In recent years e-commerce has grown exponentially, with many offshore purchases now done through online sites. Unfortunately, first-time importers have encountered difficulties when clearing their shipments through customs, resulting in delays and additional costs. In fact, warehouses at NAIA are full of abandoned and unclaimed packages and shipments. We have outlined below answers to many of the queries that we have encountered through the years.
Are all importations subject to duty and VAT? Excise Tax? With regard to duty and VAT, all importations are generally taxable except in the following cases:
- When there is an exemption expressly provided under the Customs Modernization and Tariff Act (e.g. importations of ‘balikbayans’ and returning residents amounting to not more than Php150,000), the National Internal Revenue Code or NIRC (in case of VAT), or special laws;
- De minimis importations or goods imported with a value of less than Php10,000 (excluding insurance and freight);
- ‘Balikbayan’ boxes subject to certain conditions;
- Importation by tax-exempt entities (e.g. BOI exemptions);
- Importations bound for Free Zones (PEZA and freeports); and
- Importations for CBWs.
For excise tax, the NIRC lists the products that are subject to excise tax upon importation such automobiles, petroleum products, alcohol and tobacco.
Are passenger cargoes, whether hand carried or not, subject to taxes? Yes (please refer to answer in No. 1), with the exclusion of personal belongings normally brought or used for travelling. Taxes and duties on high-value cargoes shall be collected using simplified forms and procedures in the customs frontline office.
Are online purchases from overseas made on eBay, Amazon, Alibaba and other online shops subject to duties and taxes? Yes (please refer to answer in No. 1), with the exclusion of items with de minimis value.
What are the types of importations? There are four types:
- Free importations (goods that are not regulated, restricted or prohibited);
- Regulated importations (goods regulated by government regulating agencies);
- Restricted importations (goods that are allowed only under very specific conditions provided in the CMTA); and
- Prohibited importations (goods that are absolutely prohibited by reason of public health, morals and safety).
In the case of regulated goods, importers are generally required to register with the regulating agency and secure an import permit or clearance prior to actual importation.
What are the types of import processes? The following are the general types of import processes:
- Consumption (goods that are generally subject to duties and taxes and not destined to a free zone or CBW);
- Transit (goods for delivery to free zones); and
- Warehousing (goods for CBWs).
All importations are subject to a goods declaration to be submitted to customs for processing except in the case of passenger cargoes, postal matters not commercial in nature, low-value express cargo, de minimis importations and other low-value shipments which are manually processed using simplified forms and procedures.
Are all importers required to register with BIR and BOC? When goods are subject to a goods declaration (see answer in No. 5), importers will be required to be registered with the BIR and BOC. In case of first-and-last importations, an importer may be exempted by BOC from such accreditation under existing rules.
For regular importers, what are the documents required to be submitted together with the goods declaration?
- Invoice and Packing List
- Airway Bill or Bill of Lading
- Certificate of Origin (required if preferential duty rate will apply)
- Load Port Survey (required for bulk cargo)
- Import permit or clearance (required for regulated goods)
- BIR Authority to Release Imported Goods (required for goods subject to excise tax)
Are importers required to secure the services of customs brokers? Yes, the present rules require the services of customs brokers when goods declaration are required for submission to customs. While the CMTA provides that importers may opt not to secure the services of customs brokers, this new provision has yet to be implemented and operationalized.
The author is an international trade, indirect tax (customs) and supply chain expert. He is the Editorial Board Chairman of Asia Customs and Trade, an online portal on customs and trade developments affecting global trade and customs compliance in Asia. ACT provides trade intelligence through industry updates and features; columns written by customs and trade professionals and experts; and specially commissioned reports.For questions, please email him at email@example.com (www.customstrade.asia).