Government urged to step up drive vs technical smuggling

MANILA, Philippines - Federation of Philippine Industries (FPI) chairman Jesus Arranza, concurrently president of the CIIF Oil Mills Group, urged the government yesterday to plug a revenue leakage resulting from the unabated technical smuggling of palm oil and palm olein.

In a press conference, Arranza said that based on import records of the Department of Trade and Industry (DTI) for 2007 to 2009, some companies have been found undervaluing their shipments of palm oil and olein by as much as 90 percent.

He said a rough calculation shows a revenue loss of P100 million as importations dropped to 76,000 metric tons in 2009 from 119,000 MT in 2007 and 139,000 MT in 2008.

Arranza said the drop in import figures indicates rampant misdeclaration of import volumes.

For instance, Arranza cited one company which declared an import value of $40 per MT compared to the $890/MT which the CIIF Oil Mills Group pays for similar products imported from the same companies.

While palm oil and olein imports are no longer subject to tariff, they are subject to a 12 percent value-added tax.

By undervaluating their import value, some companies are depriving the government of additional revenue, Arranza said.

Arranza said the Bureau of Customs (BOC) appears to be remiss by not questioning some companies on the extremely low valuation of their oil imports when the CIIF and a few other firms declare a much higher import value.

Arranza said he will submit the import documents to the BOC’s Post Entry Audit Group (PEAG) so an audit can be done for the past three years. He added that the government should hold liable companies found to have undervalued their palm oil and olein imports.