Reform Agenda

A pearl buried inside a tightly-shut shell is practically worthless. Government information is a pearl, meant to be shared with the public in order to maximize its inherent value. The Transparency Seal, depicted by a pearl shining out of an open shell, is a symbol of a policy shift towards openness in access to government information.



  • CUSTOMS MODERNIZATION


    This bill will introduce amendments to harmonize with the Revised Kyoto Convention (RKC), specifically:

    a. new provision authorizing Customs to establish temporary storage prior to goods declaration which will provide express legal basis to the creation of special warehouses.
    b. period within which to file entry is 15 days extendible to another 15 days
    c. penalty on failure to pay correct taxes and duties fixed at 50% on deficiency on duties, taxes and other charges and 100% landed cost.

    Electronic System
    o Bureau required to apply Information Communications Technology (ICT) in its operations
    o the validity and enforceability of electronic documents, permits, licenses or certificates are recognized

    De minimis
    o threshold FOB (Free on Board) or FCA (Free Carrier) value of Five thousand pesos (Php 5,000.00), below which no duties and taxes shall be collected.
    o May be adjusted by the Secretary of Finance, in consultation with the Commissioner of Customs.

    Relief Consignment
    o Defined as goods donated to or leased to government institutions and accredited private entities for free distribution or temporary use of victims of calamities.
    o Exempted from duties and taxes

    Tools for Trade Facilitation
    o Concept of Authorized Economic Operator (AEO) as drafted by the WCO is adopted and entitled to minimal requirements for processing of goods
    o AEO refers to importers, exporters, customs brokers, forwarders, and other entities duly accredited by the Bureau based on international standards and national best practices.
    o self-certification system in determining the applicable rules of origin.

    Risk Management System
    o Incentives, such as deferred payment of duties and taxes, are granted to highly compliant and low risk importers and exporters, and to importations made by the government and its instrumentalities.

    Concept of Abandonment is redefined
    o Impliedly abandoned goods are not deemed property of the government. Bureau may sell impliedly abandoned goods and the proceeds of the sale shall be given to the person entitled to receive them, after deduction of any duty, tax and charges due on the goods.
    o Importer or owner of the goods may reclaim the abandoned goods within a period of thirty (30) days after the lapse of the period to file the declaration or to secure delivery, and upon payment of any taxes, duties or charges due on the goods.

    Disposition of property in customs custody
    o Option to donate the goods to another government agency, declare the same for official use of the Bureau, after approval of the Secretary of Finance, (even before public auction) or to dispose of the goods through a public sale.

    Advance Ruling
    o Allows an importer or exporter to file an application for advance rulings on issues involving tariff classification, valuation and rules of origin, before the goods arrive or are exported.

    Streamlined appeal procedures
    o Decisions made by a District Officer or Commissioner are no longer subject for reconsideration.
    o Remedy of the aggrieved party is to file an appeal with the Commissioner, Secretary of Finance or the Court of Tax Appeals, as the case may be.

    Inaction in cases for Automatic Review
    o Decisions which are adverse to the government are subject to automatic review by the Commissioner and/or by the Secretary of Finance.
    o the aggrieved party has the option to appeal the case before the Court of Tax Appeals.

    Abatement of Duty and Refunds
    o If less than Five thousand pesos (Php 5,000.00), no refund shall be allowed
    o May be changed by the Secretary of Finance, upon consultation with the Commissioner of Customs.

    Offenses and Penalties – increased penalties

  • Reform of Government-Owned and Controlled Corporations (GOCCs)


    Continued reliance on government subsidies amidst reports of excesses and financial mismanagement in the past prompted the creation of the Governance Commission for GOCCs (GCG) under RA 10149 or the GOCC Governance Act of 2011. The GCG serves as an oversight and policy-making body for GOCCs to ensure their financial viability and responsiveness to the needs of the public. This has resulted to total dividends and other remittances to yield P95.90 billion (averaging P27.40 billion a year) from 2011 to June 2014 alone, compared to a mere P81.54 billion (averaging P9.06 billion a year) from 2002 to 2010.

    The SSS pension system was also reformed to address the problem on unfunded liability and to respond to the clamor for higher benefits. In January 2014, the SSS has started the increase in contribution rate from 10.4 percent to 11 percent and in the maximum monthly salary credit from P15,000 to P16,000. These, together with the five-percent across-the-board pension increase, which the SSS is also set to implement, are expected to lower the SSS’ unfunded liabilities by P141 billion and increase its fund life from 2039 to 2043.

  • Reformed Revenue Collection Agencies


    Reforms in the revenue collection agencies have resulted in an improved tax effort from 12.1 percent in 2010 to 13.3 percent in 2013 or a P40 billion average annual increase in tax collections for the said period. This was achieved without imposing new taxes, except for reforms in the Sin Tax.

  • Customs ng Bayan


    To increase transparency and accountability, the BOC released never-before-published data, such as reports on import entries, to allow the public to better monitor proper duties and taxes that must be paid per product per entry. It revamped the Customs website (www.customs.gov.ph), launched the Customs ng Bayan website (www.dof.gov.ph/customsngbayan), and released the Customs dashboard in the Open Data website (data.gov.ph/infographics/commodity-import) to provide the public with useful Customs data, such as imports, trade activity reports, and advisories.

