BOC details rules for importing CKD vehicles by PEZA locators

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CKDThe Bureau of Customs (BOC) has laid down procedures for the importation of completely knocked-down (CKD) vehicles by participants to the Motor Vehicle Development Program (MVDP) located within Philippine Export Zone Authority (PEZA) areas.

Customs Commissioner Alberto Lina on March 28 issued Customs Memorandum Order (CMO) No. 07-2016 that establishes “specific rules in the treatment of CKDs and finished products/completely built units (CBU) relative to the imposition of duties and taxes thereon.”

BOC said the new order, effective immediately, levels the “playing field between and among the MVDP participants.”

MVDP is a program under the Board of Investments (BOI) that aims to accelerate the development of the Philippine motor vehicle industry. It covers passenger cars, commercial vehicles, and motorcycles.

CMO 07-2016 covers import activities of MVDP participants which are, at the same time, PEZA-registered enterprises with vehicle manufacturing facilities inside ecozones.

Under the CMO, such a participant is referred to as a factory enterprise and may import CKDs as raw materials in two ways—as a participant or as a PEZA export enterprise.

The procedure for a specific importation will be dictated by the program under which the participant is bringing the shipment into the country.

Under current rules on incentives administration, companies cannot “double-dip,” which means participants can only avail themselves of incentives either as an MVDP participant or as a PEZA export enterprise.

To import as an MVDP participant, a factory enterprise must submit to the BOC a Certificate of Registration from the BOI and all other necessary documents to be accredited by the BOC as an importer-MVDP participant.

“Should a factory enterprise elect to avail of the privileges granted to a participant in its importation of CKDs, it should, prior to the importation, secure a Certificate of Authority (CA) to import (the subject shipment) from the BOI and submit the same to the BOC upon processing of the release of the importation,” BOC explained.

Payment of duties and taxes based on the preferential rate under the program is needed to secure the release of an MVDP importation.

In order to import as a PEZA export enterprise, the factory enterprise should submit the required documents and pay the fee in order to register with the BOC and avail of the benefits accorded a PEZA export enterprise.

“All importations of a factory enterprise not covered by a CA to import from the BOI shall be treated as an importation of a PEZA export enterprise, and shall be subject to the rules governing PEZA locators,” CMO 07-2016 noted.

Moreover, if CBUs assembled from imported CKDs by a factory enterprise as a PEZA export enterprise is withdrawn for local consumption, they will be assessed the corresponding CKD tariff rates, provided that the withdrawal does not exceed the legal threshold or permitted volume.

If the withdrawal for local consumption exceeds the limit, the units withdrawn will be assessed the corresponding tariff rates for CBUs.

Existing procedures, rules, and regulations applicable to the importation by participants of MVDP and PEZA export enterprises not inconsistent with CMO 07-2016 remain in full force and effect, BOC noted. – Roumina Pablo

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