QuestionsQuestions (BOC ADMINISTRATIVE ORDER NO. 04-2004)
It seeks a fair, uniform, and neutral valuation system that precludes arbitrary or fictitious values; recognizes transaction value as the primary basis; ensures customs value is based on simple and equitable criteria consistent with commercial practices and without discrimination by source of supply; prevents valuation from being used to combat dumping; and implements recordkeeping and post-entry audit to protect government revenue.
It is the price actually paid or payable for the goods when sold for export to the Philippines, adjusted in accordance with the provisions of Section II.B.3, and subject to the conditions specified in Section II.B.2.
All enumerated conditions must be satisfied: there is a sale for export to the Philippines; no prohibited restrictions on disposition/use; price/ sale not subject to undeterminable conditions; no proceeds from resale/disposal/use accrue to the seller unless an adjustment can be made; buyer and seller are not related or the relationship did not influence the price (or passes acceptable tests).
The relationship is deemed acceptable if either (1) the circumstances demonstrate the relationship did not influence the price actually paid or payable, or (2) the transaction value closely approximates to specified test values (transaction value of identical/similar sales to unrelated buyers, deductive value under Method 4, or computed value under Method 5), taking into account commercial/quantity level differences and costs/elements differences.
Commissions and brokerage fees (except buying commissions); cost of containers treated as part of customs goods; cost of packing; assists (value of specified goods/services supplied by buyer or at reduced cost used in production/sale for export); royalties/license fees related to goods; proceeds accruing to seller from later resale/disposal/use; transport to port of entry; loading/unloading/handling charges to port of entry; and insurance.
Construction/erection/assembly/maintenance/technical assistance after importation; cost of transport after importation; duties and taxes of the Philippines; and other permissible deductions allowed under the WTO Valuation Agreement—provided these are distinguished from the price actually paid or payable.
Within forty-five (45) days from the date of importation, or forty-five (45) days from the time payment has been made (whichever is applicable under the provision’s phrasing).
Customs applies Methods 2, 3, then 4, and if still not determined, 5; if still not determined, Method 6. At the importer’s request, the order of Methods 4 and 5 may be reversed, unless the Commissioner deems real difficulties in determining dutiable value using Method 5, in which case the request may be refused and Method 4 applied first.
Goods that are the same in all respects (physical characteristics, quality, reputation); produced in the same country; and produced by the producer of the goods being valued.
Imported goods are excluded when engineering, development, artwork, design work, and plans and sketches are undertaken in the Philippines and are provided by the buyer to the producer of the goods free of charge or at a reduced cost.
The imported goods/identical/similar goods must be sold in the same condition; sales must occur at or about the time of importation (or earliest date within a permitted window before expiration of 90 days); if no such sales exist, processed sales may be used by the importer (subject to the provision); purchaser in the Philippines must not be related to the importer-seller; purchaser must not have supplied assists.
A period extending 45 days prior to and 45 days following the importation of the goods being valued.
The cost of production of the imported goods plus profit and general expenses usually reflected in sales of goods of the same class or kind from the country of exportation to the Philippines; it requires adding specified costs (materials and production/processing, plus packing/containers, assists, and engineering/design/plans charged to producer if applicable) and then adding profit/general expenses and transport/insurance to the port/place of importation.
It applies when dutiable value cannot be determined under Methods 1 to 5. It is prohibited from using: prices of locally produced goods; accepting the higher of two values; domestic prices in the country of exportation; production cost other than computed values for identical/similar goods under Method 5; prices for export to other countries; minimum customs values; or arbitrary/fictitious values.
Customs must notify and give the importer opportunity to provide further explanation; communicate its written grounds if requested; if still with reasonable doubts, Customs deems Method 1 cannot determine customs value and proceeds sequentially to alternative methods. On written request, Customs must explain how the value was determined, and after a final decision, communicate the decision and grounds in writing—without prejudice to the importer’s right to appeal under Article 11 of the WTO Customs Valuation Agreement.
Reference values cannot be used as a substitute value for customs valuation, but may be used to establish doubt or alert Customs to do value verification checks upfront or post-entry through post-entry audit.
Importers must keep, at their principal place of business, for three (3) years from the date of filing of the import entry, records of importations/books of accounts/computer systems and all other customs commercial data relevant to verifying accuracy of declared transaction value, including payment records.
The officer must produce to the person in charge (1) a duplicate original Audit Notification Letter (ANL) issued by the Commissioner addressed to the importer/broker, and (2) an official Customs identification card. No audit shall commence without issuance of an ANL; the officer must be given reasonable facilities and assistance; and Customs may use court aid for disobedience.
It can lead to punishment for contempt/refusal, re-assessment using alternate valuation methods with declared transaction value presumed inaccurate, administrative fine equivalent to 20% ad valorem on articles for which records were not properly accessible, hold/release penalty for subsequent shipments after proper hearing, and criminal prosecution with specified fine and imprisonment ranges.