PHILIPPINE CUSTOMS POST CLEARANCE AUDIT & PRIOR DISCLOSURE PROGRAM QUESTIONS WELL
ANSWERED LATEST UPDATE 2026
What does CAO No. DI-2019 implement? - Answers The post clearance audit functions of the Bureau
and related provisions of the Customs Modernization and Tariff Act (CMTA).
What is the scope of the Customs Administrative Order? - Answers It covers the post clearance audit
of records required to be kept by importers, customs brokers, agents, and locators.
What is the objective of the post clearance audit system? - Answers To prescribe principles,
purposes, and methodology for audits, recordkeeping requirements, and the audit period.
What does the Prior Disclosure Program (PDP) aim to promote? - Answers Compliance with customs
laws by allowing importers to voluntarily disclose errors in goods declarations and payments.
What is the role of a Customs Broker? - Answers A person who holds a valid Certificate of
Registration or Professional Identification Card issued by the Professional Regulatory Board.
Define Customs Clearance. - Answers The completion of customs formalities necessary for goods to
enter for consumption, warehousing, transit, or export.
What is Customs Clearance for Consumption Entries? - Answers The procedure for making final
payment of duties and taxes at the port of entry with legal permit for withdrawal.
What is Customs Clearance for Warehousing Entries? - Answers The procedure for filing goods
declaration and securing duties and taxes to be paid at the point of entry.
What does Customs Clearance for Transit Entries entail? - Answers The customs procedure allowing
goods to be transported under customs control from one office to another.
What is the definition of Fraud in customs context? - Answers The commission of acts resulting in
false statements to reduce taxes and duties or avoid compliance with regulations.
What are Free Zones? - Answers Special economic zones registered with the Philippine Economic
Zone Authority (PEZA) for specific economic activities.
Who is considered an Importer? - Answers A person or entity importing goods into the Philippines or
withdrawing admitted goods from Free Zones.
What is an Inadvertent Error? - Answers A mechanical, electronic, or clerical error committed
unintentionally by the importer despite internal controls.
What are Locators in customs terminology? - Answers Persons authorized to bring imported goods
into Free Zones.
What does Misclassification refer to? - Answers The use of insufficient or wrong descriptions of goods
or erroneous tariff headings leading to duty deficiencies.
What is the purpose of the Customs Modernization and Tariff Act (CMTA)? - Answers To modernize
customs procedures and enhance revenue collection while ensuring compliance with regulations.
What is the significance of Section 1003 of the CMTA? - Answers It outlines the recordkeeping
requirements for importers and customs stakeholders.
What are the adverse consequences of non-compliance with customs rules? - Answers Potential
penalties, fines, and increased scrutiny from customs authorities.
What is the goal of strengthening customs controls? - Answers To facilitate trade and ensure
compliance from the border to the back-end of the cargo clearance process.
What does the term 'beneficial owner' mean in customs? - Answers A person who controls the
material terms of the importation or is related to the importer in a significant way.
What is the legal basis for the establishment of Free Zones? - Answers Various Republic Acts,
including RA No. 7916, RA No. 7227, and others that govern special economic zones.
What is the role of the Bureau of Customs in the Philippines? - Answers To oversee customs
operations, enforce laws, and facilitate trade while collecting revenue.
What is the significance of the term 'true owner' in customs? - Answers It refers to the actual party
benefiting from the importation of goods, often linked to the importer.
What does the term 'misdeclaration' imply? - Answers Providing incorrect information regarding the
nature or value of imported goods.
What is the importance of document retention for importers? - Answers To comply with legal
obligations and facilitate audits by customs authorities.
What is the expected outcome of the PDP? - Answers To generate additional customs revenues with
minimal administrative costs.
What does 'informed compliance' mean in customs operations? - Answers Ensuring that importers
understand and adhere to customs laws and regulations.
, What is a misdeclaration? - Answers A false, untruthful, erroneous, or inaccurate declaration
regarding the quantity, quality, description, weight, or measurement of goods, resulting in a
deficiency in duties and taxes.
Define negligence in the context of customs. - Answers Failure to exercise reasonable care and
competence in ensuring that a statement made is correct, leading to a deficiency in taxes and duties
paid.
What is the principal place of business? - Answers The headquarters that holds the senior executive
of a firm, where the corporation's activities are directed and where records are kept.
What is the purpose of the Prior Disclosure Program? - Answers To allow the Commissioner of
Customs to accept prior disclosures by importers of errors and omissions in goods declarations as a
mitigating factor for deficiencies in duties and taxes.
What does the Post Clearance Audit Group (PCAG) do? - Answers Conducts audits of importers,
locators, and parties engaged in customs clearance and processing.
What is a reconsideration of audit findings? - Answers A plea for re-evaluation of audit findings based
on existing records without additional evidence.
What is a reinvestigation of audit findings? - Answers A plea for re-evaluation of audit findings based
on newly discovered or additional evidence.
