Billions lost to technical smuggling

Surigao del Sur Rep. Prospero Pichay Jr. filed yesterday a resolution asking the House committee on good government to probe the reported rampant diversion of imported goods and raw materials from Customs-bonded warehouses to the domestic market.

The technical smuggling, Pichay said, costs the government billions of pesos in unpaid taxes, while, at the same time, causing unfair competition to local manufacturers.

Some of the firms engaged in the illegal practice also use public bonded warehouses in importing general merchandise and electronic parts, which are diverted to the domestic market.

Taxes and duties on imported goods coming in through the bonded warehouses are not immediately imposed, but only upon release to non-exempt entities.

In case these goods are transferred to tax-exempt entities such as the Philippine Export Zone Authority (PEZA), Clark special economic zone or Subic Freeport economic zone, the goods remain tax-free.

In many instances, Pichay said the transfer to tax-free zones is only on paper since the imported products find their way to the local market.

In the same resolution, Pichay also urged the investigation of three fertilizer importers which, he said, were found to have faked their certificates of eligibility, allowing them to enjoy Customs duty exemptions on their importations through the ports of San Fernando, La Union; Cagayan de Oro and Iloilo.