Changes under the Customs Modernization and Tariff Act:

an overview
SUITS THE C-SUITE By Mark Anthony P. Tamayo

Business World (06/13/2016 p.S1/4)

(Second of 5 parts)

In last weeks article, we discussed the evolution of the Tariff and Customs Code of the
Philippines (TCCP) and briefly talked about the new rules on goods declaration under the
new Customs Modernization and Tariff Act (CMTA).

This article will continue to discuss the changes introduced in the CMTA.

DE MINIMIS IMPORTATIONS

The CMTA acknowl edges the e -commerce trend of increasing number of small value
consignments and thus, retained the provision on de minimis values (small value
importations) below which no duties and taxes will be collected and with minimal clearance
procedures, including data requirements.

The de minimis threshold value has now been increased to Php10,000 (previously, Php10)
in response to the clamor of foreign business groups. Thus, if the value of an importation
does not exceed Ph10,000, there will be no duties and taxes that will be collectible by the
BoC.

This threshold value is subject to review by the Finance Secretary every three years.

RELIEF CONSIGNMENT

Goods such as food, medicine, equipment and materials for shelter, donated or lease to
government institutions and accredited private entities for free distribution to or use of
victims of calamities shall be treated as relief consignment. Relief goods are exempt from
duties and taxes.

Upon declaration of a state of calamity, the clearance of such goods will be a m atter of
priority.

Towards this end, restrictions on customs policies are now relaxed under the CMTA.
Special procedures are now provided to facilitate their unimpeded entry. Among these
procedures are: a) lodging of a simplified or provisional goods decla ration; b) pre-arrival
clearance; c) clearance beyond business hours without corresponding charges; and d)
examination shall be in exceptional cases only.

The Department of Finance (DoF) and the Department of Social Welfare and Development
shall jointly is sue implementing rules on this.

CONDITIONALLY -FREE AND DUTY -EXEMPT IMPORTATIONS

The CMTA introduces modifications to Section 105 of the TCCP, as amended, on

conditionally-free importations (now named conditionally -free and duty-free importations
under Section 800).

One of the more well-known privileges recognized under Section 800 is the duty and
tax-free importation of personal and household effects by returning residents which has
been defined as nationals who have stayed in a foreign country for a peri od of at least six
months.
The conditions for exemption (aside from the requirements that the same should neither
be of commercial quantity nor intended for barter, sale or hire) are as follows:

For those who have stayed in a foreign country for a period of at least 10 years, the Free
on Board (FoB) or Free Carrier Arrangement (FCA) value shall not exceed P350,000 and
that the privilege is not availed of within 10 years prior to the returning residents arrival.

If the stay is at least five years, the F CA or FOB value shall not exceed P250,000 and that
the privilege is not availed of within five years prior to the returning residents arrival.

If the stay is less than five years, the FCA or FoB value shall not exceed P150,000 and that
the privilege is not availed of within six months prior to the returning residents arrival.

In addition to the above, returning Overseas Filipino Workers (OFWs) shall have the
privilege to bring in tax and duty free home appliances and other durables (limited to one
of every kind) once in a given calendar year accompanying them on their return or arriving
within a reasonable time (not exceeding 60 days after every returning OFWs return).

Residents of the Philippines, OFWs or other Filipinos, while residing abroad or upon t heir
return to the Philippines, are also allowed to bring in or send to their families or relatives
in the Philippines balikbayan boxes (containing personal and household effects only)
duty and tax-free, provided that the FCA value shall not exceed P150, 000 and the items are
not in commercial quantities or intended for barter, sale or for hire. This can be availed up
to three times in a calendar year.

Any amount in excess of the above threshold values shall, however, be subject to duties
and taxes.

In the third part of this article, we shall discuss other changes brought about by the CMTA,
particularly the rules on related -party transactions and penalties relating to unlawful
importation and exportation, misdeclaration, misclassification and underdeclarati on of
imported goods.