BDB Laws Tax Law for Business appears in the opinion section of Business Mirror every Thursday.

Importer accreditation process

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 rulesRevenue Memorandum Order (RMO) 102014 and Customs Memorandum Order (CMO) 4-2014, respectivelyto 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 332014 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 ones 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
atpierremartin.reyes@bdblaw.com.ph or call (632) 403-2001, local 311.