Determination of Dutiable Value
- Use six sequential methods for customs valuation.
- Method 1: Transaction Value - based on the actual price paid or payable for goods sold for export to the Philippines with specific conditions ensuring value integrity and relationship neutrality.
- Adjustments to transaction value include commissions, packing, assists, royalties, transport, loading/unloading, and insurance costs.
- Exclusions from dutiable value include post-importation costs, Philippine duties and taxes, and other permissible deductions.
- Importer must pay adjustments within 45 days of importation or payment.
Methods 2 and 3 – Transaction Values of Identical and Similar Goods
- Method 2 uses transaction value of identical goods sold for export to the Philippines under similar commercial terms.
- Identical goods must share physical characteristics, quality, reputation, origin, and producer.
- Method 3 applies if identical goods value is unavailable; uses transaction value of similar goods with like characteristics and commercial interchangeability.
- Adjustments allowed for commercial level, quantity, and transportation differences.
- If multiple values found, the lowest is used.
Methods 4 and 5 – Deductive and Computed Values
- Method 4 (Deductive): Based on resale price in the Philippines minus certain costs such as commissions, profits, taxes, and transport expenses.
- Conditions include sales in the same condition or after further processing, unrelated purchasers, and an applicable time frame.
- Method 5 (Computed): Based on the cost of production plus profit and general expenses.
- Includes costs of materials, labor, packing, assists, engineering, and transport to import point.
Method 6 – Fallback Value
- Applied when dutiable value cannot be determined under previous methods.
- Uses reasonable means consistent with WTO principles and available data.
- Prohibits use of domestic sale prices, minimum values, arbitrary or fictitious values.
Handling Doubts on Transaction Value
- Customs must notify importer if doubts arise on declared transaction value.
- Importer given opportunity to respond; communication can be written upon request.
- If unresolved, customs proceeds to determine dutiable value using alternative methods.
- Importer entitled to written explanation of customs valuation determinations.
Administrative Provisions
- Reference values from published sources serve as risk management tools but not basis for valuation.
- Currency conversion based on Bangko Sentral ng Pilipinas rates per Customs Memorandum Order No. 24-95.
- Goods can be released under sufficient guarantee when valuation delays occur, excluding prohibited goods.
- Importers may appeal customs valuation within 15 days following additional duty payment.
- Liquidation of import entries is final after three years, except for fraud, protest, audit, or tentative liquidation.
Recordkeeping Requirements
- Importers must keep import and business records for three years at principal business location.
- Records include company structure, purchase documents, shipping/importation documents, manufacturing and sales data, and financial records.
- Customs brokers must keep copies of importation records for three years.
- Foreign language documents must be accompanied by certified English or Filipino translations.
Compliance Audit Procedures
- Authorized customs officers may audit records at importer or broker premises with proper notification.
- Audits cover document and financial flow, inventory, and business processes relevant to customs valuation.
- Access denial is punishable, can lead to reassessment and penalties.
- Non-cooperation presumes inaccurate declared value and grounds for reassessment using alternative valuation methods.
Scope and Conduct of Compliance Audits
- Audits initiated based on risk management, detected errors, or voluntary requests.
- Brokers audited primarily to validate importer client audits.
- Audits governed by detailed procedural guidelines including notifications, planning, conduct, reporting, and monitoring.
Compulsory Acquisition of Undervalued Goods
- Customs commissioner may acquire goods undervalued by 200% or more based on test values, if importer fails to justify valuation.
- Payment for acquired goods must be made within ten working days.
- Importers may appeal to Secretary of Finance and Court of Tax Appeals.
- Acquired goods may be sold if appeal not filed or denied.
Administrative and Criminal Offenses
- Failure to keep required records incurs administrative fines, hold orders, and possible imprisonment.
- Denial of access to audit records results in contempt charges, reassessment, fines, hold orders, and criminal penalties.
- Failure to pay correct duties after audit classified as negligence, gross negligence, or fraud, with corresponding fines and possible prosecution.
- Voluntary disclosure before audit commencement may lead to compromise of fines except in fraud cases.
- Confidential information obtained during audits protected by confidentiality rules; violations are prosecutable.
- Appeals on penalty impositions follow Customs Code procedures.
- Government prosecutions handled by Customs officers with Department of Justice involved in probable cause determinations.
Registration and Submission Requirements
- Importers and brokers must submit general information and undertakings to maintain records and allow audits upon registration.
- Import Entry and related declarations must be furnished to the Post Entry Audit Group.
Authority and Legal Provisions
- Commissioner of Customs empowered to promulgate additional implementing rules.
- Repeals inconsistent orders and provisions.
- Contains separability clause ensuring validity in case parts are declared unconstitutional.
- Effective 15 days after publication.