Law Summary
Declaration of Policy
- State policy aims to protect government revenue, institute fair and transparent customs and tariff management, facilitate international trade, prevent customs fraud and modernize customs administration.
- Key directives include:
- Harmonization and enhancement of customs procedures.
- Adoption of clear customs rules consistent with international standards.
- Transparency and accessibility of customs information.
- Coordination with government agencies and private sector.
- Fair and expeditious appellate remedies for grievances.
- Use of modern practices and ICT in customs functions.
- Promotion of professionalism and meritocracy in customs personnel.
Definitions
- Extensive list of key terms such as:
- Abatement: Reduction of duties and taxes.
- Actual Exportation: Export goods intended to remain outside Philippine territory.
- Airway Bill, Bill of Lading: Transport documents relevant to air and water freight.
- Authorized Economic Operator (AEO): Accredited entities facilitating secure international trade.
- Goods Declaration: Statement required for import or export procedures.
- Smuggling: Fraudulent import or export of goods.
- Third Party: Person dealing with the Bureau on behalf of others.
- Others defined include Customs Officer, Customs Territory, Transit, Transshipment, etc.
Commencement and Termination of Importation
- Importation begins when a vessel or aircraft intends to unload in the Philippines.
- Terminated upon payment or securing payment of duties and taxes or when goods lawfully leave Bureau jurisdiction.
Duties and Taxes on Imported Goods
- Duties and taxes are due upon importation, including previously exported goods.
- Unpaid obligations incur a 20% per annum legal interest.
- Payment is evidenced by issuance of official receipts or documents.
Effective Duty Rates
- Applicable import duty rates are those effective on the date of importation or withdrawal from warehouse/free zones.
Declarant and Responsibilities
- Declarant may be importer, exporter, customs broker, or duly authorized agent.
- Declarant responsible for accuracy of goods declaration and payment of duties; customs broker shares accuracy responsibility but not payment.
- Transitional rules on authorization of agents apply.
Penalties for Errors
- Substantial penalties not imposed for inadvertent errors without fraud or gross negligence.
- Penalties may be imposed to discourage repetition but not excessive.
Use of Information and Communications Technology (ICT)
- Implementation of ICT to support efficient, cost-effective customs operation and paperless systems.
- Recognition of electronic documents with full legal effect.
- Systems to be secured and equipped with disaster recovery plans.
- Stakeholder consultation required in ICT adoption.
Relationship with Third Parties
- Transactions may be done directly or via designated third parties.
- Equal treatment is required.
- Secretary of Finance to issue guidelines on relationship.
Customs Information Publication
- All laws, rulings, and administrative issuances to be published and accessible to the public.
- Specific information on customs operations provided on request for legitimate purposes.
- Reasonable fees may be charged for information provision.
Advance Decisions and Rulings
- Binding advance rulings issued at request on matters concerning import/export.
- Written notification within regulated period; reasons provided if adverse.
- Appeals allowed within 15 days from receipt of decision.
Types of Importation
- Imported goods are deemed entered upon electronic lodgement of a goods declaration.
- Free import and export allowed unless otherwise provided by law.
- Regulated goods require appropriate permits and clearances.
- Prohibited goods listed include seditious writings, unlawful abortion drugs, obscene materials, adulterated food/drugs, infringing goods, and others.
- Restricted goods include explosives, gambling devices, narcotics, among others; transit also restricted.
Relief Consignments
- Goods donated for calamity victims are treated as relief consignments.
- Priority clearance with simplified procedures provided during declared calamities.
- Relief consignments exempt from duties and taxes.
Bureau of Customs Organization
- Headed by Commissioner with 4–6 Deputy Commissioners appointed by the President.
- Commissioner exercises exclusive jurisdiction over customs laws interpretation, review of decisions, enforcement, among others.
Customs Districts and Ports
- Philippines divided into Customs Districts supervised by District Collectors.
- Ports of entry designated, including principal and subports.
- President may open or close ports on Finance Secretary's recommendation.
Customs Police Authority
- Customs officers, authorized AFP and law enforcement officers, and BIR officials have power to search, seize, arrest within Bureau authority.
- Exercise of authority regulated including conditions for premises entry, search of persons, vessels, vehicles.
- Coordination with other agencies mandated.
