Layusa, Francis Paolo B.

February 15, 2017

Advance Taxation Review

SALIENT FEATURES OF R.A. 10863

(CUSTOMS MODERNEZATION AND TARIFF ACT)

All imported goods will be subject to the lodgement of a goods declaration, also known as entry
declaration, which may be for consumption, for warehousing, for admission, for conditional
importation or for customs transit, depending on the purpose.

As a general rule, goods declarations for consumption are cleared though a formal entry
process, except in the following instances where goods may be cleared through informal entry:
(i) goods of a commercial nature with Free on Board or Free Carrier Arrangement (FCA) value
of less than Php 50,000 (which is an increase from the previous thresholds of Php 2,000 per
TCCP, as amended, and USD 500 under Customs Memorandum Order No. 13-2010); or (ii)
personal or household effects or goods, not in commercial quantity, imported in passengers
baggage or mail.

A goods declaration must now be lodged within 15 days (previously, 30-day non-extendible
period) from a BoC notice (sent through electronic or personal service) informing the importers
of the date of discharge of the last package from the vessel or aircraft, extendible for another 15
days (upon request by the importer based on valid grounds). Once lodged, the BoC, after its
examination, shall issue a notice of assessment (of duties and taxes payable). The importer has
a period of 15 days from receipt of said notice within which to pay the corresponding duties and
taxes. In effect, this is also the period within which the importer may contest the assessment
issued by the BoC at the border. Otherwise, the assessment will be deemed final after the lapse
of the 15-day period.

The failure to pay duties and taxes within the 15-day period shall result in the imposition of a
10% surcharge (increased to 25% if delinquency lasts for more than one year) based on the
total assessed amount or balance thereon as well as to a 20% interest per annum computed
from the date of final assessment.

After payment of duties and taxes, the importer will then have a non-extendible period of 30
days (previously, 15 days from posting of notice to claim) to claim the goods from customs
custody.

If, at the time of importation, an importer does not have all the information or supporting
documents required to complete a goods declaration, the CMTA now allows the lodging of a
provisional goods declaration (PGD). The PGD is a new concept that importers can use
particularly in instances where additional information and/or collateral documents are required to
be submitted at the border. Under this concept, an importer would have to execute an
undertaking to complete the necessary information or submit the supporting documents within
45 days (extendible for another 45 days) from the lodging of the PGD. Goods under PGD may
be released upon posting of a security equivalent to the amount ascertained to be the applicable
duties and taxes.

An assessment by the BoC at the border of a PGD shall be deemed tentative and shall be
completed upon final readjustment and submission of the additional information or
documentation required to complete the declaration.

If an importer needs to amend a goods declaration already filed, the CTMA, for valid reasons
and with the approval of the BoC, also permits the filing of an amended goods declaration. The
amendment, however, must be done prior to final assessment or examination of the goods by
the BoC

OFWs can send up to three P150,000-worth of tax and duty free balikbayan boxes in a year,
given that the goods are not in commercial quantities nor intended for barter, sale or for hire.

Filipinos, who have stayed in a foreign country for at least 10 years and are returning to the
Philippines, will also be granted tax exemption for the personal and household effects, not
exceeding PHP350,000, they will be bringing with them when they return to the country.

As for Filipinos who have lived overseas for at least five years, they will be entitled to tax and
duty free personal and household effects amounting to PHP250,000, while those who have
stayed abroad for less than five years can enjoy PHP150,000 tax-free ceiling.

The CMTA also raises the de minimis value, which refers to the value of tax and duty free goods
and the minimum cost of goods required to undergo formal Customs entry, from the present
PHP10 to PHP10,000