anti-smuggling advocate Jesus Arranza.