DOF urges Congress to pass Customs modernization act

The Department of Finance ( DOF) has urged Congress to pass into law the proposed Customs Modernization and Tariff Act (CMTA) to institutionalize and consolidate reforms in the agency perceived by the public as the most corrupt.

The DOF, together with the Bureau of Customs, explained the speedy approval of the proposed CMTA is necessary for the agency to maintain its “improved” collections growth in the recent months.

“Customs collected 369.3 billion in 2014, 21 percent higher than what was collected in 2013 on the back of painstaking reforms and plenty of hard work. But our work is far from over,” Commissioner John P. Sevilla said in a statement.

“CMTA will etch further reforms into law and enable us to institutionalize the ongoing transformation of Customs into an efficient and responsive revenue agency,” he added.

For his part, Finance Undersecretary Carlo A. Carag said the recently released figures on Customs’ collections demonstrated the effective reform in the agency.

“We intend to further transform the Customs from what was once perceived as one of the most corrupt and underperforming agencies into a pioneer of governance innovation and technology in the region,” Carag said.

The finance official added the modernization and policy changes to be institutionalized with CMTA will boost Customs’ confidence to continue breaking records and delivering results in the coming years.

Under the proposed measure, CMTA will make the Philippines compliant with the Revised Kyoto Convention (RKC) and other international agreements, as well as consistent with the trend towards harmonization, modernization and simplification of customs procedures.

The proposed bill will also mandate the use of Information Communications Technology (ICT) to enhance customs operations and enforcement, consistent with the government’s policy to eradicate corruption by eliminating face-to- face transactions and institutionalizing electronic systems instead.

The proposed bill will, likewise, provide a de minimis value of 5,000, below which no duties and taxes shall be collected.

It will also exempt relief consignments from duties and taxes and enable a simplified customs procedure for efficient release of goods when there is a declaration of a state of calamity.

To develop the Customs’ capacity for trade facilitation, the principle of an Authorized Economic Operator (AEO) as drafted by the World Customs Organization is adopted in the proposed bill.

An AEO refers to importers, exporters, customs brokers, forwarders, and other entities duly accredited by the bureau based on international standards and various national best practices, and which are entitled to minimal requirements for processing of goods.

Further, the proposed bill recognizes the use of self-certification system in determining the applicable rules of origin.

The bill will also strengthen the Customs’ risk management system. For example, incentives such as the deferred payment of duties and taxes may be granted to highly compliant and low risk importers and exporters.

The concept of abandonment is also redefined, where only expressly abandoned goods are deemed property of the government.

The proposed bill gives the Customs the option to donate the abandoned goods to another government agency, declare the same for official use of the bureau or to dispose of the goods through a public sale.

This gives the bureau an option to donate the goods or declare the same for official use even before public auction, which is a limitation in the present law.

Finally, the amount of fines and penalties for violation of the provisions of the bill will be increased since the current fines and penalties in the TCCP are outdated.

In the proposed bill, unlawful importation and exportation will be considered as a heinous crime if the appraised value of the good unlawfully imported, including duties and taxes, exceeds

50,000,000.