PCAG and PDP

World Trade Organization's Trade Facilitation Agreement (Article 7.5)

mandates that member countries adopt risk-based post clearance audit systems to expedite cargo release while maintaining compliance standards.

Revised Kyoto Convention

establishes that customs control systems must include audit-based controls, defining them as measures through which customs authorities verify the accuracy and authenticity of declarations by examining relevant books, records, business systems, and commercial data.

PCA

is to assure that Customs declarations have been completed in compliance with Customs legal requirements as well as other requirements under any other law applicable in respect of import or export, via examination of a traders’ systems, accounting and other business records and premises.

internal audit

which is a mechanism to verify and review, either conducted by a company to review its own internal procedures or by customs to review customs’ own internal rules and procedures.

Executive Order (EO) No, 160 (s. 2003)

created the Post Entry Audit Group (PEAG) of the Bureau of Customs (BOC), under the direct supervision and control of the Commissioner of Customs, to perform the post clearance audit functions of the BOC

EO No. 155 (s. 2013)

transferred the functions of the BOC-PEAG to the Fiscal Intelligence Unit (FIU) of the Department of Finance (DOF)

EO 46-2017 Section 1

What EO is the reversion of the Post Clearance Audit Function to the Bureau of Customs. The post clearance audit function shall be transferred from the DOF-FIU to the BOC. For this purpose, the operations of the BOC-PEAG are hereby revived and such group is renamed as the Post Clearance Audit Group (PCAG) under the supervision of the Commissioner of Customs

(1) Within one (1) year after payment of the duties, upon statement of error in conformity with Section 912 of this Act, as approved by the District Collector;
(2) Within fifteen (15) days after such payment, upon request for reappraisal or reclassification addressed to the Commissioner by the District Collector, if the appraisal or classification is deemed to be low;
3) Upon request for reappraisal and/or reclassification, in the form of a timely protest addressed to the District Collector by the interested party if the latter should be dissatisfied with the appraisal or return; or
(4) Upon demand by the Commissioner after the completion of compliance audit in accordance with the provisions of this Act.

SECTION 427. Readjustment of Appraisal, Classification or Return. — Such appraisal, classification or return, as finally passed upon and approved or modified by the District Collector, shall not be altered or modified in any manner, except:

Prior disclosure program

Shall refer to a program based on international best customs practice, authorizing the commissioner of customs to accept, as a potential mitigating factor, prior disclosure by importers of errors and omissions in goods declaration resulting in deficiency in duties and taxes on past importations. It may also include disclosures on royalties and other proceeds of any subsequent resale, disposal or use of the imported goods that accrues directly or indirectly to the seller.

Post clearance audit group (PCAG)

Shall refer to an office created under executive order no. 160 s. 2003, as amended by executive order no. 46, s. 2017, mandated to conduct audit of importers, locators, and all parties engaged in customs clearance and processing.

Reconsideration of audit findings

Shall refer to a plea for the re-evaluation of the audit findings on the basis of existing records without need of additional evidence. It may involve both a question of fact or of law or both

Reinvestigation of audit findings

shall refer to a plea for the reevaluation of the audit findings on the basis of newly discovered or additional evidence intended to be presented in the reinvestigation. It may also involve a question of fact or of law or both.

three (3) years; customs clearance

Within_________ from the date of final payment of duties and taxes or _______, as the case may be, the Bureau may conduct an audit examination, inspection, verification, and investigation of records pertaining to any goods declaration, which shall include statements, declarations, documents, and electronically generated or machine readable data, for the purpose of ascertaining the correctness of the goods declaration and determining the liability of the importer for duties, taxes and other charges, including any fine or penalty, to ensure compliance with this Act.

