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Duty Free Philippines flagship store in Paranaque City | Photo from DFPC’s website

The Bureau of Customs (BOC) has issued Customs Administrative Order (CAO) No. 11-2020, which governs the establishment and operation of duty- and tax-free stores and warehouses by Duty Free Philippines Corp. (DFPC).

CAO 11-2020 institutes safeguards and controls over DFPC-operated stores and warehouses to prevent abuses of privileges, protect government revenue, and ensure these facilities comply with customs warehousing laws.

The CAO applies to all duty- and tax-free stores and warehouses operated by the government under Republic Act No. 9593 or the Tourism Act of 2009.

The DFPC, a corporate entity created under RA 9593, has the exclusive franchise to operate duty- and tax-free shops that cater to the international travelers market.

Under CAO 11-2020, BOC shall exercise supervision and control over DFPC-operated warehouses, which will be considered a special type of customs bonded warehouse (CBW) and an extension of customs premises where dutiable goods stored and introduced are concerned. BOC, however, will not be liable for any loss or damage of the goods stored in any CBW.

The BOC collection district of Ninoy Aquino International Airport (NAIA) will exercise jurisdiction over the existing DFPC customs main bonded warehouse, which will be used exclusively to receive, store and safeguard imported duty- and tax-free goods.

The main bonded warehouse will also serve as the principal transfer and distribution point of all goods for sale at all duty-free stores in international airports and seaports, tourism enterprise zones, and other ports of entry throughout the country.

Meanwhile, other concerned collection districts will directly supervise and control the operation of all DFPC sales, display, storage, or store counters outside Metro Manila, including the deployment of customs personnel.

Duty-free warehouses and sales, display or store counters to be established will be considered extensions of DFPC’s main bonded warehouse no matter their location. Each branch or outlet will be covered by separate and individual warehousing security.

Under CAO 11-2020, BOC should also promulgate the rules on how to establish and operate online duty-free stores, which will be extensions of physical sales display or store counters.

For its part, DFPC is directed to comply with BOC’s requirements on establishment, security, suitability and management, including stock-keeping and accounting of goods.

Imported goods to be sold at DFPC’s duty- and tax-free stores should be entered duty- and tax-free under warehousing entry. They should also be covered by sufficient security and pertinent documents, which should be filed with BOC-NAIA, except for excisable goods which are subject to value-added tax and excise tax.

Importations discharged from other ports of entry other than NAIA will be transferred from the port of discharge to BOC-NAIA upon lodgment of the transit single administrative document, with notice to DFPC as the consignee or importer. This is provided that such importation will remain under customs supervision and control until sold, exported or disposed of.

CAO 11-2020 also outlines the conditions for the sale of duty- and tax-free goods to qualified individuals, including travelers and tourists and returning Filipino residents.

To support and showcase Philippine culture, craftsmanship and industry, Philippine-made goods may be allowed entry and sale subject to customs clearance and procedure.

If found in the possession of an unauthorized person, duty- and tax-free goods purchased may be seized and forfeited as provided under the Customs Modernization and Tariff Act (CMTA) and the National Internal Revenue Code.

DFPC violation of any term or conditions under CAO 11-2020 and other such regulations will be sufficient cause to cancel their authority to operate the bonded warehouse, store, outlets, or sales counters. Any fraudulent practice committed against customs revenue will subject the violator to administrative and penal provision under the CMTA.

If the violator is a government employee, he or she, after a hearing by BOC, will be suspended or dismissed from service, in addition to receiving other penalties prescribed under the CMTA and other laws. If the violator is a private individual, he or she, after a BOC hearing, will be banned from duty- and tax-free areas, in addition to receiving other sanctions as prescribed in the CMTA and other laws. – Roumina Pablo

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