Changes under the Customs Modernization and Tariff Act: an overview

SUITS THE C-SUITE By Mark Anthony P. Tamayo

Business World (06/13/2016 – p.S1/4)

(Second of 5 parts)

In last week’s article, we discussed the evolution of the Tariff and Customs Code of the Philippines (TCCP) and briefly talked about the new rules on goods declaration under the new Customs Modernization and Tariff Act (CMTA).

This article will continue to discuss the changes introduced in the CMTA.


The CMTA acknowledges the e-commerce trend of increasing number of small value consignments and thus, retained the provision on de minimis values (small value importations) below which no duties and taxes will be collected and with minimal clearance procedures, including data requirements.

The de minimis threshold value has now been increased to Php10,000 (previously, Php10) in response to the clamor of foreign business groups. Thus, if the value of an importation does not exceed Ph10,000, there will be no duties and taxes that will be collectible by the BoC.

This threshold value is subject to review by the Finance Secretary every three years.


Goods such as food, medicine, equipment and materials for shelter, donated or lease to government institutions and accredited private entities for free distribution to or use of victims of calamities shall be treated as relief consignment. Relief goods are exempt from duties and taxes.

Upon declaration of a state of calamity, the clearance of such goods will be a matter of priority.

Towards this end, restrictions on customs policies are now relaxed under the CMTA. Special procedures are now provided to facilitate their unimpeded entry. Among these procedures are: a) lodging of a simplified or provisional goods declaration; b) pre-arrival clearance; c) clearance beyond business hours without corresponding charges; and d) examination shall be in exceptional cases only.

The Department of Finance (DoF) and the Department of Social Welfare and Development shall jointly issue implementing rules on this.


The CMTA introduces modifications to Section 105 of the TCCP, as amended, on conditionally-free importations (now named conditionally-free and duty-free importations under Section 800).

One of the more well-known privileges recognized under Section 800 is the duty and tax-free importation of personal and household effects by “returning residents” which has been defined as nationals who have stayed in a foreign country for a period of at least six months.

The conditions for exemption (aside from the requirements that the same should neither be of commercial quantity nor intended for barter, sale or hire) are as follows:

· For those who have stayed in a foreign country for a period of at least 10 years, the Free on Board (FoB) or Free Carrier Arrangement (FCA) value shall not exceed P350,000 and that the privilege is not availed of within 10 years prior to the returning resident’s arrival.

· If the stay is at least five years, the FCA or FOB value shall not exceed P250,000 and that the privilege is not availed of within five years prior to the returning resident’s arrival.

· If the stay is less than five years, the FCA or FoB value shall not exceed P150,000 and that the privilege is not availed of within six months prior to the returning resident’s arrival.

In addition to the above, returning Overseas Filipino Workers (OFWs) shall have the privilege to bring in tax and duty free home appliances and other durables (limited to one of every kind) once in a given calendar year accompanying them on their return or arriving within a reasonable time (not exceeding 60 days after every returning OFWs return).

Residents of the Philippines, OFWs or other Filipinos, while residing abroad or upon their return to the Philippines, are also allowed to bring in or send to their families or relatives in the Philippines “balikbayan boxes” (containing personal and household effects only) duty and tax-free, provided that the FCA value shall not exceed P150,000 and the items are not in commercial quantities or intended for barter, sale or for hire. This can be availed up to three times in a calendar year.

Any amount in excess of the above threshold values shall, however, be subject to duties and taxes.

In the third part of this article, we shall discuss other changes brought about by the CMTA, particularly the rules on related-party transactions and penalties relating to unlawful importation and exportation, misdeclaration, misclassification and underdeclaration of imported goods.

Mark Anthony P. Tamayo is a Partner of SGV & Co. and currently the Indirect Tax Country Leader and Head of the Global Trade & Customs practice of the firm.