PCAG-TIRAO

Review available trade data to determine compliance markers of industry (or other means of data groupings) and set benchmarks for the purpose of developing an audit program for the Commissioner's approval;

PCAG-TIRAO

In coordination with the Management Information System and Technology Group (MISTG), They develop a computer-aided risk based management system, the parameters of which are to be based on objective and quantifiable data, subject to the approval of the Secretary of Finance upon recommendation of the Commissioner, for use in the profiling and identification of potential priority audit candidates based on the approved audit program;

PCAG-TIRAO

Recommend for approval of the Commissioner of Customs the potential priority audit candidates;

PCAG-TIRAO

Develop policies, guidelines, manuals and standard operating procedures relating to the audit process;

PCAG-TIRAO

They perform such other functions as may be necessary or incidental in carrying into effect the provisions of this Order, and as may be provided by law

PCAG-CAO

Prepare the audit work plan, scope and approach for the approved priority audit candidates;

PCAG-CAO

Conduct the audit examination, inspection, verification or investigation of records subject to applicable laws, approved policies, guidelines, manuals and standard operating procedures;

PCAG-CAO

Prepare and submit the required reports on audit findings and recommendations to the Commissioner of Customs for approval;

PCAG-CAO

They establish and maintain a customs compliance program; and Develop policies, guidelines, manuals and standard operating procedures relating to the audit process; and

PCAG-CAO

They perform such other functions as may be necessary or incidental in carrying into effect the provisions of this Order, and as may be provided by law

a. Relative magnitude of customs revenue to be generated from the firm;

b. The rates of duties of the firm's imports;

c. The compliance track records of the firm;

d. An assessment of the risk to revenue of the firm's import activities;

e. The compliance level of a trade sector; and

f. Non-renewal of an Importer's customs accreditation.

Post clearance audit of Importers shall be undertaken when firms are selected based on any but not limited to the following criteria:

within 30 calendar days from the date of issuance

Validity of ANL

Assistant Commissioner for another 30 days

Who revalidates the ANL

audit plan

The audit team shall prepare an _______ to fit the circumstances of the audited company and meet the specific audit objectives in the most expeditious and transparent manner.

60 calendar days

The audit team shall commence the audit proper not later than ________ from the service of the ANL.

the audit team actually conducts examination, inspection, verification and investigation

The audit proper shall take place when _____

120 calendar days per year

The audit shall be completed within _____________ of audit period from the date the Importer receives the ANL.

PCAG-CRF

shall be deemed as proof that the importer or entity subject of audit has been found to have no deficiency in duties, taxes and other charges and that the importer is compliant with its obligation to keep records as required by law.

status report'; Assistant Commissioner

If the audit team would be unable to submit the FAR within the required period, a _______ must be submitted to the Commissioner through the _________

five (5) calendar days prior to expiration

The status report should be submitted not later than ____

thirty (30) calendar days.

After the status report, the audit shall be completed not exceeding ____

five (5) calendar days from receipt of the Demand Letter

Service of Demand Letter for Payment of Deficiency Within ____

fifteen (15) calendar days from receipt

The demand to pay is not later than

Commissioner; fifteen (15) days

The Importer adversely affected by the deficiency assessment issued by the PCAG and approved by the Commissioner may file a request for reconsideration or reinvestigation to the ______ within ______ from receipt of the Demand Letter.

thirty (30) days

For requests for reinvestigation, the Importer shall submit all relevant supporting documents in support thereof within ___________ from the date of filing

sixty (60) calendar days

The Bureau, through the PCAG, shall have _______ from submission of complete documents to resolve the request for reinvestigation.

thirty (30) calendar days

The Bureau shall furnish the DOF and the BIR a copy of the final audit results within _________ from the issuance thereof including the amount paid by the Importer.

quarterly status

the Bureau shall provide a _______ report to the DOF of all ANL's issued and audits conducted.

deficiency in duties and taxes due plus legal interest as provided in Section 7.; (D+LI)

For a PDP applicant who has not yet received an ANL, payment of the ______

deficiency in duties and taxes due plus a penalty of ten percent (10%) of the basic deficiency and legal interest as provided in Section 7.; or (D+10%BD+LI)

