Department of Finance Carlos Dominguez III
File photo/THEPHILBZINEWS
By Alithea De Jesus
Following the reported use of cooperatives by private traders as dummies to import rice and benefit from being exempted from the income tax, Finance Secretary Carlos Dominguez III has directed the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) to assist the Department of Agriculture (DA) this lead.
Dominguez issued the order during a recent Executive Committee (Execom) meeting of the Department of Finance (DOF), following the DA’s decision to temporarily suspend the issuance of sanitary and phytosanitary import clearances (SPSICs) to farmers’ cooperatives and irrigators’ associations (IAs) for commercial purposes.
According to Finance Undersecretary Antonette Tionko, while cooperatives are not exempted from paying duties for importing rice, they can be exempted from paying the income tax on these imports if they are registered with the BIR as tax-exempt entities.
“There’s this question now as to why traders are using coops to import rice …. Let’s look into that because they might be using the tax advantage on rice imports,” Dominguez, a former agriculture secretary, told BIR Commissioner Caesar Dulay and BOC Commissioner Rey Leonardo Guerrero during the meeting.
Agriculture Secretary William Dar issued Department’s Administrative Order (AO) No. 34 last month suspending the SPSICs to coops and IAs, effectively barring them from importing rice, after the DA received reports that these organizations have resorted to rice imports rather than carry out their purpose of procuring local rice from farmers.
Both the DOF and DA have also received reports that the SPSICs issued to cooperatives have been misused by traders to avoid legal responsibilities and evade the payment of the correct amount of import taxes.
In his AO, Dar also directed the Bureau of Plant Industry (BPI) to conduct an investigation, and consult with affected stakeholders, “to come up with new policies and rules to avoid circumvention of the laws and to protect not only the farmers and their cooperatives from exploitation and abuse but (also) the welfare of all Filipinos.”
Senator Cynthia Villar has also filed Senate Resolution (SR) No. 536 calling for an inquiry into the possible abuse by rice traders of the SPSICs and other privileges enjoyed by cooperatives and associations.
During the Execom meeting, Guerrero reported that from October 1-31, 2020, the collection from rice imports grew from P505 million during the same period last year to P630 million, representing a 24.9-percent increase.
This was the result of the volume of rice imports increasing by 17.5 percent from 84 million kilograms (kg) in October 2019 to 98 million kg in October 2020.
Total import duties from rice collected from January to October 2020 now stand at P14.31 billion.
All import duties collected from rice imports go to the annual P10-billion Rice Competitiveness Enhancement Fund (RCEF), which aims to raise palay productivity and sharpen the global competitiveness of local farmers by providing them with inputs, farm equipment, credit and mechanization program.
As a result of the improved rice valuation system implemented by the BOC, the average value of rice imports grew by 6.8 percent from January 1 to October 31 this year, Guerrero said.