February 16, 2017 – The Bureau of Customs (BOC) is investigating reports that billions of pesos have been lost in government revenue from smuggling into the country three top imports each year.
Customs Commissioner Nicanor E. Faeldon has directed the intelligence and investigation service to look into reports of oil, luxury vehicle, and cigarette smuggling in many parts of the country.
Oil siphoned from tankers to barges in the high seas and loaded in trucks on shore for delivery to depots have resulted in huge losses in government revenue.
Luxury vehicle smuggling, on the other hand, is carried out through misdeclaration, misclassification, and/or undervaluation, while smuggled cigarettes flood the market either without the payment of duties and taxes or carry fake Bureau of Internal Revenue tax stamps.
BOC records show that motor vehicle, oil, and cigarette smuggling are the top sources of revenue losses estimated to hit more than P50 billion per year, or almost 10.68% of the annual revenue target of P467.9 billion set by the Development Budget Coordination Committee (DBCC).
The BOC’s statistical data on oil smuggling indicates that the agency loses an estimated P22.5 billion yearly. It loses P16 billion annually from illegal cigarette sales and an estimated P21 billion through vehicle smuggling, according to data contained from the US-based think-tank Global Financial Integrity and the International Monetary Fund.
The revenue losses from these three top imports contribute to almost $3.85 billion, or P165.5 billion (at the P45/US dollar exchange rate) in revenue losses from smuggling yearly, or 35.4% of the current annual revenue target.
Faeldon points to “mis-invoicing” of imported goods, or fraudulent misrepresentation (misdeclaration), whether underdeclaration or overdeclaration, of the real value of goods as the prevalent malpractice the agency wants to address under his leadership.
A 2016 BOC report has listed rogue oil, motor vehicles, and cigarette companies that owe billions of pesos in unpaid taxes and which are currently the subject of court litigation cases,
“We are ready to use all available options in the investigation against these erring companies to make sure we control all forms of revenue leaks detrimental to hitting revenue targets, including proper trade facilitation processes of the BOC,” Faeldon said. “It will never be an easy task, but we will work hard to make sure we do our mandated tasks as public servants.”
The investigation is part of the BOC’s efforts to collect revenues, stop bribery in the agency and wipe out smuggling to hit revenue targets and enforce stiff measures in line with the government’s reform agenda. #