BOC releases guidelines for duty drawback claims

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  • Customs Memorandum Order No. 16-2023 contains guidelines for processing duty drawback claims
  • The guidelines are meant to streamline the handling of duty drawback claims by importers
  • CMO 16-2023 covers all claims filed under the Customs Modernization and Tariff Act and those previously submitted to the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center
  • The guidelines take effect on November 1

The Bureau of Customs (BOC) has unveiled new procedures for processing, approval and payment of duty drawback claims.

The guidelines under Customs Memorandum Order (CMO) No. 16-2023 are meant to ensure there are no double claims in the processing and payment of refund for duty drawback.

Duty drawback refers to refunds or credits for import duties and possibly internal revenue taxes that were genuinely paid.

Effective from November 1, the rules cover claims under the Customs Modernization and Tariff Act (CMTA) and also those previously submitted to the Department of Finance’s One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center.

Under CMO 16-2023, importers may apply for a duty drawback of up to 99% of the legally imposed duty for fuel used in international trade sea vessels, coastwise trade vessels temporarily converted for international trade, and fuel used by scheduled international airlines.

For petroleum oils and oils from bituminous materials, crude oil imported by non-electric utilities sold to electric utilities, a refund of up to 50% of the duty imposed by law is available.

Importers can also seek duty drawbacks for materials and articles used in exportable goods’ packing, packaging, and more, provided specific conditions are met.

However, CMO 16-2023 clarifies that registered enterprises that have previously applied for tax credits based on customs duties paid on imported raw materials and supplies under RA 5186 or RA 6135 will not receive duty drawback for the same imports later processed and re-exported.

Claims for duty drawback will be processed after paying the necessary processing fee and submitting complete documents to BOC. The processing fee ranges from P700 to P5,000, depending on the claim’s amount.

Approved duty drawback claims will be issued in the form of Tax Credit Certificates, with a five-year validity period. These certificates can be revalidated for an additional five years, unless otherwise stated in the General Appropriations Act.

CMO 16-2023 follows Customs Administrative Order 04-2019, which outlines procedures for duty drawback, refund for overpayment, abatement of duties and taxes, and other refunds under the CMTA. – Roumina Pablo

RELATED READ: One-stop shop for tax credit, duty drawback abolished