Philippine Customs Commissioner Nicanor Faeldon has directed his agency’s intelligence and investigation service to look into reports of rampant smuggling of the country’s top three import products – oil, luxury vehicles and cigarettes – in many parts of the country.
Bureau of Customs (BOC) records show that smuggling of the three commodities is the leading cause of revenue leakage, feared to hit more than P50 billion per year, or almost 10.68% of the agency’s 2017 revenue target of P467.9 billion, the agency said in a statement.
Oil smuggling is common through pilferage (siphoning off oil from tankers into barges on the high seas then moving it into oil trucks for land delivery to depots). Luxury vehicle smuggling is carried out through misdeclaration, misclassification, or undervaluation while cigarette smuggling is achieved by using fake tax stamps from the Bureau of Internal Revenue (BIR).
According to reports from U.S think tank Global Financial Integrity and the International Monetary Fund, annual BOC losses from oil smuggling amount to about P22.5 billion; from illegal cigarette sales, P16 billion; and from vehicle smuggling, P21 billion.
Losses from the three big-tickets imports contribute to the almost US$3.85 billion (P165.5 billion) in revenue lost to smuggling yearly, or 35.4% of the current BOC annual revenue target, according to agency records.
Faeldon said “mis-invoicing” of imported goods, or fraudulent misrepresentation (misdeclaration), whether underdeclaration or overdeclaration, of the real value of goods is the prevalent malpractice BOC is determined to address within his term.
BOC said it holds a list of companies suspected of engaging in oil, motor vehicle (including high-end importers), and cigarette smuggling.
In a 2016 report, BOC’s legal service stated that some of the oil, motor vehicle, and cigarette companies that owe customs billions of pesos in unpaid taxes are already facing suits, and “soon hopefully be subject to agency’s administrative penalties.”
“We are ready to use all available options in the probe against erring companies of oil, motor vehicle, and cigarette to make sure we control all forms of revenue leaks that are seriously detrimental to hitting revenue targets including proper trade facilitation processes of BOC,” Faeldon said.
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