The government may have lost some P20 M in import duty and value added tax from the entry of undervalued wheat flour from Turkey in 2009 and the first two months of 2010, the Philippine Association of Flour Millers (PAFMIL) said.

PAFMIL executive director Ric Pinca said that instead of declaring an import value of $300 per metric ton CNF (cost and freight), which is the value reference of the Bureau of Customs (BoC), these imports were declared for as low as $96 FOB (free on board).

"Undervaluation occurs when an imported product is declared to cost less than it's actual value to reduce the amount of import duty and other taxes,” Pinca said.

Import figures collated by PAFMIL show that of the over 86,000 MT of flour imported from Turkey in 2009, some 19,000 MT are undervalued causing the government to lose around P16.9M in revenues.

From January to February this year, 6,000 MT of the 13,695 MT importation were undervalued, with government losing another P3 M in uncollected import duty and value added tax, Pinca alleged.

These losses do not include those incurred when the imported commodity is "misdeclared" as something of lesser value and with less import duty, such as soybean meal which has zero duty and no value added tax.

Wheat flour has a 7 percent import duty pending the effectivity of the EO extending for another six months the zero duty privilege for wheat imports. Aside from the import duty, wheat imports are also slapped with a 12 percent value added tax.

“Undervaluation and misdeclaration are forms of technical smuggling,” Pinca stressed.

“These occur right at the entry ports such as the Port of Manila and the Manila International Container Port (MICP), under the very noses of Bureau of Customs (BoC) officials who are supposed to prevent such occurences,” Pinca pointed out.

“The local wheat flour milling industry cannot compete with smuggled competition that does not pay the right duties and tax,” he said.