Philippines Customs Eyes P600-M from Audit of Imports with Reduced Tariff

The Bureau of Customs is looking at collecting P600 million revenues from an audit of import entries that were granted reduced tariff on 2010.

Customs Commissioner Angelito Alvarez has ordered the agency's Post-Entry Audit Group (PEAG) to verify reports that tens of thousands of import shipments in 2010 were erroneously granted preferential tariff.

The review would initially focus on shipments from China, Korea and Vietnam, said Alvarez, in light of findings that even products included in the "sensitive list" from the 3 countries were given reduced tariff classification.

According to the customs chief, there are 2 categories of products that can be granted peferential tariff under the ASEAN-China Free Trade Agreement (ACFTA), the ASEAN-Korea Free Trade Agreement (AKFTA) and the ASEAN Trade in Goods Agreement (ATIGA)."

The first are those listed under the "normal track" or "inclusion list" of a party automatically granted preferential tariff. The second are products under the sensitive list which are only granted preferential tariff when the exporting party reduced its most favored nation or MFN rate to 10% or less in the case of Korea and China, and 20% or less in the case of Vietnam.

"This is in accordance with the reciprocal treatment provisions stipulated in the free trade agreements," noted Alvarez.

Commodities in China's sensitive list that were wrongly classified as qualified for preferential tariff included corn flour, sweet corn powder, prilled urea, diammonium phosphate, x-ray film green sensitive, plywood veneer, cotton fiber and color television.

One company alone saved over P9 million from duties and taxes for one shipment of bulk urea, Alvarez disclosed.

According to Lawyer Louis Adviento, chair of Customs' Ad Hoc Review Team for Preferential Certificate of Origin, there were more than 118,000 import entries that were granted preferential tariff on 2010.