What is undervaluation in customs terms? - Answers A situation where the declared value fails to
fully disclose the actual price paid or payable, resulting in discrepancies in duties and taxes.
How long can the Bureau conduct an audit examination of records? - Answers Within three years
from the date of final payment of duties and taxes or Customs Clearance.
What is the period of limitation for customs assessments? - Answers Three years from the date of
final payment of duties and taxes, or upon completion of the post clearance audit, in the absence of
fraud.
Who is required to maintain records according to customs regulations? - Answers All importers,
customs brokers, and other parties engaged in customs clearance and processing.
What is the purpose of keeping records in customs? - Answers To confirm the truthfulness and
accuracy of goods declarations, check system integrity, determine compliance levels, and serve as a
basis for sanctions for non-compliance.
For how long must importers keep records related to customs? - Answers For a period of three years
from the date of final payment of duties and taxes or Customs Clearance.
What types of documentation must be kept by importers? - Answers Documentation on entity
organization, orders and purchases, and financial statements, among others.
What is included in the documentation on entity organization? - Answers Articles of incorporation,
list of incorporators, organizational structure, and management personnel involved in import
processing.
What financial documents must importers maintain? - Answers Audited financial statements and tax
returns for various taxes including income tax and value-added tax.
What records must customs brokers keep? - Answers Manual and/or electronic copies of records
covering transactions they handle.
What is the significance of the General Information Sheet in customs documentation? - Answers It
includes information on the parent company, subsidiaries, and affiliates, and their capital
composition.
What must locators keep records of? - Answers All transactions and activities related to the
admission and withdrawal of goods from Free Zones into the customs territory.
What is the role of the Bureau in recordkeeping compliance? - Answers To determine the level of
compliance of importers and other parties with laws and regulations enforced by the Bureau.
What happens if there is non-compliance in recordkeeping? - Answers It may lead to the imposition
of sanctions for non-compliance with regulatory obligations.
What does 'audit and examination of records' entail? - Answers It includes inspection, verification,
and investigation of records pertaining to goods declarations to ascertain correctness.
What is the consequence of fraud in customs assessments? - Answers The assessment may not be
conclusive, and the Bureau can extend the period for audits beyond three years.
What is the significance of keeping accurate records in customs? - Answers Accurate records help
ensure compliance with customs regulations and facilitate audits and assessments.
What are the implications of errors in goods declarations? - Answers Errors can lead to deficiencies in
duties and taxes, potentially resulting in penalties or sanctions.
ANSWERED LATEST UPDATE 2026
What does CAO No. DI-2019 implement? - Answers The post clearance audit functions of the Bureau
and related provisions of the Customs Modernization and Tariff Act (CMTA).
What is the scope of the Customs Administrative Order? - Answers It covers the post clearance audit
of records required to be kept by importers, customs brokers, agents, and locators.
What is the objective of the post clearance audit system? - Answers To prescribe principles,
purposes, and methodology for audits, recordkeeping requirements, and the audit period.
What does the Prior Disclosure Program (PDP) aim to promote? - Answers Compliance with customs
laws by allowing importers to voluntarily disclose errors in goods declarations and payments.
What is the role of a Customs Broker? - Answers A person who holds a valid Certificate of
Registration or Professional Identification Card issued by the Professional Regulatory Board.
Define Customs Clearance. - Answers The completion of customs formalities necessary for goods to
enter for consumption, warehousing, transit, or export.
What is Customs Clearance for Consumption Entries? - Answers The procedure for making final
payment of duties and taxes at the port of entry with legal permit for withdrawal.
What is Customs Clearance for Warehousing Entries? - Answers The procedure for filing goods
declaration and securing duties and taxes to be paid at the point of entry.
What does Customs Clearance for Transit Entries entail? - Answers The customs procedure allowing
goods to be transported under customs control from one office to another.
What is the definition of Fraud in customs context? - Answers The commission of acts resulting in
false statements to reduce taxes and duties or avoid compliance with regulations.
What are Free Zones? - Answers Special economic zones registered with the Philippine Economic
Zone Authority (PEZA) for specific economic activities.
Who is considered an Importer? - Answers A person or entity importing goods into the Philippines or
withdrawing admitted goods from Free Zones.
What is an Inadvertent Error? - Answers A mechanical, electronic, or clerical error committed
unintentionally by the importer despite internal controls.
What are Locators in customs terminology? - Answers Persons authorized to bring imported goods
into Free Zones.
What does Misclassification refer to? - Answers The use of insufficient or wrong descriptions of goods
or erroneous tariff headings leading to duty deficiencies.
What is the purpose of the Customs Modernization and Tariff Act (CMTA)? - Answers To modernize
customs procedures and enhance revenue collection while ensuring compliance with regulations.
What is the significance of Section 1003 of the CMTA? - Answers It outlines the recordkeeping
requirements for importers and customs stakeholders.
