Repub ot his Phiiooiies DEPARTMENT OF FINANCE Rena Bove Cane ab Ooanpe,Sr. Soot DEPARTMENT ORDER NO. 044.2014. ~ 47 June 2014 : ‘SUBJECT: POST ENTRY AUDIT GUIDELINES UNDER.THE FISCAL INTELLIGENCE UNIT, DEPARTMENT OF “FINANCE, ‘PURSUANT TO EXECUTIVE ORDER NO. 185, 8. 2013, WAERI of he Prion jection 3515 of the Tariff and Customs Code 1es ("TCCP"), a8 amended by Republic Act No. 9135, authorizes the condiict of audit examination, inspection, Verification and/or investigation of transaction ‘records of importers and brokers; a WHEREAS, Executive, Order’ No. 155, Series of 2013, implements Section 3515 of the TCCP, by mandating the Fiscal Infligence-Unit o the Department of Prance (DOE-EUS perform postentry audits of import transactions; . WHEREAS, there ‘is @ need to ssue guidelines ani ‘Procedures in the performance by the DOF-FIU of the for joing ictions and responsibilities to guide the public anc the, ‘governmont officals concemed ; NOW, THEREFORE, in consideration of the’ foregoing premises, the: following’ rules and regulations ‘are ‘neroby promulgated: ° ‘Section 1. importer and Import Selection. - Through a cpmputeraldod risk management sya, the OOF IU Shall Identify the importers and import entries’ to be subjected to post-enty aucit based on certain objective and quantifable data, which shall include but not be limited to the following : ing independent studies and information on Imported products determined to have a high tisk of being subject to erroneous classification, misdeclaration or undervaluation; a) ) Relative, magnitude of customs revenue from certain imported products; ©) Relative magnitude of custonis revenue from identified imported products irom the importer, . 4) Relative magnitude of customs revénue. from the importer; fi ao) @) The rates of duties of the importer’s imports; The compliancé track records of the importer; and + import activities, y ' Upon selection. of the importers dnd import entries to be -subject to audit, the DOF-FIU may analyze the selected import ‘enifies to determine whether there exists a potential valuation, classification andlor other compliance issue. ‘Section 2. Coordination with the BIR - Upon the selection of ‘the importer or import entry to be subject to post entry audit, the DOF-FIU shail inform the Bureau of Intemal Revenue cane the selection of the importer and the grounds therefore. The BIR. issue a Letter of Authority for its personnel to investigate and examino the porters records arts books of accounts for any deficiency taxes in accordance with the provisions of the National Internal Revenue Code: q Section 3, Notice of Post-Entry Audit Findiigs.’- Upon the determination by the OOF-FIL of any deftones nthe duos declared and paid on any importation of goods and articles into the Philippines, the DOF-FIU shall nolify the importer concemed by Sending Post-Entry Audit Findings (‘PEAP) 10 9) An assessment of the risk to revenue of the importer's-the importers address stated in the importentiy fled with the Bureauof =. Customs ("BOC") for the importation, The PEAF to be issued by the DOF FIU to the importer shall state the specific import transactions covered, the amount of deficiency duties found thereon, and the basis of the findings, and shall contain a.notice that the findings of deficiency duties shall Be submitted to the BOC and the BIR, unless said deficiencies are ‘satisfactorily explained by the importer in a¢cordance with the provisions, Of this Deperiment Order. In'such PEAF, the DOF-FIU shall allow the: Importer o submit relevant supporting documents, wich includ, but ae not limited to, the documents listed in Annex “A” hereof. Section 4. Single Comprehensive Reply. - Within a non-extendibie pod ot thity 60) calendar days rom the mporter sreceot ofthe FEAF, the importer shal be allowed fo fle one Reply fo PEAF with the DOF- FIU, to be swom under oath.. The Reply to PEAF shall siate whether : ‘the importer admits, or disagrées with, each of the findings in the PEAR. In the event that the importer disagrees with any of the findings in the PEAR; the importer shall state all reasons therefor. For findings to which the importer disagrees, the Reply fo PEAF shall be'supported by certified true copies of documents which may be relevant to the findings. Copies submilied to the DOF-FIU of any supporting documents, which have previously been filed with any government ‘agency, must be certified true and correct by the government agency : ‘concemed; otherwise, copies of any other supporting documents must | be cortified true and correct by the person or entity which executed the same. In case tte imporier is a natural person , the Reply fo PEAF shall be 7 ‘executed personally by him. In case the importer is @ partnership, the Reply fo PEAF shall be exectted by any partner who was duly authorized in writing and under oath by the partners holding a’ majority interest in {he equity ofthe parhersti. n case the importers 2 corporation the 1 PEAR shall be executed by an offoer duly authorized by the Board of Diractors, in which case, the Importer shall submit a Secretary's: = Cerificate attesting to'the passage and continuing valldty of resolutions - of is Board of Directors approving and authorzing the subrrission of the Reply fo PEAF and all other documents attached, thereto, and designating its oficial representative for said