Reform Agenda

A pearl buried inside a tightly-

shut shell is practically worthless.
Government information is a
pearl, meant to be shared with
the public in order to maximize
its inherent value. The
Transparency Seal, depicted by a
pearl shining out of an open shell,
is a symbol of a policy shift
towards openness in access to
government information.
!

CUSTOMS
MODERNIZATION

This bill will introduce amendments to harmonize with

the Revised Kyoto Convention (RKC), specifically:

a. new provision authorizing Customs to establish

temporary storage prior to goods declaration which will
provide express legal basis to the creation of special
warehouses.
b. period within which to file entry is 15 days extendible
to another 15 days
c. penalty on failure to pay correct taxes and duties fixed
at 50% on deficiency on duties, taxes and other charges
and 100% landed cost.

Electronic System
o Bureau required to apply Information
Communications Technology (ICT) in its operations
o the validity and enforceability of electronic documents,
permits, licenses or certificates are recognized

De minimis
o threshold FOB (Free on Board) or FCA (Free Carrier)
value of Five thousand pesos (Php 5,000.00), below
which no duties and taxes shall be collected.
o May be adjusted by the Secretary of Finance, in
consultation with the Commissioner of Customs.

Relief Consignment
o Defined as goods donated to or leased to government
institutions and accredited private entities for free
distribution or temporary use of victims of calamities.
o Exempted from duties and taxes

Tools for Trade Facilitation

o Concept of Authorized Economic Operator (AEO) as
drafted by the WCO is adopted and entitled to minimal
requirements for processing of goods
o AEO refers to importers, exporters, customs brokers,
forwarders, and other entities duly accredited by the
Bureau based on international standards and national
best practices.
o self-certification system in determining the applicable
rules of origin.

Risk Management System

o Incentives, such as deferred payment of duties and
taxes, are granted to highly compliant and low risk
importers and exporters, and to importations made by
the government and its instrumentalities.

Concept of Abandonment is redefined

o Impliedly abandoned goods are not deemed property
of the government. Bureau may sell impliedly
abandoned goods and the proceeds of the sale shall be
given to the person entitled to receive them, after
deduction of any duty, tax and charges due on the goods.
o Importer or owner of the goods may reclaim the
abandoned goods within a period of thirty (30) days
after the lapse of the period to file the declaration or to
secure delivery, and upon payment of any taxes, duties
or charges due on the goods.

Disposition of property in customs custody

o Option to donate the goods to another government
agency, declare the same for official use of the Bureau,
after approval of the Secretary of Finance, (even before
public auction) or to dispose of the goods through a
public sale.

Advance Ruling
o Allows an importer or exporter to file an application
for advance rulings on issues involving tariff
classification, valuation and rules of origin, before the
goods arrive or are exported.

Streamlined appeal procedures

o Decisions made by a District Officer or Commissioner
are no longer subject for reconsideration.
o Remedy of the aggrieved party is to file an appeal with
the Commissioner, Secretary of Finance or the Court of
Tax Appeals, as the case may be.

Inaction in cases for Automatic Review

o Decisions which are adverse to the government are
subject to automatic review by the Commissioner
and/or by the Secretary of Finance.
o the aggrieved party has the option to appeal the case
before the Court of Tax Appeals.

Abatement of Duty and Refunds

o If less than Five thousand pesos (Php 5,000.00), no
refund shall be allowed
o May be changed by the Secretary of Finance, upon
consultation with the Commissioner of Customs.

Offenses and Penalties – increased penalties

!

REFORM OF
GOVERNMENT-OWNED
AND CONTROLLED
CORPORATIONS
(GOCCS)

Continued reliance on government subsidies amidst

reports of excesses and financial mismanagement in the
past prompted the creation of the Governance
Commission for GOCCs (GCG) under RA 10149 or the
GOCC Governance Act of 2011. The GCG serves as an
oversight and policy-making body for GOCCs to ensure
their financial viability and responsiveness to the needs
of the public. This has resulted to total dividends and
other remittances to yield P95.90 billion (averaging
P27.40 billion a year) from 2011 to June 2014 alone,
compared to a mere P81.54 billion (averaging P9.06
billion a year) from 2002 to 2010.

The SSS pension system was also reformed to address

the problem on unfunded liability and to respond to the
clamor for higher benefits. In January 2014, the SSS has
started the increase in contribution rate from 10.4
percent to 11 percent and in the maximum monthly
salary credit from P15,000 to P16,000. These, together
with the five-percent across-the-board pension increase,
which the SSS is also set to implement, are expected to
lower the SSS’ unfunded liabilities by P141 billion and
increase its fund life from 2039 to 2043.
!

REFORMED REVENUE
COLLECTION
AGENCIES

Reforms in the revenue collection agencies have resulted

in an improved tax effort from 12.1 percent in 2010 to
13.3 percent in 2013 or a P40 billion average annual
increase in tax collections for the said period. This was
achieved without imposing new taxes, except for
reforms in the Sin Tax.
!

CUSTOMS NG BAYAN

To increase transparency and accountability, the BOC

released never-before-published data, such as reports on
import entries, to allow the public to better monitor
proper duties and taxes that must be paid per product
per entry. It revamped the Customs website
(www.customs.gov.ph), launched the Customs ng Bayan
website (www.dof.gov.ph/customsngbayan), and
released the Customs dashboard in the Open Data
website (data.gov.ph/infographics/commodity-import)
to provide the public with useful Customs data, such as
imports, trade activity reports, and advisories.
!

