DOF orders probe on illegal use of coops for rice imports

MANILA, Philippines — The Department of Finance (DOF) has ordered an investigation into the alleged use of cooperatives as dummies for traders to evade the payment of correct taxes on rice imports.

Finance Secretary Carlos Dominguez issued the order to the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), following the Department of Agriculture’s (DA) decision to temporarily suspend the issuance of sanitary and phytosanitary import clearances (SPSICs) to cooperatives for commercial purposes.

Finance Undersecretary Antonette Tionko said while cooperatives are not exempted from paying duties for rice imports, 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 said.

Last month, Agriculture Secretary William Dar issued Department Administrative Order (AO) 34 suspending the issuance of SPSICs to farmers’ cooperatives and irrigators’ associations (IAs) for commercial purposes, effectively barring them from importing rice.

Dar made the issuance after the DA received reports that these organizations have been focusing on importing rice rather than carrying out their purpose of procuring local rice from farmers.

The DOF and the 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.

Dar had then directed the Bureau of Plant Industry (BPI) to conduct an investigation, and to consult  affected stakeholders in order to come up with new policies 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.”

Sen. Cynthia Villar has also filed Senate Resolution 536 calling for an inquiry into the possible abuse by rice traders of the SPSICs and other privileges enjoyed by cooperatives and associations.

Citing the latest data from the BOC, the DOF said total import duties from rice collected from January to October 2020 stood at P14.31 billion.

All import duties collected  will go to the annual P10-billion Rice Competitiveness Enhancement Fund (RCEF), which aims to raise palay productivity and improve competitiveness of local farmers by providing them with inputs, farm equipment, credit and mechanization program.