Five provisions under the proposed Customs Modernization and Tariff Act (CMTA) will be carried out ahead of the release of the impending law’s implementing rules and regulations (IRR), a Bureau of Customs (BOC) official has announced.
Approved by the bicameral conference committee last January, the CMTA is undergoing final proofreading by Congress before it is signed into law by the President, according Atty. Agaton Teodoro Uvero, BOC Assessment and Operations Coordinating Group deputy commissioner. Uvero was a speaker at the March 8 Transport Industry Directions 2016 event organized by the Philippine International Seafreight Forwarders Association with PortCalls as partner. The event coincided with the launch of the Philippine Multimodal Transportation and Logistics Roadmap.
Uvero said that if the measure is not signed within 30 days of submission to the Office of the President, it lapses into law.
The Department of Finance and BOC have created a technical working group (TWG) to create the IRR. Uvero, who will head the TWG, said they target holding public consultations on the IRR by end of April and completing the rules before the current administration steps down from office middle of the year.
But even before the final IRR is released, Uvero said BOC will roll out five provisions under CMTA.
The first is on relief consignment as provided in CMTA’s Sections 120-21, stipulating that donations to calamity victims are both duty- and tax-free. Uvero noted that previously, donations were only duty-free but not value added tax-free. Under the CMTA, donations coursed through other non-government organizations, even those not accredited by the Department of Social Welfare and Development, will be duty- and tax-free.
Uvero said another priority is the issuance of four or five Customs Administrative Orders to implement the declarant provision, which makes mandatory for two years the engagement of customs brokers as goods declarant but makes the same optional after that period. After the two-year period, the CMTA allows “a person duly empowered (by the importer or exporter) to act as agent or attorney-in-fact” to be the goods declarant.
On the urgent list too is the increase in the de minimis value to P10,000 from P10 for articles brought into the country duty-free through the postal office, by courier companies, or by hand.
Yet another priority is the issuance of rules to implement the CMTA provision raising the amount of exemption for a balikbayan box to P150,000 from the previous P10,000. The same amount of exemption will be granted to returning overseas Filipino workers.
Returning residents who have stayed in a foreign country for less than five years will get a P150,000 exemption; those who have been residing abroad for more than five years but less than 10 years, P250,000; and those overseas for 10 years or more, P350,000.
The fifth priority provision is embodied in CMTA’s Section 402, which states that all goods declared for consumption should be cleared through a formal entry process, except for goods of a commercial nature with Free on Board or Free Carrier value of less than P50,000, and personal and household effects or goods that are not in commercial quantity and are imported in a passenger’s baggage or mail.
Uvero noted this eliminates the tedious process of formal entry processing air travellers usually go through upon entry into the Philippines.
New rules, additional amendments
Aside from the amendment of existing laws, Uvero said the CMTA provides new policies and concepts, such as a fresh definition of “free zone” to now include other special economic zones other than those registered with the Philippine Economic Zone Authority.
Free zones will soon encompass Clark Freeport Zone, Poro Point Freeport Zone, John Hay Special Economic Zone, Subic Bay Freeport Zone, Aurora Special Economic Zone, Cagayan Special Economic Zone and Freeport, Zamboanga City Special Economic Zone, Freeport Area of Bataan, and such other freeports as established or to be created by law.
A permanent office that will implement the Authorized Economic Operator (AEO) program will also be created; an executive order for this has already been drafted. Right now, an ad hoc office without personnel is in charge of the program, Uvero pointed out.
The AEO is a concept under the World Customs Organization SAFE Framework of Standards to Secure and Facilitate Global Trade. It represents a customs-to-business partnership to enhance international supply chain security and facilitate movement of legitimate goods. It is a voluntary certification scheme that will help certain economic operators in the global supply chain adopt “acceptable control measures” to enhance cargo security. The BOC issued rules for the adoption of the AEO program in the Philippines in late 2013.
The CMTA also mandates paperless customs transactions, Uvero said. Under the measure, BOC, in accordance with international standards, “shall utilize information and communications technology to enhance customs control and to support a cost-effective and efficient customs operations geared towards a paperless customs environment.”
Other new policies found in CMTA include: unpaid duties, taxes, and other charges will incur legal interest of 20% per annum computed from the date of final assessment when payment becomes due and demandable; simplified procedures and processes in the advance ruling and dispute settlement, as well as alert orders; regulated imports will not be seized by BOC but only required to produce the necessary import permits, and if no such permits can be presented, they will just be made to pay penalties and fines.
The latter policy, Uvero explained, prevents seized containers from languishing at terminals, with their goods rotting.
Re-classification of CBWs
The CMTA also differentiates between customs bonded warehouses (CBWs) for manufacturing and exports from customs facilities and warehouses, the latter covering off-dock container freight station/container yards, arrastre operators, and bonded warehouses in airports.
The allowed period of storage in CBWs is being extended to one year from the previous three months. Those that need more than one year, such as shipbuilders, can request for an extension from the Customs commissioner.
The settlement of pending seizure cases by paying the fine or redeeming the forfeited goods is also clarified to prevent discretion on the part of customs officers.
As for abandoned shipments, Uvero said that instead of becoming government property, an abandoned shipment, under the CMTA, will be auctioned and proceeds used to pay the shipment’s duties and taxes and other expenses. Any excess from the proceeds will go to the cargo owner, Uvero said.
Finally, fines and penalties for administrative cases have also been lowered, while criminal cases such as fraud and smuggling merit heftier penalties.
Uvero concluded that the CMTA provides lesser discretion for customs officials, uses international best practices, and applies clear and simplified rules. – Text and photo by Roumina Pablo