For a PDP applicant who has received an ANL and availed of the program pursuant to Section 6.1.2, payment of the ______

thirty (30) calendar days

For a PDP applicant who has made disclosures on royalties and other proceeds of any subsequent resale, disposal, or use of the imported goods that accrues directly or indirectly to the seller, or on any subsequent adjustment to the price paid or payable, payment of the deficiency in duties and taxes due without penalty and interest, provided that the applicant files for PDP within _______ from the date of payment or accrual of subsequent proceeds to the seller

PCAG

shall verify the completeness of the PDP application form including payment made and other supporting documents.

ninety (90) calendar days

The verification and approval or denial of the PDP application shall be completed within the period of _______ from the submission of the complete PDP documents.

thirty (30) days

When the request for reconsideration or reinvestigation is denied by the Commissioner, in whole or in part, the Importer may appeal such denial to the Court of Tax Appeals (CTA) within____ from receipt of the adverse ruling or decision of the Commissioner.

constructive distraint

It is where they get the property of a delinquent Importer who, in the opinion of the Commissioner, is retiring from any business subject to duty and tax, or is intending to leave the Philippines, or to remove the property therefrom, or to hide or conceal the property, or to perform any act tending to obstruct the proceedings for collecting the duty and tax due or which may be due.

Ten Thousand Pesos (Php10,000.00).

the remedies of distraint and levy shall not be allowed when the amount of duties and taxes, excluding interest and penalties, involved is not more than ______

1. Suspension or cancellation of accreditation as Importer or Broker with the Bureau;
2. Surcharge of twenty percent (20%) on the dutiable value of the goods which is the subject of the importation for which no records were kept and maintained;
3. Hold delivery or release of subsequent imported articles to answer for the fine and any revised assessment;
4. Criminal prosecution punishable with imprisonment of not less than three (3) years and one (1) day but not more than six (6) years, and/or. a fine of One Million Pesos (PhPl,000,000.00); and
5. Waiver of the right to contest the results of the audit based on records kept by the Bureau.

The following penalties are imposable to those who fail to keep and maintain the prescribed records:

1. Suspension or cancellation of accreditation as an Importer or Broker with the Bureau;

2. Punishment for contempt, for contumacy or for refusal to provide access, from the proper court having criminal jurisdiction over the matter;

3. Re-assessment of the importations subject of audit, the declared transaction value being presumed inaccurate applying therein the correct valuation method, tariff classification, quantity and/or country of origin, as applicable, based on available data;

4. Surcharge of twenty percent (20%) on the dutiable value of the goods which is the subject of the importation for which no records were kept and maintained;

5. Hold delivery or release of subsequent imported articles to answer for the fine and any revised assessment; and

6. Criminal prosecution punishable with imprisonment of not less than three (3) years and one (1) day but not more than six (6) years, and/or a fine of One Million Pesos (PhPl,000,000.00).

The following penalties are imposable to those who deny the authorized customs officer full and free access to the records required to be kept and maintained:

Negligence and Fraud

(2) degrees of culpability

125% of the revenue loss

Fine for negligence in PCAG

125% of the revenue loss

Fine for simple negligence in PCAG

6 times of revenue loss and/or imprisonment of not less than two (2) years but not more than eight (8) years.

Fine for fraud in PCAG

1. Articles of incorporation;

2.The company structure, which shall include but not be limited to:

a. Incorporators and board of directors;

b. Key officers;

c. Organizational structure;

3. Key importations;

4. Importation privileges enjoyed;

5. Record of violations and penalties;

a. Infringements committed;

b. Instances of prohibited importation;

c. Instances of smuggling;

d. Instances of technical smuggling; - Misdeclaration - Misclassification - Undervaluation

6. Risk categories;

7. Audit results; and

8. Other information and documents from the various offices of the Bureau that may be necessary in order to facilitate the conduct of post clearance audit.

RECORDS TO BE KEPT BY THE BUREAU