Question & AnswerQ&A (EXECUTIVE ORDER NO. 444)
The main purpose is to amend Executive Order Nos. 250, 250-A (1995) and 419 (1997) to further rationalize duty free stores/outlets and their operations in the Philippines, prevent abuse of duty free privileges, and protect local industries from unfair competition.
No, the establishment of new duty free shops/outlets and the expansion of existing ones are disallowed except as may be authorized by existing laws, as reiterated under Section 1.
Duty free shops are allowed to operate only within the country's international ports of entry and within the fenced-in areas of freeport zones, as indicated in Section 2.
Between the effectivity of the Order and 31 December 1998, permanent residents, locators, and employees of the Subic and Clark freeports had unlimited duty free purchases. Residents of municipalities adjacent to Subic and Clark had a US$100 monthly shopping privilege, and domestic tourists visiting these areas were allowed a US$25 shopping privilege for consumable goods only to be consumed inside the fenced-in areas.
a) Tourists and Filipinos traveling to or returning from foreign destinations - US$1,000 but not exceeding US$10,000 annually; b) Overseas Filipino Workers (OFWs) and Balikbayans - US$2,000; c) Residents of fenced-in freeport areas (18 years old and above) - unlimited purchases for consumption within freeports.
'Resident' means individuals who reside permanently by domicile or employment within the freeport area. It excludes non-residents with property leases, business outsiders, and members of private clubs within the freeport.
Allowed items include consumables, light and heavy durables, and television sets of sizes not manufactured in the Philippines, subject to conditions such as heavy durables being sold only to balikbayans, OFWs, and freeport residents.
Yes, prohibited items include TVs manufactured in the Philippines, certain karaoke/videoke systems, stereos, residential ovens, washing machines ≤10kg, furniture, kitchenware, refrigerators ≤15 cubic feet, electric fans, air conditioners, and critical agricultural products like rice, sugar, and coffee beans.
They must place special labels on duty free items stating 'Not for resale, imported duty free,' conduct background checks on operators, implement computerized accounting for operations, and create an internal audit team for spot checks.
Violations may lead to administrative sanctions such as suspension or cancellation of the operation of the concerned duty free shop as per rules and regulations prepared by the Department of Finance.