Last year, the Bureau of Customs (BOC) was confronted by challenges brought about by severe port congestion made worse by tough traffic schemes enforced by local governments in Metro Manila. Despite this setback, the BOC managed to improve revenue collections, setting a new record for the highest ever single-month collection. Notable is the growth expansion in customs revenue of more than 20 percent in October 2014 alone.
Despite this gain, smuggling remains a threat to this revenue machinery as the practice of using trade channels through untrue commercial declarations to evade payment of taxes affect collections and distort international trade data. Now more than ever, there is more reason for this practice be curtailed, as rice, sugar and other major commodities are often the perennial subject of smuggling, thus endangering the protection the State has accorded to their production and distribution.
Hence, as part of a coordinated policy response to close loopholes to prevent smuggling, the Department of Finance issued Department Order No. 012-2014 which lay down the rules on the accreditation of importers. Since its issuance on Feb. 6, 2014, all importers and customs brokers (individuals, partnerships, corporations, cooperatives, associations, whether taxable or non-taxable) save for the exempt entities (e.g. PEZA locators), are required to secure accreditation from the Bureau of Internal Revenue (BIR). This constitutes the first phase of the accreditation process. Only importers and customs brokers who are accredited by the BIR would be issued with BIR Importer Clearance Certificates (BIR-ICCs) and BIR Customs Broker Clearance Certificates (BIR-BCCs).
The BIR-ICCs and BIR-BCCs would then be presented by the importers and customs brokers to the BOC for their BOC accreditation under the rules and regulations to be issued by the BOC for this purpose. This constitutes the second and final phase of the accreditation process.
On Feb. 10, 2014, the BIR issued Revenue Memorandum Order (RMO) No. 10-2014 prescribing the policies, guidelines and procedure in the accreditation of importers and Customs brokers, and the revocation thereof. The RMO also defined the duties and responsibilities of the BIR offices in the accreditation and dis-accreditation of importers and customs brokers and in the monitoring and verification of their compliance with the BIR-prescribed criteria for accreditation.
In this RMO, the BIR laid down a set of a criteria for BIR accreditation as the first phase of whole process envisaged under Department Order No. 012-2014. The process involves the presentation of a wide array of supporting documents to sustain the application. For importers, the basic documents totaled to nine (9), as well as additional documents if the applicant is an individual, non-individual or a cooperative. For customs brokers, the basic documents totaled to six (6). On top of that, the applicants would have to pay a non-refundable processing and certification fee of (P2,000.00). The applications would be approved by the chief of the Accounts Receivable Monitoring Division (ARMD) at the BIR National Office.
The BIR issued RMO No. 33-2014 on Sept. 11, 2014 amending RMO No. 10-2014, subtracting the Business Name registration requirement and adding the Certificates of Registration issued by the concerned Investment Promotion Agencies (IPAs) as one of the documentary requirements. Also, if the applicant for ICC or BCC is newly-registered with BIR or one who has never been accredited by the BOC as either an importer or broker, the applicant would be required to submit a printer’s delivery receipt and proof of filing tax returns through the BIR’s electronic filing and payment system for at least two consecutive months. The rule requiring all applications and accreditations be filed directly and by personal appearance at the ARMD was relaxed, allowing individual applicants afflicted with severe medical conditions to be represented by an appointed attorney-in-fact, supported by a Special Power of Attorney and a medical certificate issued by an attending physician under oath.
On Dec. 19, 2014, the BIR issued RMO No. 1-2015, further amending RMO No. 10-2014. This RMO, while dispensing with the need to present the Certificate of Registration issued by the BIR and Securities and Exchange Commission, actually added six (6) more documentary requirements in the list. Moreover, it prescribed that applications of importers/brokers found submitting any required certification different from the one issued by the concerned offices would be automatically denied. Further, information provided in the issued certification would be subjected to validation by the ARMD. Thus, the applicants were made more aware of the efforts of the concerned issuing offices in effecting a thorough verification on the applicant’s tax compliance, before the certifications are issued and used as attachments in the application for ICC/BCC.
One of the objectives of RMO No. 1-2015 is to streamline the accreditation process for the purpose of expediting the process thereof. The RMO actually transfers to the applicant the work associated with the process flow of verification, requiring each applicant to go to the different BIR field offices to secure the necessary certifications. Previously, the ARMD would communicate and/or endorse the applications to these same offices for action. With the process more in the hands of the applicants, it is expected that the lag-time attributed to endorsements between field offices would be avoided.
The latest issuance in this long read of requirements is RMO No. 4-2015, dated Feb. 5, 2015. Though the accreditation process is generally stringent, RMO No. 4-2015 has cut Philippine Export Zone Authority (PEZA) locators some slack by exempting them from the requirements of Department Order 12-2014. There no longer being the requirement for them to be accredited with the BIR as importers, these entities can now go straight to the BOC Account Management Office. Such rule was envisioned to promote trade facilitation in a secured manner, as the BOC may still require the submission of documents and information about these locators prior to granting accreditation, albeit these pieces of information may be culled from documents already in possession by the PEZA.
Further, RMO No. 1-2015 prescribes that importers/brokers previously issued provisional ICC/BCC are required to submit documents at least one month prior to the expiry of the six-month validity period. Furthermore, this six-month validity period of the ICC/BCC would no longer be extended once the aforesaid documents are not submitted, without prejudice to re-filing of another application with the ARMD. If the documents required under the same RMO are in order, a regular ICC/BCC would thereafter be issued and the validity of would be extended to three (3) years, counted from the date of issuance of the provision ICC/BCC.
The applicants are required to secure the various documentary requirements in a month, and if the month lapses without having complied with the requirements, the provisional ICC/BCC loses its effectivity. With the provisional ICC not-extended, the applicant loses its right to import. We ask ourselves – is one month adequate to complete the gargantuan list of documents so required by the BIR? Will this not pose greater hardship on the importers and revenue officials instead of simplifying the accreditation process? Such limitation etched in law may, in the long run, become a stumbling block of local businesses relying heavily on imports.
Mark Darryl A. Caniban is a supervisor from the tax group of R.G. Manabat & Co. (RGM&Co.), the Philippine member firm of KPMG International.
This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity.
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