EARLY this year, the Department of Finance issued Department Order 012-2014, introducing a two-phase accreditation process, in which importers must first secure a Bureau of Internal Revenue (BIR) Importer Clearance Certificate (BIR-ICC) or BIR Customs Broker Clearance Certificate (BIR-BCC), and present the same to the Bureau of Customs (BOC) for accreditation. The BIR and BOC then issued their respective rules—Revenue Memorandum Order (RMO) 10-2014 and Customs Memorandum Order (CMO) 4-2014, respectively—to implement the same. Months have passed, and the process continues to be mired in criticism, confusion and delays, leading to warnings of its adverse impact on business.
Under RMO 10-2014, importers must meet all of these criteria: 1) existence of a head office or principal place of business; 2) full compliance with BIR primary and secondary registration; 3) no “stop-filer” cases, or timely filing of returns and payments of tax; 4) no record of any account receivable and delinquent account (AR/ DA); 5) no record of any pending tax-related criminal case; 6) no unresolved issue arising from discrepancies in declared income or expenses resulting from third party information; 7) not tagged as a “cannot be located” taxpayer; 8) no material misrepresentation in submitted accreditation documents; 9) regular use of the electronic filing and payment system in filing all requisite tax returns and in the payment of taxes or regular use of the so-called Inter-Active Forms System in filing the tax returns and payment of taxes; and 10) regular submission of all information returns.
Emphasis must be made regarding the fourth and sixth criteria. The AR/ DA in the fourth criterion is defined as an outstanding tax liability arising from an assessment that has been established to be final, executory and demandable. Thus, for as long as the importer has outstanding tax liabilities that are already final and executory, it will never be able to secure accreditation, unless the same is settled. Regarding the sixth criterion, those who were issued letter notices showing discrepancies will not be issued ICCs, unless they resolve the discrepancy issues. Between not being able to import and pay taxes, applicants are forced to choose the latter.
The application for ICC shall be filed with the Accounts Receivable Monitoring Division (ARMD). While a direct, personal appearance was previously required, this was amended by RMO 33- 2014 to allow individual applicants with a severe medical condition to be represented by an attorney-in-fact. The RMO also clarified that, as to non-individual applicants, the authorized officer refers to any of the officers listed in its latest General Information Sheet (GIS) filed with the Securities and Exchange Commission (SEC). If the person authorized is not one of those indicated in the GIS, a sworn statement that such person shall be jointly or severally liable for problems arising from the application must be submitted.
As enumerated in RMO 10-2014, the application must be accompanied by numerous supporting documents, some of which require application to and lengthy processing by other government agencies, such as the SEC, the Philippine Economic Zone Authority and the Board of Investments. If the documents are incomplete, the ARMD shall not accept the application.
Assuming that all the necessary documents are secured, the ARMD shall verify if the applicant meets all the criteria. If all are met, the ARMD will issue the ICC. This shall be valid for three years. Those who fail to satisfy any of the criteria shall be issued a Notice of Denial of Application for Accreditation as an Importer/Broker. This, however, is without prejudice to a refiling when the reasons for denial no longer exist.
Thereafter, pursuant to CMO 4-2014, the ICC is submitted, along with other supporting documents, to the Account Management Office (AMO) of the BOC. The AMO shall either approve or deny the accreditation. Importers should note that, aside from revocation and cancellation by the BOC, their accreditation with the bureau shall be invalidated upon the expiration, revocation or cancellation of the BIR-ICC or BIR-BCC. The implication here is that, to maintain one’s accreditation, the importer must be compliant with both BIR and BOC rules, which certainly should be the case.
The underlying purpose of these rules is to ensure that importers are engaged in a legitimate business. It must be said, however, that a balance must be struck between ensuring compliance with the law and promoting a regulatory environment conducive for business. Months have passed since its introduction, and many will agree that the accreditation process has become more cumbersome and drawn out. The process must be simplified and the issues arising from its implementation addressed. The government should facilitate trade, not impede it.
The author is a junior associate of the Du-Baladad and Associates Law Offices, a member-firm of the World Tax Services Alliance.
The article is for general information only, and neither not intended nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported, therefore, by a professional study or advice. For comments or questions about the article, send an e-mail to the author at pierremartin.reyes@bdblaw.com.ph or call (632) 403-2001, local 311.