The Customs Administrative Order (CAO) implementing tax and duty exemption for importations by returning residents and overseas Filipino workers (OFWs) of their personal and household effects that meet certain criteria took effect on January 24.
Customs Administrative Order 06-2016 implements Section 800 (f) Chapter 1, Title VIII, and other relevant sections of Republic Act (R.A.) No. 10863, otherwise known as the Customs Modernization and Tariff Act (CMTA). CAO 06-2016 is the fourth order to be issued that implements CMTA provisions.
It covers conditionally tax- or duty-exempt importations of personal and household effects belonging to returning residents and OFWs, as well as the additional tax and duty exemption privilege of OFWs for home appliances and other durables amounting to not more than P150,000.
Returning residents are defined as Filipino nationals who have stayed abroad for at least six months and are returning to the Philippines. Included in the definition are the returning resident’s dependent spouse and children.
OFWs, meanwhile, are all Filipinos working in a foreign country under employment contracts, regardless of profession, skills, or employment status in a foreign country.
A separate order, CAO 05-2016, covers the consolidated shipment of duty- and tax-free balikbayan (personal effects) boxes.
Under CAO 06-2016, “household appliances, jewelry, precious stones, and other goods of luxury which were previously exported from the Philippines shall be exempt from duties and taxes when covered by a Certificate of Identification (CI) issued by the District Collector, or a customs officer duly authorized by the former, before departure from the Philippines.”
Once the exported goods are imported into the Philippines, the customs examiner will verify the identity of the goods brought in against information on the CI.
To get exempted from duties, taxes, and other charges, the personal and household effects normally used by the returning residents or OFWs during their stay abroad must accompany them on their return, or arrive not later than 60 calendar days after the owner’s return.
Importations of excisable articles such as distilled spirits, wines, cigars and cigarettes, perfumes, and toilet waters that exceed the allowed quantity to be prescribed by the Bureau of Customs (BOC) will have to pay duties, taxes, and other charges.
Physical examination or non-intrusive inspection will be conducted based on existing regulations and the established risk management scheme of BOC.
For a returning resident or an OFW to enjoy tax and duty exemption, his personal and household effects should not exceed the following Free Carrier (FCA) or Free on Board (FOB) values:
- P350,000 for returning residents or OFWs who have stayed in a foreign country for at least 10 years and have not availed of the privilege within 10 years prior to arrival;
- P250,000 for those who have stayed in a foreign country for five but not more 10 years and have not availed of the privilege within five years prior to arrival; and
- P150,000 for those who have stayed in a foreign country for less than five years and have not availed of the privilege within six months of returning to the Philippines.
Any amount above the three thresholds is levied corresponding duties and taxes, the CAO notes.
A returning OFW may also apply for additional duty and tax exemption for home appliances and other durables not exceeding P150,000 in value. This benefit can be enjoyed once in a calendar year, subject to several conditions.
Excluded from the privilege are luxury items, unless covered by a pre-departure CI. Also excluded are vehicles, watercraft, aircraft, animals, donations; goods intended for barter, sale, or hire; goods in commercial quantity and regulated goods in excess of the allowed limits; and prohibited and restricted goods.
BOC will issue a customs memorandum order prescribing in detail the procedures for lodging, processing, and clearing conditionally tax- and duty-exempt importation of personal and household effects, home appliances, and other durables of returning residents and OFWs.
CAO 06-2016 repeals or amends previously issued and inconsistent CAOs and memorandum orders, and will review and amend such orders, if necessary, every three years. – Roumina Pablo
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