Imports of critical equipment, supplies and raw materials needed to produce medical products is exempt from import duties, taxes and fees, according to a new joint memorandum circular (JMC).
JMC No. 20-02 provides guidelines for the operation of enterprises allowed to operate under the enhanced community quarantine and engaged in the manufacture, importation, and distribution of certain products. The JMC was signed on April 1 by the heads of the Department of Finance (DOF), Department of Trade and Industry (DTI), Bureau of Customs (BOC), and Board of Investments (BOI).
The JMC operationalizes relevant sections of Republic Act (RA) No. 11469 or the Bayanihan to Heal as One Act, the law granting President Rodrigo Duterte emergency powers for a limited time to address the emergency health crisis brought about by the outbreak of COVID-19. Under RA 11469, the importation of needed medical equipment or supply is exempt from import duties, taxes, and fees.
Under JMC 20-02, the following items– regardless of country of origin–are exempt from import duties and taxes levied by the BOC, Food and Drug Administration and other relevant agencies:
- medicine identified as critical and necessary by the Department of Health (DOH)
- medical equipment and devices such as test kits, thermometers, thermal scanners, ventilators
- personal protective equipment such as helmets, masks, goggles, gloves, face shields, gowns
- surgical equipment and supplies
- laboratory equipment and its reagents
- support and maintenance for laboratory and medical equipment
- medical supplies, tools, and consumables such as alcohols, sanitizers, tissue, hand soap, cleaning materials, povidone iodine, and common medicines
- such other supplies or equipment as may be determined by DOH and other relevant government agencies
The circular also applies to raw materials and packaging materials, including their raw materials, exclusively used to produce the above products.
The classification of the covered products or any articles needed in their supply chain, such as capital equipment, spare parts and accessories, raw materials, packaging and its raw materials, under the corresponding ASEAN (Association of Southeast Asian Nations) Harmonized Tariff Nomenclature (AHTN) chapters in the Customs Modernization and Tariff Act is as listed in an annex of JMC 20-02.
The importation should be “reasonably needed and will be used exclusively by the covered enterprises in the manufacture of the covered products,” and should be ordered, loaded or in transit during the effectivity of the order.
The exemption applies to:
- importation of covered products by covered enterprises
- importation for use in manufacturing activities in partnership with government agencies to produce covered products needed to address the COVID-19 emergency
- importation by hospitals and other private health institutions of the covered products
- local sales of covered enterprises in compliance with the export suspension under JMC 20-02
The concerned agencies should issue their relevant regulations to implement JMC 20-02.
BOC has already issued Customs Administrative Order (CAO) No. 07-2020, which grants exemption to importations that arrived and were cleared by BOC for three months from the effectivity of RA 11469, unless extended by Congress.
READ: Medical supplies, equipment get import duty, tax exemption
To implement the JMC, BOI is authorized to issue accreditation certificate to covered enterprises and an authority to import for the covered products.
The export requirement imposed under the laws administered by relevant investment promotions agencies is suspended. Export enterprises that manufacture the covered products should supply at least 80% of their daily production to the procuring entity determined under RA 11469, government institutions, hospitals, and private establishments in the country for local or domestic use.
The local sales of export enterprises will be deemed and treated as “export sales” in compliance with their export requirement. As such, the corresponding treatment, exemption on duties, taxes, fees, and other incentives warranted under existing laws governing export enterprises will continue to apply.
If the export enterprises are located in special economic zones with status of separate customs territory under relevant laws, such as local sales, will likewise be exempt.
JMC 20-02 takes effect immediately and will remain in effect during effectivity of RA 11469. – Roumina Pablo
Photo courtesy of DTI
