A draft Customs Administrative Order (CAO) that operationalizes the de minimis rule under the Customs Modernization and Tariff Act (CMTA) has been released by the Philippine Department of Finance (DOF) and Bureau of Customs (BOC).
In an advisory, DOF and BOC said position papers on the draft CAO from interested private and public stakeholders may be submitted until September 1. A public consultation will then be held on September 1 at the BOC Port of Manila.
Considering the breadth of Republic Act No. 10863 (CMTA), the DOF and BOC chose to focus on 14 priority CMTA provisions that will be subject to weekly public hearings until December. The 14 provisions will form part of the general implementing rules of the CMTA, signed into law in May 2016.
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The proposed CAO on de minimis implements Section 423, pursuant to Section 204 of CMTA. Under that section, no duties and taxes are to be collected on goods with a free-on-board (FOB) or free carrier (FCA) value of P10,000 and below, a departure from the previous de minimis value of P10.
Covered by the order are all importations for consumption located at the Customs territory, having an FCA or FOB de minimis value, and entered through any seaport or airport of entry in the Philippines by the importer, consignee, freight forwarder, or air express operator.
The CAO aims to minimize—without compromising customs border enforcement control—the import and customs administration costs of clearing importations with de minimis value.
“In line with this, de minimis importers are not required to be accredited,” the draft CAO notes.
The order also seeks to adapt to the growing trade liberalization and facilitation trend and harmonize with different applicable international trade agreements.
Furthermore, it strives to promote the growth and competitiveness of micro, small, and medium enterprises in the Philippines, as well as enhance efficiency and cost effectiveness of customs clearance for shipments falling under de minimis.
Under the draft CAO, de minimis value importations will go through advance lodgement procedures to allow BOC to process the information ahead of time and determine if there is a need to examine the goods.
If no examination is needed, the goods can be released after processing, according to the draft CAO.
When importing regulated goods for personal use, regulatory requirements may be dispensed with, it adds.
For regulated de minimis value importations in commercial quantity, applicable government regulations must apply. The draft CAO explains that de minimis value importations are still subject to rules governing prohibited or restricted importations.
Regulations imposed by other government agencies on the allowed quantity of importations should also be strictly observed.
Excluded as de minimis imports
Excluded as de minimis importations are shipments declared as “without commercial value” or “of no commercial value.” Thus, the importer, consignee, freight forwarder, or air express operator must declare the true value of goods imported for consumption.
Passenger-carried imported goods consisting of personal effects and the usual allowable duty-free items will be subject to applicable passenger’s customs clearance procedures. But such importations, whether of de minimis value or not, must be declared in the appropriate passenger’s declaration form. In case the imported item has de minimis value, no duty or tax is charged.
And importations of regulated products in commercial quantity—even though within the de minimis value threshold—should comply with the regulatory requirements imposed by the concerned agency; otherwise, the goods will not be released, the draft CAO said.
Conditionally free importations, regardless of value, must also abide by appropriate Customs laws and regulations for such importations.
Likewise excluded as de minimis importations are other shipments such as cargoes bound for economic zones and shipments covered by ATA Carnet, among others.
De minimis value importations should be included in non-intrusive random examinations based on the selectivity scheme used by BOC, and only be physically inspected based on reasonable grounds and on conditions set forth in Chapter 2, Title IV of Section 438 and 439, Chapter 4, Title IV of the CMTA.
BOC’s Informal Entry Division or its equivalent unit at principal ports of entry, sub-ports, special collection units, or postal offices will implement the approved CAO.
A service fee of P300 applies to every de minimis shipment, the draft CAO states.
Any person, officer, or employee who violates the proposed order faces penalties as specified under Title XIV of the CMTA and other applicable penal provisions. – Roumina Pablo
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