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"Technical smuggling and agriculture
By: Ernesto M. Ordoñez
@inquirerdotnet
Philippine Daily Inquirer
05:25 AM September 14, 2017
It is technical smuggling that harms agriculture, not outright smuggling. Now that the issue of smuggling is in the limelight again due to the shabu smuggling scandal, our legislative and executive branches should consider resurrecting a structure that combated smuggling successfully in the past. This is the Cabinet Oversight Committee against Smuggling (Cocas), which decreased smuggling by 25 percent, but was abolished because it caught “big fish.”
Lawyer Filamer Miguel, in her article “Smuggling 101,” explains technical smuggling. It “takes place when the goods and articles are brought into the country through fraudulent or erroneous declarations to substantially reduce….the payment of taxes, duties, and other charges.”
This generally takes three forms: undervaluation, misclassification and misdeclaration.
Undervaluation happens when an importer claims a cost for the product that is significantly below the reference value provided by the Department of Agriculture or Department of Trade and Industry. It also happens with insurance and freight charges. Both the tariff and value-added tax are based on a product’s CIF (cost, insurance, freight).
Undervaluation deprives the government of the revenue from both tariffs and taxes. As Section 3519 of the Tariff and Customs Code of the Philippines states, this refers to “all taxes, fees, and charges imposed by the BOC and the Bureau of Internal Revenue.”
Misclassification occurs when the product is claimed to be in a wrong category. For example, poultry choice cuts with a 40-percent tariff were misclassified as mechanical deboned meat (MDM) to take advantage of its zero tariff.
Misdeclaration is when the product in question is clearly not what it is declared to be. Examples were when onions were declared as office equipment, and drugs were declared as vegetables.
The smuggling computed from United Nations Comtrade data is mostly technical smuggling. Export numbers of countries sending goods to the Philippines are compared with the BOC’s record of imports from these countries. The difference is largely smuggling."
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