INCREASING TAX
COLLECTION

The DOF and BIR also introduced reforms to improve

tax collection from self-employed individual taxpayers
(SEITs). Of the estimated 1.8 million self-employed
professionals registered with BIR in 2011, only 402,934
(22.4 percent) filed their income tax returns. A large
number of these SEITs, including doctors, lawyers,
accountants, and media professionals, paid under
P60,000 in income tax in the period 2010–2012.

The BIR prioritized the audit of the tax returns of self-

employed professionals and sole proprietorships with
annual income tax of less than P200,000. Furthermore,
through the Tax Watch, the Administration mounted
campaigns to promote transparency and advocate for
the correct declaration and payment of taxes through
television commercials and newspaper advertisements.

Cases against tax evaders, smugglers, and erring

government employees were also filed. The total number
of cases filed against erring government officials under
the Revenue Integrity Protection Services (RIPS),
increased from only 5 cases in 2010 to 101 by June 2014.
During the current administration, a total of 108
personalities have been charged, of which seventy-six
(76) were charged at the Office of the Ombudsman,
twenty-seven (27) at the Civil Service Commission, and
five (5) were referred to the concerned agency for filing
of charge.

Under Run After the Smugglers (RATS), a total of 170

cases by June 2014 have been filed against smugglers,
with total tax dues amounting to P26 billion. This is a
marked improvement from 2010, where only 18 cases
have been filed. Under Run After Tax Evaders (RATE),
total tax evasion cases filed have increased from only 23
cases in 2010 to 257 by June 2014, with total tax dues of
P51.72 billion.
!

REFORMING THE
BUREAU OF CUSTOMS
(BOC)

Measures to respond to the President’s call for change in

the BOC include personnel movements and the
appointment of new officials and staff, including a new
Commissioner and six new Deputy Commissioners. New
offices under the DOF were also created, i.e., the Office
of Revenue Agency Modernization (ORAM) and the
Customs Policy Research Office (CPRO), which are
tasked to review current systems in revenue-generating
agencies to increase collections and modernize
operations.

This has resulted in the increase of cash collections to

P265.79 billion for the period of January to September
2014, an 18% percent improvement from the collections
in the same period in 2013. Recently, the BOC posted
revenues of P32.87-Billion in September 2014, the
highest-ever single-month collection of the agency, on
the back of continuous improvements in valuation and
an increase in the volume of imported goods.
September’s collection is up 27.2% versus the same
month last year. Improvements in the Bureau’s system
for the valuation of goods, coupled with enhanced
enforcement and apprehension efforts, yielded an
18.23% hike in the customs value for imported products
and a 19% increase in the duties and taxes collected,
offsetting a slight decrease in the average tariff rate.

Other reforms include a return-to-mother-units order

for BOC personnel to return to their permanent plantilla
positions, the rotation of Intelligence Group (IG)
personnel in BOC and DOF offices, and the transfer of
post-entry audit functions of the BOC to the DOF.
!

INCREASING TAX
COLLECTION

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!

PERA NG BAYAN

Through the Pera ng Bayan website

(www.perangbayan.com), citizens are empowered to
report and track updates on cases of tax evaders,
smugglers, and erring revenue personnel of the DOF.
Since its launch in 2010, the website has received 2,629
citizen reports, 82 of which had been resolved and
closed, 1,975 were forwarded to the concerned agencies
for appropriate action, while the remaining 572 were
archived for lack of substantial information.
!

ISKOR NG ‘YONG
BAYAN

The Department of Finance-Bureau of Local

Government Finance (DOF-BLGF) launched the Local
Government Unit (LGU) Fiscal Sustainability Scorecard
this 2014 as a regular fiscal and financial management
performance assessment of all LGUs. Using the power of
data to drive performance, the scorecard is published
online via Iskor ng ‘yong Bayan, as part of the DOF’s
Transparency Initiative.

The scorecard takes into account key results areas of

local revenue generation capacity, local collection
growth, expenditure management, updating of Schedule
of Market Values, and reportorial compliance of
treasurers and assessors with the DOF and BLGF. These
regular performance assessments of LGUs are made
publicly available so local treasurers and assessors are
also accountable to the public.
!

INSPIRED INVESTOR
CONFIDENCE

Good governance reforms and the resilience of the

economy has put the spotlight on the Philippines as a
viable investment destination. The country achieved
investment grade status, recorded higher levels of
approved investments, improved its competitiveness
rankings, and hosted meetings attended by high-level
personalities representing top corporations, global
organizations, and governments.
!

IMPROVED
INVESTMENT GRADE
CREDIT RATINGS

After reversing nearly a decade of credit rating decline,

the country achieved investment grade from all three
major credit rating agencies for the first time in
Philippine history in 2013. This allows the government
and the private sector to borrow at cheaper rates,
lowering debt service and generating savings that can be
channeled to investments by the government and the
private sector.

On 08 May 2014, the country received another credit

rating upgrade from Standard & Poor’s, which affirmed
the continued improvement of the macroeconomic
environment and increased attractiveness of the country
as an investment destination. This prompted JP Morgan
to note that the Philippines has been the most upgraded
sovereign credit in the region in recent years. S&P
expressed optimism that gains in fiscal management,
and the enhanced investment environment will be
sustained even after this Administration. The
Philippines is one of four ASEAN Member States (along
with Singapore, Malaysia, and Thailand) rated
investment grade by all three major credit rating
agencies.
!

SUSTAINED FISCAL
STABILITY

In 2013, the deficit narrowed to P164.06 billion or 1.4

percent of GDP, below the 2.0 percent program and
lower by almost half of the P314.46 billion deficit in
2010. At the same time, national government debt was
well managed with its share to GDP recorded at 49.2
percent in 2013, down from 52.4 percent in 2010. In the
first five months of 2014, the national government
recorded a surplus of P8.51 billion as a result of the 12.2
percent growth in revenue collections.

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