Import Duty Reduction on Petroleum Products

Executive Order No. 440 is issued under powers granted by law, including the authority invoked through Republic Act No. 8479 and the tariff adjustment powers under the Tariff and Customs Code of 1978 (Presidential Decree No. 1464).
Republic Act No. 8479 establishes a single and uniform tariff duty on imported crude oil and imported refined petroleum products at three percent (3%), subject to Presidential reduction when warranted.
Republic Act No. 8479 provides that starting January 1, 2004 (or upon implementation of the Uniform Tariff Program under WTO and ASEAN FTA commitments), the tariff rate is automatically adjusted to the appropriate level notwithstanding the statute.
Sections 401 and 402 of Presidential Decree No. 1464 empower the President to increase, reduce, or remove existing rates of import duty and to modify the form of duty and tariff nomenclature.
Executive Order No. 440 modifies the interim revenue measure implemented by Executive Order No. 336, series of 2004, until Congress enacts new taxes for petroleum products.

Executive Order No. 440 is anchored on Presidential authority to reduce tariff rates when warranted and on continuing ASEAN commitments to adjust tariff levels in line with future tax laws for petroleum products.
Executive Order No. 440 recognizes that implementation of Republic Act No. 9337 expands the VAT base and results in increased Government revenues by imposing VAT on petroleum products.
Executive Order No. 440 accounts for the impact of VAT implementation on retail prices of LPG and petroleum products, even as excise taxes are rationalized and reduced to zero for socially-sensitive products.
Executive Order No. 440 links tariff adjustments with the Government’s ASEAN Free Trade Area Council commitment to adjust duty levels when new laws on petroleum taxes are enacted.

Section 1 covers the articles specifically listed in Annex A (referred to in the order as Annex A) classified under Section 104 of Presidential Decree No. 1464.
Section 1 applies to articles whose duties were adjusted from three percent (3%) to five percent (5%) under Executive Order No. 336.
Section 1 provides that these listed articles are subject to their original rates of import duty, identified as Most-Favored-Nation (MFN) and ASEAN Free Trade Area (AFTA) Common Effective Preferential Tariff (CEPT) rates, shown in Columns 4 and 5 of Annex A.
Section 2 applies the AFTA-CEPT rates to imports from ASEAN Member States applying CEPT concessions for the same product.
Section 3 maintains the duty rates for tariff headings not enumerated and those listed but represented by the symbol “X X X” (as used in the order).

Section 4 mandates that, upon effectivity, all articles in Annex A that are entered and withdrawn from warehouses in the Philippines for consumption shall be levied the MFN rates of duty prescribed in Annex A.
Section 5 mandates that, upon effectivity, the same Annex A articles entered and withdrawn from warehouses in the Philippines for consumption shall be imposed the AFTA-CEPT rates of duty prescribed in Annex A.
Section 5 conditions application of AFTA-CEPT rates on compliance with the Rules of Origin under the CEPT Agreement.
Section 2 requires that AFTA-CEPT rates be accorded to imports from ASEAN Member States applying CEPT concessions, consistent with Article 4 of the Agreement on the CEPT Scheme for the ASEAN Free Trade Area (CEPT Agreement) and its Interpretative Notes.
Section 4 and Section 5 operate upon the effectivity date described in Section 7 (connected to Republic Act No. 9337 or the VAT Reform Law).

Section 6 revokes or modifies all Presidential issuances, administrative rules and regulations, or parts thereof that are contrary to or inconsistent with Executive Order No. 440.
Section 7 requires publication of Executive Order No. 440 in two (2) newspapers of general circulation in the Philippines.
Section 7 sets the effective date as the date of effectivity of Republic Act No. 9337 or the VAT Reform Law.

Section 2 relies on the Agreement on the CEPT Scheme for the ASEAN Free Trade Area (CEPT Agreement), signed on 28 January 1992.
Section 2 applies Article 4 of the CEPT Agreement and its Interpretative Notes.
Section 2 ties preferential duty treatment to CEPT concessions applied by ASEAN Member States to the same product.