BOC’S use of cross-border electronic invoicing eyed

THE Bureau of Customs (BOC) announced it is “ready to adopt” cross-border electronic invoicing (e-invoicing) in its digital transformation program that is targeted to simplify and speed up facilitation of trade and eliminate technical smuggling.

Customsassistantcommissioner Vincent Philip C. Maronilla said the bureau does not stop from improving its system, and cross border einvoicing is something that caught the Boc’s interest.

The BOC statement cited the case of Indonesia, which lost $12 billion in duties and taxes on gold imports. A statement by the BOC said this could have been prevented by cross border e-invoicing, which prevents the tampering of goods description and HS [harmonized system] codes. The latter is a standardized numerical method of classifying traded products used by customs authorities around the world to identify products when assessing duties and taxes and for gathering statistics.

The statement quoted Samahang Agrikultura ng Pilipinas (Sinag) President Rosendo O. So as saying that the tampering of the HS Code “is very rampant.”

“It is done by unscrupulous importers in connivance with some corrupt customs personnel,” So said adding that tampering of HS code is common in the importation of meat and steel products.

The BOC statement also cited a 2021 report by the UN Comtrade Data on meat trade, covering HS Codes 0201 to 0210, which showed that all countries reported exports to the Philippines amounted to $2,265,193,202. “But the reported Philippines import from all countries was only showed $1,850,598,993 or a difference of $414,594,209, which is equivalent to around P20.730 billion.”

“The same report also showed a big disparity in 97 other different HS Codes wherein the all countries reported export to the Philippines amounted to $149,866,915,512 while the reported Philippine imports from all countries was only $124,390,447,217 or a disparity of $25,476,468,295,” the BOC said. “The disparity is attributed to the tampering of the HS codes.”

Maronilla, who is also concurrent Customs spokesman, was quoted in the statement as saying that undervaluation and misdeclaration were the most common schemes used by unscrupulous importers and brokers to evade payment of correct customs duties, resulting in billions of pesos in tax losses that could have otherwise been use to fund vital government projects and provide assistance to the marginalized sectors of society.

“It is new to us but we are open to it. We can integrate it in our system,” Maronilla said. “Any innovations or upgrades in our system that would speed up trade and eliminate corruption is always a welcome development. We are ready for it.”

On a yearly basis, the BOC is losing billions of pesos in foregone duties and taxes, due to undervaluation, misdeclaration, misclassification and underdeclaration as shown in a 20-page report of the Federation of Philippine Industries, the BOC statement read.

E-invoicing refers to the electronic authentication of tax invoices through an invoice registration portal. Each invoice is issued a unique invoice reference number which is later used for invoice matching and auto populating tax return and waybill forms. This concept is the same in almost all countries that have implemented e-invoicing.

The system is already being used by some countries in Asia that include Singapore, India, South Korea, Japan and Vietnam. In European Union member countries, e-invoicing on business to government transactions is mandatory. Recently, Finland, Italy and France, among other EU countries, have expanded the purview of e-invoicing to businessto-business transactions, the BOC statement read.