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Industry Issues For Customs (September 6)
Customs Brokers Act II (August 9)

Industry Issues For Customs (September 6)

IN recent weeks, the Commis-sioner of Customs and the Secretary of Finance have been consulting the private sector on its planned reforms at the Bureau of Customs (BOC).

For the past six months, various industry associations have been lobbying to institute customs reforms and address various problems with the BOC. In particular, the Port Users Confederation (PUC) and the Philippine International Seafreight Forwarders Association (PISFA) have submitted numerous position papers and have conducted meetings with the BOC. Unfortunately, all these past efforts to solve ongoing problems and to institute reforms were not acted upon by the previous administration. We have summarized below some of these industry issues and concerns now pending with the new customs commissioner.

E-Manifest Submissions

Under existing rules, shipping lines are required to submit the e-IFM 12 hours prior to vessel arrival. In the case of forwarders, the e-CCM must be submitted within six hours prior to arrival. The system automatically prevents carriers and forwarders from submitting beyond the period. Also, forwarders cannot submit the e-CCM unless the carriers are able to submit the e-IFM first. Late submissions are accepted only after manual intervention and after payment of penalties.

The current system has resulted in BOC personnel at both MICP and POM imposing penalties, mostly without official receipts.

This manual intervention by customs personnel totally defeats the purpose of automation. The system should automatically allow even late submissions considering that penalties will anyway be imposed against carriers and forwarders. The penalty should be enough without going through the complicated and more expensive process of manual customs intervention.

In a recent letter submitted to the new customs commissioner, PISFA requested the following:

To redesign/reconfigure of the e-manifest submission system to allow submission of e-manifest from freight forwarders without waiting for the submission from shipping lines;
Pending such redesign of the e-manifest system, to allow the automated submission even for late submission without manual intervention considering that penalties may still be imposed;
To automate the payment of the penalties; and
Pending implementation of the proposed changes, to hold in abeyance the imposition of penalties and to simply allow submission beyond the six hours from arrival in case of freight forwarders.

Importer’s Accreditation

Recently, BOC issued CMO 31-2010 which mandates all BOC-accredited importers to submit ITRs and VAT returns for the immediately preceding three years within 15 days from publication of said CMO. In a letter recently submitted to customs, PUC raised issues on the additional documentation by citing the following:

The submission of ITRs and VAT returns are already covered under the Post Entry Audit regime. Under existing rules, BOC can audit companies within three years from importation and as part of the mandatory record keeping requirements, all importers are mandated to present their ITRs and VAT returns to the customs auditors upon conduct of a compliance audit.
In the past years, the industry has been advocating for transparency and simplification in the accreditation process and in recent years, the PUC has been able to request BOC to reduce the number of documents required for accreditation. PUC member associations fear that the additional documents required will be a reversal to the old tedious and costly process.
The CMO does not cover cases where companies are newly-registered (with no previous ITRs and VAT returns yet) or not subject to VAT (e.g. PEZA companies).

PUC also submitted its recommendations as follows:

Instead of annual accreditation, the following companies should be exempt from the renewal of accreditation: (a) Locators in PEZA zones; (b) Locators in Clark and Subic Freeports and (c) Top 1000 importers for the last three years (duties and taxes paid). Subject to certain risk management parameters and in case a company has derogatory records, said company shall however be required to submit its annual renewal.
In lieu of the annual renewal of accreditation, exempted companies shall submit an annual report (e.g., on or before June 30 of each year) containing the following: (a) ITRs and VAT returns for the preceding year; (b) List of Importation (including volume and value); (c) List of Suppliers; and (d) List of Customs Brokers / Forwarders. Failure of exempted companies to submit this annual report shall be a ground for the revocation of its accreditation with the BOC.

The author is the legal director of AFPI, PISFA and PUC. He is a lecturer on logistics, indirect tax and customs, and a trainor of Ateneo Graduate School and BayanTrade Academy on International Supply Chain Management. Please contact agatonuvero@yahoo.com for your comments.

Customs Brokers Act II

LAST December 15, 2009, former President Gloria Macapagal-Arroyo signed and approved the passage of Republic Act No. 9853, entitled: “An Act Amending RA 9280 otherwise known as the Customs Broker Act of 2004, and for other purposes”. RA 9853 was accordingly published in major newspapers last January 16, 2010.

Amending RA 9280

Section 2 of RA 9853 effectively allows corporations to engage in the customs brokerage business by providing as follows:

“The practice of customs brokers is a professional practice, admission to which shall be determined upon the basis of individual and personal qualifications. However, nothing in this Act shall prevent a corporation from being registered for the purpose of engaging in the business of customs brokerage as long as the corporation shall engage or hire the services of at least one (1) customs broker.”

Brief History

As a background, the original Customs Brokers Act (RA 9280) was signed into law on March 30, 2004. Under RA 9280, only licensed customs brokers were allowed to transact with customs in behalf of importers and with regard to import/export declarations entered with customs. Customs brokerage companies were then prohibited from engaging in the customs brokerage business.

In January 2005, the Professional Regulatory Commission, through the Professional Regulatory Board for Customs Brokers (PRBCB), issued the implementing rules for RA 9280. Thereafter, the Bureau of Customs issued CAO 3-2006A to further implement the provisions of RA 9280.

Prior to the passage of RA 9280, the Tariff and Customs Code of the Philippines (TCCP) allowed corporations to engage in the customs brokerage business so long as such companies hire two (2) licensed customs brokers, one as principal broker and another as alternate broker.

PRBCB recently amended its implementing rules providing that only licensed customs brokers can sign import declarations. Under the old TCCP provisions, individual licensed customs brokers sign import declarations but the registered customs brokers are the corporations.

Policy Issues

RA 9853 has again allowed corporations to engage in the customs brokerage business. While licensed customs broker professionals are regulated by the PRBCB, corporations will need to register with the Bureau of Customs (BoC) to engage in the customs brokerage business.

It is obviously within the mandate of BoC to register and regulate customs brokerage companies to ensure the following policy mandates:

To ensure that only legitimate and accredited companies are allowed to offer customs brokerage services to the general public;
To prevent unregistered corporations from engaging in illegal customs activities and in victimizing shippers;
To enhance the existing risk management system and client profile registration system (CPRS) by ensuring that only registered port users transact with the BoC and the general public; and
To protect the individual licensed customs brokers by mandating that only legitimate companies can engage and hire their services.

Conflicting Opinions

Some quarters are of the opinion that since only licensed customs brokers can sign the import declarations, there is no need to register corporations. Existing corporations, on the other hand, want a pre-RA 9280 arrangement — corporations are registered with customs and the licensed customs broker signs the import declarations.

It has been more than 6 months since RA 9853 was passed into law. In the meantime, customs brokerage companies continue with their business without the proper government registration, to the possible detriment of shippers dealing with some companies (licensed customs brokers) engaged in unscrupulous practices.