Illicit activities seen shaving Customs collection by P50 billion

Revenue equal to almost 11 percent of this year’s projected collection at the Bureau of Customs (BOC), or some P50 billion, were seen escaping the tax net as a result of motor vehicle, oil and cigarette smuggling identified as the top sources of revenue leakage. The BOC is tasked with collecting at least P467.9 billion this year.

Based on data assessed by US-based think tank Global Financial Integrity and the International Monetary Fund (IMF), the BOC were to miss on P22.5 billion from oil smuggling alone, P16 billion more from illegal cigarette sales and another P21 billion from vehicle smuggling.

According to the BOC, the revenue loss from all three big-ticket items translate to some $3.85 billion annual import revenue loss from smuggling, or 35.4 percent of the current revenue target. This translates to P165.5 billion in revenue losses at an exchange rate of P45 per US dollar.

The agency is already looking into the billions of pesos in revenue losses from the smuggling of these imported products every year.

Customs Commissioner Nicanor E. Faeldon, in response to a public clamor, has directed its intelligence and investigation service to look into reports of rampant oil, luxury vehicle and cigarette smuggling in many parts of the country.

Oil smuggling is common through pilferage or siphoning-off of oil from tankers to barges in the high seas and then on to oil trucks on land for delivery to depots. These activities result in huge government revenue losses. Luxury vehicle smuggling is carried out through misdeclaration misclassification, and undervaluation. Cigarette smuggling robs government of revenues from the nonpayment of duties and taxes, aside from use of fake tax stamps of the Bureau of Internal Revenue (BIR).

The BOC vowed to ramp up efforts to address misinvoicing of imported goods, or the fraudulent misrepresentation of the real value of goods, which is a prevalent malpractice.

He has a list of companies suspected to be engaged in oil, high-end motor-vehicle importers and cigarette smugglers that fake tax stamps of the BIR to defraud the government.

In its 2016 report, the agency’s legal services said oil, motor vehicle and cigarette companies have disputed billions of pesos in excise liabilities that are still under court litigation.

“We are ready to use all available options in the probe against erring companies of oil, motor vehicles and cigarette to make sure we control all forms of revenue leaks that are detrimental to hitting the revenue targets, including proper trade facilitation processes at the BOC,” Faeldon said.