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Animal feed, cooking oil tax differential suspected of encouraging palm oil smuggling


THE ZERO-TARIFF status of palm oil used in animal feed is believed to be a factor in encouraging smuggling by importers, who instead use the commodity for making cooking oil, the Department of Agriculture (DA) said.

“We have been investigating the alleged smuggling of palm oil as animal feed (which is instead) processed as cooking oil for human consumption… Palm oil as animal feed is imposed zero tariff and is not classified as a product to be imposed a 12% e-VAT,” the DA said in a statement.

During a hearing of the House Committee on Ways and Means on Tuesday, Albay Representative Jose Ma. Clemente S. Salceda estimated foregone revenue as a result of palm oil smuggling at about P45 billion. The mechanism for tariff evasion is the misdeclaration of palm oil for use in animal feeds, a trade which he said is worth P300 billion.

“As the DA has no police power to apprehend and prosecute suspected smugglers, it sought the assistance of the Anti-Red Tape Authority (ARTA) which conducted an investigation in January 2022,” the DA added.

The DA said there were discrepancies in the volume certified by the Bureau of Animal Industry (BAI), which processes import permits, and the Bureau of Customs (BoC), which tracks the volume of landed shipments.

“BAI’s data on volume certified are much higher than those in the accounts of the BoC,” the DA said.

In 2020, the BoC tallied imports of 55.49 million kilograms, while the BAI’s count was 40.63 million kgs.

The DA said the steps it has taken to address possible smuggling include the monitoring of sanitary and phytosanitary import clearances (SPSICs). — Luisa Maria Jacinta C. Jocson

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