purpose. \ Section 5. Sticily No Contact Policy. ~ Under no circumstance shall the DOP-FIU hold, conference with the importer and broker or any, of the, Importer of broker's officers, agents or representatives + Tegarding any finding stated Jn the PEAF: Any official of employee of. the DOF-FIU found fo have committed a violation of this provision shall be held administratively iablo, without prsjudice to any eivil or criminal proceedings which may be filed against such erring official or employee. ‘Section 6. Notice ‘of Acceptance of Explanations. - if the DOF-FIU finds all explanations stated in the Reply fo PEAF to be satisfactory, the’ DOF-FIU shall notfy the importer that it accepts the explanations, copy furnished the BOG and the BIR. i Section’ 7. Fiial Audit Report and Recommendation, -The DOF- FIU shall submit @ Final Audit Report, and Recommendation ("FARR’) to the BOC and/or the BIR, as:the cas may be, In any of the folowing instances: a. The Reply fo PEAF states thet the importer admits any of the findings in the PEAR, in which case the FARR shall contain a recommendation that the BOC collect the admitted deficiency duties; ‘ |b, The DOF-FIU finds that any of the explanations contained in the Roply fo PEAF is not satisfactory, in which case the FARR Shall slate the reasons for said findings, such as lack of proper Substantition, and shell contain a recommendation that a format assesomeit be sued fo the importer oF ‘c. No Reply fo PEAF's fled within the period prescribed in Section 7 ‘4 hereot forthe fling of the same. - In any of the foregoing instances, the FARR shall include 6 ‘recommendation on the administrative fines and penalties o be imposed. ‘on the importer. : ‘The PEAF issued to the importer and the Reply to PEAF filed by the importer, if any, shall be attached to the FARR, : Sections. Investigation of Broker, -f, upon revi of all the documents submitted by ‘the importer and such other documents as may fe available to the OOFFIU, there fs prima facie evidence that the broker committed violations of the Tariff and Customs Code in relation to the-F|U may also submit to fepriate recommendations. ‘Section 9. Assessment and Collection. - Within five (5) dayé from receipt ofthe FARR, the Commissioner of Customs shan es tothe importer: transaction/s under consideration, the BOC a report onits findings with-app! @. A collection letter directing the importer to pay, within ten (10) working days tom receipt thereat, the deiency cule ‘admitted in the Reply lo PEAR and the appropriate fines ard penalties; and/or ° , Aformal assessment of deficiency duties and demand letter directing the importer o pay, wihin ten (10) wvorking days {from receipt thereof, the deficiency duties not admitted in the Reply (o PEAF, and the appropriate fines and penallies, Within five (5) days from recei t of the FARR, the Commis of ieinl Revenue Seat ac on Bs free es Sa NE accordance with-the provisions of thé National Internal Revenue ode of 1007, as amendod, Section 10. Failure fo Pay Deficiency Duties. - Should the importer fal to pay the deficiency duties and penalties stated in, the collection jeter andlor formal assessment of deficiency duties ‘within the period prescribed in Section 8 hereof, the Commmlesioner. ‘of Customs shall immediately impose the following sanctions.” 4. Revoke, cancel and witigraw the accreditation prilegos granted to the importer in accordance with existing rules and regulations; and ».' Avail of the administrative and judiclal remedies provided for by law and rules and regulations. Section 1 . Failure to Pay Déficiency Taxes. ~ Should the importer fail to pay the deficiency taxes and penalties as may be ‘assessed by the BIR, the Commissioner of Internal Revenue shall {eke appropriate action in accordance with the provisions of the National internal Revenue Code of 1997, as amended. In addition, the Commissioner of intemal Revenue shall inform the Commissioner of Customs’ in writing of such failure of the! importer to pay: the deficiency. taxes and penaltios. The Commissioner of Customs shall then immediately impose the same ‘sanctions provided under Section 10 hereof. Section 12. Repoit on Assessment and Collection.’ - Within thirty (30) days from receipt of the. FARR, and every last day. of the month therpafter, the BOC andlor the BIR, as the case may ‘be, shall submit to the Secretary of Finance a report on the offical actions that have Been taken and shell be taken on the FARR. Section 13. Authonty io Compromise: - Nothing in. this Department Order shallbe interpretedto preclude the Commissioner of Customs from exercising his power to compromise, subject to the approval of te, Seortan of Finance, the imposiion of the appropriate fines and surcharges on the defciency duties provided iG under Seaton 2816 of he 1SOE Section 14. Repealing Clause. - All provisions of orders, memoranda, circulars or other issuances or parts thereof which are inconsistent with this Department Order are hereby deemed repealed and/or modified accordingly. § Section 15. Separabiliity Clause. - If. any provision of. this Department Order is declared by the courts as unconstitutiorial or contrary to existing laws, the other provisions hereof shall remain in full force and effect. . ‘Settion 16.Effectvity.-.This Department Order shall take effect fifteen (15) days after publigation .