THE Bureau of Customs (BOC) said it is looking into valuation issues on rice shipments from Vietnam after noticing that most of the imports were declared with values lower than the published prevailing prices for exports from that country.
In a Department of Finance Executive Committee (Execom) meeting, Customs Commissioner Rey Leonardo B. Guerrero reported that the average value of rice imports, coming mostly from Vietnam, dropped 12.7 percent to P19,312 per metric ton in May 2021, compared to P22,119 per MT in the same month last year.
The average value of rice in May was also lower than the P21,066 per MT recorded in April and P22,119 per MT in March.
“We discovered that many of these importations are under a tentative assessment so we are reviewing the payments,” Guerrero said.
Customs spokesman Assistant Commissioner Atty. Vincent Philip Maronilla also told the BusinessMirror on Monday that they are doing a transaction audit of the rice shipments from Vietnam from January to May this year.
Maronilla, who heads Customs’ Post-Clearance Audit Group, said they have already issued audit notification letters to 23 rice importers last month, adding that they expect to finish the transaction audit by July this year.
He said they have already identified valuation issues on 68 million kilograms of rice imports from March to May.
Despite this, Maronilla said they still cannot yet conclude that undervaluation was committed.
But should the importers be found to have committed valuation issues, Maronilla said they may be held liable for technical smuggling, among others.
“If we’re talking about value they may be playing with their invoices and if their declarations are untruthful, they are liable under the Customs Modernization and Tariff Act of the Philippines and they could be held liable for technical smuggling and also falsification and a lot of other customs fraud violations,” he said in a phone interview.
Maronilla also said valuation issues from these rice shipments may have contributed to lower rice tariff collection, especially from March to May.
Latest preliminary data obtained by the BusinessMirror showed the Customs bureau collected P7.32 billion in rice tariffs from January to May, down by 8.1 percent from P7.97 billion in the same period last year.
Rice import volume from January to May this year also fell by 16.2 percent to 1.049 million MT from 1.25 million MT.
For the month of May alone, BOC only collected P1.65 billion in rice tariffs, plunging by 34 percent from P2.5 billion in the same month last year. Rice import volume in May this year also declined by 33.2 percent to 245,033.78 MT from last year’s P336,552.23 MT.
This was the third consecutive month that both the rice import volume and rice tariff collection dropped.
Dominguez to BOC: Watch shipments
In the same Execom meeting, Finance Secretary Carlos G. Dominguez III directed the BOC to tighten its watch on incoming rice shipments to ensure proper collection of taxes following President Duterte’s issuance of Executive Order (EO) 135 slashing the tariff rates on rice imports to a uniform 35 percent for a period of one year, regardless of whether these came from within or outside the Association of Southeast Asian Nations (Asean) region.
Economic managers have earlier said the issuance of the EO was aimed at diversifying the country’s market sources for rice and maintaining the stable supply and affordable price of the staple.
“I think there will be a shift in the imports of Thai and Vietnamese rice, and Burmese [Myanmar] rice, to rice from other countries where the value is much lower. Just keep an eye on that,” Dominguez told Guerrero during the meeting.
In September last year, the BOC subjected several rice imports to “post-modification and post audit” to ensure that undervalued shipments are properly assessed and subsequently paid with the correct amount of duties and taxes.
At the height of the strict quarantines imposed last year because of the Covid-19 pandemic, the BOC allowed traders to avail themselves of the Provisional Goods Declaration in processing their shipments to help ensure the stable supply of rice in the market.
However, the BOC later found out the valuation of several rice shipments with provisional goods declaration to be low compared to the prevailing market prices, prompting the bureau to conduct a post-audit on these imports.