What are the adverse consequences of non-compliance with customs rules? - Answers Potential
penalties, fines, and increased scrutiny from customs authorities.
What is the goal of strengthening customs controls? - Answers To facilitate trade and ensure
compliance from the border to the back-end of the cargo clearance process.
What does the term 'beneficial owner' mean in customs? - Answers A person who controls the
material terms of the importation or is related to the importer in a significant way.
What is the legal basis for the establishment of Free Zones? - Answers Various Republic Acts,
including RA No. 7916, RA No. 7227, and others that govern special economic zones.
What is the role of the Bureau of Customs in the Philippines? - Answers To oversee customs
operations, enforce laws, and facilitate trade while collecting revenue.
What is the significance of the term 'true owner' in customs? - Answers It refers to the actual party
benefiting from the importation of goods, often linked to the importer.
What does the term 'misdeclaration' imply? - Answers Providing incorrect information regarding the
nature or value of imported goods.
What is the importance of document retention for importers? - Answers To comply with legal
obligations and facilitate audits by customs authorities.
What is the expected outcome of the PDP? - Answers To generate additional customs revenues with
minimal administrative costs.
What does 'informed compliance' mean in customs operations? - Answers Ensuring that importers
understand and adhere to customs laws and regulations.
, What is a misdeclaration? - Answers A false, untruthful, erroneous, or inaccurate declaration
regarding the quantity, quality, description, weight, or measurement of goods, resulting in a
deficiency in duties and taxes.
Define negligence in the context of customs. - Answers Failure to exercise reasonable care and
competence in ensuring that a statement made is correct, leading to a deficiency in taxes and duties
paid.
What is the principal place of business? - Answers The headquarters that holds the senior executive
of a firm, where the corporation's activities are directed and where records are kept.
What is the purpose of the Prior Disclosure Program? - Answers To allow the Commissioner of
Customs to accept prior disclosures by importers of errors and omissions in goods declarations as a
mitigating factor for deficiencies in duties and taxes.
What does the Post Clearance Audit Group (PCAG) do? - Answers Conducts audits of importers,
locators, and parties engaged in customs clearance and processing.
What is a reconsideration of audit findings? - Answers A plea for re-evaluation of audit findings based
on existing records without additional evidence.
What is a reinvestigation of audit findings? - Answers A plea for re-evaluation of audit findings based
on newly discovered or additional evidence.
What is undervaluation in customs terms? - Answers A situation where the declared value fails to
fully disclose the actual price paid or payable, resulting in discrepancies in duties and taxes.
How long can the Bureau conduct an audit examination of records? - Answers Within three years
from the date of final payment of duties and taxes or Customs Clearance.
What is the period of limitation for customs assessments? - Answers Three years from the date of
final payment of duties and taxes, or upon completion of the post clearance audit, in the absence of
fraud.
Who is required to maintain records according to customs regulations? - Answers All importers,
customs brokers, and other parties engaged in customs clearance and processing.
What is the purpose of keeping records in customs? - Answers To confirm the truthfulness and
accuracy of goods declarations, check system integrity, determine compliance levels, and serve as a
basis for sanctions for non-compliance.
For how long must importers keep records related to customs? - Answers For a period of three years
from the date of final payment of duties and taxes or Customs Clearance.
What types of documentation must be kept by importers? - Answers Documentation on entity
organization, orders and purchases, and financial statements, among others.
What is included in the documentation on entity organization? - Answers Articles of incorporation,
list of incorporators, organizational structure, and management personnel involved in import
processing.
What financial documents must importers maintain? - Answers Audited financial statements and tax
returns for various taxes including income tax and value-added tax.
What records must customs brokers keep? - Answers Manual and/or electronic copies of records
covering transactions they handle.
What is the significance of the General Information Sheet in customs documentation? - Answers It
includes information on the parent company, subsidiaries, and affiliates, and their capital
composition.
What must locators keep records of? - Answers All transactions and activities related to the
admission and withdrawal of goods from Free Zones into the customs territory.
What is the role of the Bureau in recordkeeping compliance? - Answers To determine the level of
compliance of importers and other parties with laws and regulations enforced by the Bureau.
What happens if there is non-compliance in recordkeeping? - Answers It may lead to the imposition
of sanctions for non-compliance with regulatory obligations.
What does 'audit and examination of records' entail? - Answers It includes inspection, verification,
and investigation of records pertaining to goods declarations to ascertain correctness.
What is the consequence of fraud in customs assessments? - Answers The assessment may not be
conclusive, and the Bureau can extend the period for audits beyond three years.
What is the significance of keeping accurate records in customs? - Answers Accurate records help
ensure compliance with customs regulations and facilitate audits and assessments.
What are the implications of errors in goods declarations? - Answers Errors can lead to deficiencies in
duties and taxes, potentially resulting in penalties or sanctions.