Customs Jurisdiction and Control
- Jurisdiction covers all seas, coasts, ports, airports, harbors, and means of transport.
- Customs control extends to all goods entering or leaving customs territory.
- Coordination with quarantine and other authorities required.
Import Clearance Procedures
- Goods declaration required for all imports; electronic lodgement mandated.
- Formal and informal entry processes defined based on goods' value and nature.
- Provisional goods declaration allowed under conditions.
- Accuracy of declaration mandatory with penalties for falsification.
- Specific requirements for invoices, payment modes, and samples examination.
Examination of Goods
- Examination guided by risk management and preferential treatment for authorized operators.
- Nonintrusive inspections allowed; physical exams required in certain cases.
Assessment and Release
- No duties on de minimis value goods; threshold reviewed every three years.
- Duties assessed and may be tentatively assessed if disputed.
- Amendments to declarations allowed before final assessment.
- Goods released upon payment or posting of security.
Special Import Procedures
- Simplified clearance for travelers, postal mail, express shipments.
- Advance clearance program may be implemented.
Export Clearance
- Export declarations required; duty applicable if mandated.
- Exported goods to conform to established standards.
- Rules on origin determination and certifications specified.
Customs Transit and Transshipment
- Transit allowed between ports under security and subject to control.
- Goods for transshipment not subject to duties if re-exported within 30 days.
Customs Valuation
- Customs value determined by sequential methods starting from transaction value.
- Adjustments and valuation methods detailed including computed and fallback methods.
- Exchange rate conversion rules specified.
Special Duties and Trade Remedies
- Provisions on compulsory acquisition, marking of goods, anti-dumping, safeguard, and countervailing duties adopted.
- Remedies against discrimination by foreign countries provided.
Tax and Duty Deferment and Exemptions
- Conditions under which goods may be exempt from duties specified, including returning residents, relief consignments, and goods used in specific industries.
- Specific provisions on exemptions for OFWs, diplomats, and foreign agencies.
Customs Warehouses and Free Zones
- Establishment, control, and classification of bonded warehouses and customs facilities.
- Regulations on withdrawal, storage periods, security, and operator responsibilities.
- Goods in free zones exempt from duties under applicable laws.
Stores on Vessels, Aircraft, Trains
- Stores for consumption and for sale covered; duty exemptions detailed.
- Declaration requirements simplified.
Duty Drawback and Refund
- Duty drawback on fuel, petroleum for power generation, and exported goods made from imported materials provided with conditions and timelines.
- Claims procedures and prescription periods outlined.
- Refund and abatement due to overcharges, damaged, lost or defective goods specified.
Post Clearance Audit
- Audits to be conducted within three years from final payment.
- Criteria for audit selection based on risk management.
- Importers must provide access to records; failure leads to penalties.
- Records retention and audit powers of Commissioner established.
- Penalties for negligence and fraud during audits detailed.
Administrative and Judicial Procedures
- Advance rulings can be requested on classification, valuation, and origin.
- Protest mechanisms provide for contest of decisions.
- Alert orders used to suspend goods processing with specific conditions.
- Procedures for seizure, forfeiture, appeals, and settlement of customs cases defined.
- Strict penalties imposed for unlawful import/export and customs offenses.
Third Parties and Authorized Economic Operators
- Customs brokers and service providers regulated.
- Transactions allowed through third parties with equal treatment.
- Authorized Economic Operators granted incentives for compliance.
- Framework established for oversight and regulation of these entities.
Customs Fees and Charges
- Bureau authorized to collect fees for services rendered.
- Secretary of Finance may adjust fees to protect government interest.
Offenses and Penalties
- Detailed penalties for misdeclaration, undervaluation, fraud, unlawful import/export, failure to comply with customs formalities.
- Specific fines and imprisonment terms scale with appraised value of goods.
- Penalties against customs employees for dereliction, extortion, collusion, and failure to report fraud.
Miscellaneous Provisions
- Public availability and publication of customs information mandated.
- Rules on issuance of rulings, confidentiality, and administrative procedures specified.
- Disallowance of interest by customs employees in affected goods.
- Incentives for informers of customs violations.
- Outsourcing of ancillary functions permitted.
- Adoption of international standards and best practices encouraged.
Tariff Administration
- Tarif