  • Increasing Tax Collection


    The DOF and BIR also introduced reforms to improve tax collection from self-employed individual taxpayers (SEITs). Of the estimated 1.8 million self-employed professionals registered with BIR in 2011, only 402,934 (22.4 percent) filed their income tax returns. A large number of these SEITs, including doctors, lawyers, accountants, and media professionals, paid under P60,000 in income tax in the period 2010–2012.

    The BIR prioritized the audit of the tax returns of self-employed professionals and sole proprietorships with annual income tax of less than P200,000. Furthermore, through the Tax Watch, the Administration mounted campaigns to promote transparency and advocate for the correct declaration and payment of taxes through television commercials and newspaper advertisements.

    Cases against tax evaders, smugglers, and erring government employees were also filed. The total number of cases filed against erring government officials under the Revenue Integrity Protection Services (RIPS), increased from only 5 cases in 2010 to 101 by June 2014. During the current administration, a total of 108 personalities have been charged, of which seventy-six (76) were charged at the Office of the Ombudsman, twenty-seven (27) at the Civil Service Commission, and five (5) were referred to the concerned agency for filing of charge.

    Under Run After the Smugglers (RATS), a total of 170 cases by June 2014 have been filed against smugglers, with total tax dues amounting to P26 billion. This is a marked improvement from 2010, where only 18 cases have been filed. Under Run After Tax Evaders (RATE), total tax evasion cases filed have increased from only 23 cases in 2010 to 257 by June 2014, with total tax dues of P51.72 billion.

  • Reforming the Bureau of Customs (BOC)


    Measures to respond to the President’s call for change in the BOC include personnel movements and the appointment of new officials and staff, including a new Commissioner and six new Deputy Commissioners. New offices under the DOF were also created, i.e., the Office of Revenue Agency Modernization (ORAM) and the Customs Policy Research Office (CPRO), which are tasked to review current systems in revenue-generating agencies to increase collections and modernize operations.

    This has resulted in the increase of cash collections to P265.79 billion for the period of January to September 2014, an 18% percent improvement from the collections in the same period in 2013. Recently, the BOC posted revenues of P32.87-Billion in September 2014, the highest-ever single-month collection of the agency, on the back of continuous improvements in valuation and an increase in the volume of imported goods. September’s collection is up 27.2% versus the same month last year. Improvements in the Bureau’s system for the valuation of goods, coupled with enhanced enforcement and apprehension efforts, yielded an 18.23% hike in the customs value for imported products and a 19% increase in the duties and taxes collected, offsetting a slight decrease in the average tariff rate.

    Other reforms include a return-to-mother-units order for BOC personnel to return to their permanent plantilla positions, the rotation of Intelligence Group (IG) personnel in BOC and DOF offices, and the transfer of post-entry audit functions of the BOC to the DOF.

  • Increasing Tax Collection


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  • Pera ng Bayan


    Through the Pera ng Bayan website (www.perangbayan.com), citizens are empowered to report and track updates on cases of tax evaders, smugglers, and erring revenue personnel of the DOF. Since its launch in 2010, the website has received 2,629 citizen reports, 82 of which had been resolved and closed, 1,975 were forwarded to the concerned agencies for appropriate action, while the remaining 572 were archived for lack of substantial information.

  • Iskor ng ‘yong Bayan


    The Department of Finance-Bureau of Local Government Finance (DOF-BLGF) launched the Local Government Unit (LGU) Fiscal Sustainability Scorecard this 2014 as a regular fiscal and financial management performance assessment of all LGUs. Using the power of data to drive performance, the scorecard is published online via Iskor ng ‘yong Bayan, as part of the DOF’s Transparency Initiative.

    The scorecard takes into account key results areas of local revenue generation capacity, local collection growth, expenditure management, updating of Schedule of Market Values, and reportorial compliance of treasurers and assessors with the DOF and BLGF. These regular performance assessments of LGUs are made publicly available so local treasurers and assessors are also accountable to the public.

  • Inspired Investor Confidence


    Good governance reforms and the resilience of the economy has put the spotlight on the Philippines as a viable investment destination. The country achieved investment grade status, recorded higher levels of approved investments, improved its competitiveness rankings, and hosted meetings attended by high-level personalities representing top corporations, global organizations, and governments.

  • Improved Investment Grade Credit Ratings


    After reversing nearly a decade of credit rating decline, the country achieved investment grade from all three major credit rating agencies for the first time in Philippine history in 2013. This allows the government and the private sector to borrow at cheaper rates, lowering debt service and generating savings that can be channeled to investments by the government and the private sector.

    On 08 May 2014, the country received another credit rating upgrade from Standard & Poor’s, which affirmed the continued improvement of the macroeconomic environment and increased attractiveness of the country as an investment destination. This prompted JP Morgan to note that the Philippines has been the most upgraded sovereign credit in the region in recent years. S&P expressed optimism that gains in fiscal management, and the enhanced investment environment will be sustained even after this Administration. The Philippines is one of four ASEAN Member States (along with Singapore, Malaysia, and Thailand) rated investment grade by all three major credit rating agencies.

  • Sustained Fiscal Stability


    In 2013, the deficit narrowed to P164.06 billion or 1.4 percent of GDP, below the 2.0 percent program and lower by almost half of the P314.46 billion deficit in 2010. At the same time, national government debt was well managed with its share to GDP recorded at 49.2 percent in 2013, down from 52.4 percent in 2010. In the first five months of 2014, the national government recorded a surplus of P8.51 billion as a result of the 12.2 percent growth in revenue collections.



Department of Finance