Small value importations of tobacco goods as well as wines and spirits are still subject to excise taxes under a new Customs Administrative Order (CAO) that raises to P10,000 the tax-exempt value of non-commercial imports.
Finance Undersecretary Antonette Tionko, who heads the Revenue Operations Group of the Department of Finance (DOF), said the CAO also lists goods prohibited and restricted for importation.
“The proposed CAO provides that de minimis importations of tobacco goods, wines and spirits shall still be subject to excise tax pursuant to the National Internal Revenue Code of 1997, as amended,” Tionko said in her memorandum to the Finance Secretary recommending approval of the CAO.
This CAO on de minimis or small value importations was approved recently by Finance Secretary Carlos Dominguez III to implement Section 423 of Republic Act 10863, or the Customs Modernization and Tariff Act (CMTA).
Tionko said the CAO excludes for immediate release importations, even if within the de minimis threshold, that are: declared as ‘without commercial value’ or ‘of no commercial value’ of with specific amount but qualified by the phrase ‘for customs purposes’ or other analogous phrases; tobacco and liquor products carried by passengers in excess of the allowable limits; goods subject to requirements or conditions imposed by regulatory agencies, unless for personal use and within the limits allowed by regulations; prohibited and restricted importations; and importation to be entered conditionally free, for warehousing, for transit and/or admission to free zones.
Under the CAO, which is the first one pertaining to de minimis importations under the CMTA regulations, prohibited items for importation include adulterated or misbranded food products and goods; instruments, drugs and substances designed, intended or adapted for producing unlawful abortion; and representations of any form of an obscene or immoral character.
Prohibited items include written or printed goods in any form containing any matter advocating or inciting treason, rebellion, insurrection, sedition against the government, or forcible resistance to any law of the Philippines, or written or printed goods containing any threat to take the life of, or inflict bodily harm upon, any person in the Philippines.
Imports of items manufactured in whole or in part of gold, silver or other precious metals or alloys and the stamp, brand or mark does not indicate the actual fineness of quality of the metals or alloy are also banned.
Infringed goods as defined under the Intellectual Property Code and related statutes, and all other items or parts whose importation are explicitly prohibited by law or rules and regulations are likewise prohibited under the CAO.
This is the first of the series of CAOs that will be issued to flesh out the Implementing Rules and Regulations (IRR) of the 200-page CMTA, Tionko said.
The CAO also enumerates restricted goods, which, except when authorized by law or regulations, are also prohibited.
These include narcotic drugs and illegal substances; opium pipes or their parts; dynamite, firearms, gunpowder, ammunitions, explosives and other weapons of war; roulette wheels, gambling outfits, loaded dice, marked cards, machines, apparatus, or mechanical devices used in gambling or the distribution of money, cigars, cigarettes or other goods when such distribution is dependent on chance, including jackpot and pinball machines or similar contrivances or their parts.
Lottery and sweepstakes tickets, except advertisements and lists of draws, and all other goods whose importations are restricted, are likewise included in the import ban.
“The restriction to import [the prohibited or restricted] goods shall include the restriction on their transit,” the CAO stated.
Violations of the CAO shall be penalized under the provisions specified in the CMTA and other applicable laws.
The CAO raises the value of small importations that are exempted from taxes from the current P10 to P10,000.
Under the CAO, de minimis or small value importations shall be subject to non-intrusive examinations, such as x-rays or other equivalent devices on a random basis “based on an existing selectivity scheme used by the Bureau of Customs (BOC),” according to Tionko.
Under the CAO, the customs examiner, may, “based on internationally accepted customs administration risk management principles,” physically inspect the imported goods.
The CAO states that the de minimis value “shall be adjusted by the Secretary of Finance every three (3) years after the effectivity of the CMTA to its present value using the Consumer Price Index, as published by the Philippine Statistics Authority.”
On the de minimis importations brought in by passengers to the country, as postal parcels, or sent through balikbayan boxes, the CAO states that their treatment “shall be without prejudice to the application of the CMTA’s provisions on conditionally free importations.
The CAO implements Section 423 of the CMTA, which provides that no duties and taxes shall be collected on goods with an FOB (free on board) or FCA (free carrier) value of P10,000 or below.
The CMTA or Republic Act 10863 is designed to modernize BOC rules and procedures to facilitate trade, cut red tape and corruption, and improve the delivery of BOC-related services.
The drafting of the CAO was the result, in part, of public face-to-face and online consultations done by the DOF and the BOC to fine-tune the IRR of the CMTA.
Tionko said the DOF gathered inputs and comments from a DOF microsite where the public could input their comments and suggestions about each topic involving IRR provisions of the CMTA.
The DOF microsite also contains information about, and templates to suggest recommendations on, the proposed IRR of the CMTA.
For inquiries, comments and suggestions on the proposed IRR of the law, one can email the CMTA Project Management Office and Secretariat at cmta.irr.pmo@customs.gov.ph an d cmta_irr@dof.gov.ph.
Last August 17, the DOF and the BOC held the first of a series of public consultations on the CMTA’s IRR at the Ayuntamiento de Manila in Intramuros, where some 100 stakeholders from the private sector attended the meeting.
The easy-to-navigate microsite contains the drafting process, timelines, and guidelines on the crafting of the IRR, and also includes a list of priority concerns on the CMTA and the point persons assigned to each topic.
