Finance Secretary Carlos G. Dominguez III ordered the Bureaus of Internal Revenue (BIR) and Customs (BoC) to help the Agriculture department investigate alleged use by private rice traders of cooperatives to import rice as a tax-avoidance measure.
In a statement Friday, the Finance department said Mr. Dominguez issued the order after Agriculture Secretary William D. Dar last month released Administrative Order (AO) No. 34, suspending the issuance of permits and the application process for sanitary and phytosanitary import clearances (SPSICs) to farmers’ cooperatives and irrigators’ associations, after some were allegedly used as dummies by traders.
“There’s this question now as to why traders are using co-ops to import rice …. Let’s look into that because they might be using the tax advantage on rice imports,” Mr. Dominguez told BIR Commissioner Caesar R. Dulay and BoC Commissioner Rey Leonardo B. Guerrero in a recent meeting.
Cooperatives are not exempt from paying duties on rice imports but some are registered with the BIR for income tax exemptions on their activities, according to Finance Undersecretary Antonette C. Tionko.
Duties collected from rice imports rose 25% year on year to P630 million in October on the back of greater import volumes, which were up 18% at 98 million kilograms, according to the BoC.
In the year to date, rice imports generated P14.31 billion in tariffs for the government. Of these collections, the government must provide P10 billion a year to support the Rice Competitiveness Enhancement Fund (RCEF).
The BoC earlier reported rice traders were found to have underpaid P1.417 billion worth of customs duties, plus penalties and other charges, because of undervalued rice imports between March and June 2019. — Beatrice M. Laforga