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Monday, June 24, 2024

PACC probes corruption between customs, steelmakers

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The Presidential Anti-Corruption Commission is investigating allegations of corruption between several big steel manufacturers and officials of the Bureau of Customs who may have deprived the government of billions of pesos in tax revenues, including penalties for improper import declarations.

PACC chairman Dante Jimenez said in an interview with a morning radio program Tuesday his office had already brought to the attention of Trade Secretary Ramon Lopez reports that large-scale “technical smuggling” had been happening over the past 10 years due to alleged collusion between BOC officials and large steelmakers. 

“We have brought it up to Secretary Lopez of the DTI, as they are the agency that facilitates the trading of steel,” Jimenez said.

“Aside from the smuggling allegations, there are also questions regarding the quality of steel, how this affects safety and the lives of people… these are all the subjects of an ongoing investigation by the PACC,” he said.

Jimenez acknowledged that the case, which involves steelmakers clearing their products at the customs point of entry despite discrepancies in the documents submitted for these items, “maybe bigger than the cigarettes smuggling and tax evasion issue two years ago.” 

Senator Panfilo Lacson earlier raised the alarm on the billions of pesos the Philippines could be losing annually to tax leakages from imports. Steel contributes a significant portion of Philippine industrial imports.

Citing World Bank data, Lacson said the Philippines may have lost P32.18 billion worth of value-added taxes in 2017 alone due to “under-declaration”.

Lacson, speaking at a Senate hearing on the proposed P4.1 trillion national budget for 2020, vowed to seek an explanation from the country’s economic managers on where the missing amount could have gone.

Industry sources recently revealed that the PACC obtained documents detailing how one steelmaker alone imported two million tons of steel billets last year and could be responsible for over half a trillion pesos worth of lost revenues for the government due to systematic misdeclaration of its importation figures.

Importers are required to submit a customs declaration form or duty entry once their imported products pass through BOC for clearance. 

Customs brokers routinely declare the content of the imported goods to determine how much tax is accrued to the government.

Last year, giant cigarette maker Mighty Corp. paid nearly P40 billion to the Bureau of Internal Revenue to settle tax deficiencies as part of a compromise deal that allowed the company to walk from criminal complaints filed before the Department of Justice.

Three tax evasion complaints faulted the company for not paying excise taxes on cigarette products and for using counterfeit tax stamps on cigarette packs. The BIR valued the company’s combined tax dues and other fees and charges at P37.88 billion.

President Duterte has reportedly been informed of the tax evasion case being prepared by the PACC and the DTI (which monitors consumer standards of the steel industry) against the BOC and the steelmakers in the country, by virtue of the huge numbers of lost revenues that should have gone to the government, which could easily dwarf the Mighty Corp.’s case.

The president specifically called out the BOC for rampant corruption during his State of the Nation Address and axed more than 60 top officials and employees of the bureau linked to unethical practices. 

The PACC suspects that big steel importers, in collusion with BOC officials, were manipulating the HS codes (the universal code for export and import goods). The steelmakers have been describing the imports of cast and prime steel billets used for steel manufacturing as Grade 60  when in fact, the orders under the same code are a mix of Grade 40 (5sp) and Grade 33 (3sp). 

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