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22 May 2024, 16:54 PM

Alvarez Orders Audit of 2010 Import Entries with Preferential Tariff

April 3, 2021

Customs Commissioner Angelito Alvarez instructed the agency’s Post-Entry Audit Group (PEAG) to verify reports that tens of thousands of import shipments last year were erroneously granted preferential tariff.

While estimates vary, Alvarez said the most conservative would indicate that the post entry audit of import entries not qualified for preferential tariff could potentially yield P600 million.

Alvarez wanted the review to initially focus on shipments from China, Korea and Vietnam in the light of recent findings that even products included in the Sensitive List of those three countries were granted reduced tariff classification.

Explained Alvarez: “there are two categories of products that can be granted preferential tariff under the ASEAN-China Free Trade Agreement (ACFTA), the ASEAN-Korea Free Trade Agreement (AKFTA) and the ASEAN Trade in Goods Agreement (ATIGA). First are those listed under the Normal Track or Inclusion List of a Party which are automatically granted preferential tariff. On the other hand, those that are listed under the Sensitive List are granted preferential tariff only when the exporting Party has reduced their Most Favored Nation (MFN) rate to 10% or less in the case of Korea and China and 20% or less in the case of Vietnam. This is in accordance with the reciprocal treatment provisions stipulated in the free trade agreements.”

Examples of commodities in the Sensitive List of China which were wrongly classified as qualified for preferential tariff included either duty free or with reduced tariff last year included corn flour, sweet corn powder, prilled urea, diammonium phosphate, x-ray film green sensitive, plywood veneer, cotton fiber and color television.

Alvarez disclosed that one company alone saved more than P9 million from duties and taxes for one shipment of bulk urea alone.

According to Lawyer Louis Adviento, chair of BOC’s Ad Hoc Review Team for Preferential Certificate of Origin, there were more than 118,000 import entries that were granted preferential tariff last year.

Alvarez said he had ordered customs examiners and appraisers to be guided by the reference material on products included in the Sensitive List of China, Korea and Vietnam provided by the Bureau of International Trade Relations of the Department of Trade and Industry.

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