Tariffs and Customs

Group 1:
Danac, Grace
De Asis, Diana Marie Elaine
De Leon, Yvette Christine
Fortuna, Mariah
Guico, Nikki Andrea
Tariff and Duties
 Tariff and Duties
 Definition
Tariffs can mean:
• list or schedule of articles with their corresponding duties imposed on the same
• duties imposed on the articles which are payable to the government
Custom Duties are:
• Taxes on the importation and exportation of commodities
• Tariff or tax assessed upon merchandise imported from, or exported to, a foreign
country
 Purpose of Imposition
• For both revenue-raising and for regulatory purposes
• May have in some measure the effect of protecting local industries---where such local
industries actually exist and are producing comparable goods. Simultaneously, however,
the very same customs duties inevitably have the effect of producing governmental
revenues
Kinds and Classifications of Duties
 Regular / Ordinary Duties
1. Ad Valorem Duty – a tax, duty, or imposition based on the specified value of goods
2. Specific Duty – tax, duty, or imposition is based on the weight or volume capacity
and other physical unit of measurement
 Special Duties
1. Dumping Duty – imposed by the secretary of Finance upon the recommendation of
the Tariff commission when:
a. Price of the imported article is deliberately or continually fixed at less
than fair market value or cost of production; AND
b. Importation would cause or likely cause an injury to local industries
engaged in the manufacture or production of the same or similar articles
or prevent their establishment
2. Marking Duties – (5%) five percent ad valorem imposed on articles properly
marked, collected by the commissioner, except when such article is exported or
destroyed under the customs supervision and prior to final liquidation of the
corresponding entry.
Purpose: To prevent possible deception of the consumers
Cont. (Kinds and Classifications of Duties)
3. Countervailing Duties – imposed on imported articles which has caused or
threatens to cause material injury to a domestic industry or has materially
prevents the establishment of a domestic industry
Requisites:
a. Levy of an excise tax or inland tax or local goods of the same or similar
class as the article imported or the grant of subsidy to the foreign
exporter by his government
b. Importation is likely to insure materially established local industries or
prevent their established local industries or prevent their establishments
4. Discriminatory Duties (Retaliatory duty)
– imposed on imported goods that discriminates against the commerce of the
Phil. --- to place the commerce of the Philippines at a disadvantage
compared with the commerce of any foreign country
5. Safeguard Measures – can be imposed when a product is being imported in
increased quantities and threatens or cause material
injury to the domestic industry
Flexible Tariff Clause

 President is empowered:
1. to increase, reduce or remove existing rates of import duty;
2. To establish import quota or to ban imports of any commodity
3. To impose an additional duty on all imports not exceeding 10% ad
valorem
 The president may do this in the interest of national economy, general
welfare and/or national security, AND upon recommendation of NEDA
Requirements of Importation
Requirements for Importation
Accrual and Payment of Tax and
Duties
 General Rule
“All imported articles are subject to duties”
 Including:
1. Goods previously exported; and
2. Importations by the government
 Exceptions:
1. De minimis importtations (small value importations---P10 000 or below)
2. Conditionally-free importations
 Provided they comply with formalities and regulations promulgated by the
Commissioner of Customs
 If the article imported for free was used, sold, bartered or hired for purposes
other than that which they were intended for without prior payment of the duty,
tax, or other charges which would have been due and payable at time of entry,
then the article will be forfeited for the Government, and the importation shall
constitute a fraudulent practice against customs revenue
 President may suspend, disallow or completely withdraw, in whole or in
part, any of the conditionally-free importation
 Cont.
Rules for returning resident (stayed in a foreign country for more than six months)
Have tax and duty exemptions, as long as the stuff they bring back aren’t in commercial
quantities, not intended for sale, and do not exceed the amounts enumerated in Sec
800(f)
Import and Export permits
In terms of the need for permits, all goods may be freely imported into and
exported from the Philippines
EXCEPT those which are subject to regulation
Goods Declaration
Refers to a statement made in the manner prescribed by the Bureau and other
appropriate agencies, by which the persons concerned indicate the procedure to be
observed in the application for the entry or admission of imported goods and the
particulars of which the customs administration shall require
 Cont. (Goods Declaration)
 All goods declared for consumption should be cleared through a formal entry process
 EXCEPT the following goods which can be cleared through an informal entry process:
 Goods of commercial nature with a value of less than P50 000;
 Personal and household effects or goods, not in commercial quantity, imported in a passenger’s
baggage or mail

Filing of Goods Declaration

 The following may file the goods declaration:
 The importer, as the holder of the bill of lading;
 The exporter, as the owner of the goods to be shipped out
 A customs broker acting under the authority of the importer or the holder of the bill
 A person duly empowered to act as agent or attorney-in-fact for each holder

 The goods declaration must be lodged within 15 days from the date of discharge of
the last package from the vessel or aircraft
 May be extended for another 15 days, BUT request must be made before the expiration of
original period
 Lodgement and clearance prior to the arrival of goods may be allowed by the Bureau
(Advance lodgement and clearance)
 Cont.
Provisional Goods Declaration
 A provisional goods declaration can be filed if the declarant does not have all the
information required to complete the goods declaration, under two conditions:
1. It must substantially contain information required by the Bureau; AND
2. The declarant undertakes to complete the information within 45 days from the filing of
the provisional goods declaration
Relief Consignment
 Refers to goods donated or leased to the government and accredited private
entities for free distribution to or use of victims of calamities
 To be EXEMPT, the relief consignment should be:
1. Imported during a state of calamity
2. Intended for a specific calamity area
3. For the use of the calamity victims therein
 Assessment and Payment of Duties and Taxes, Interest,
and Surcharge
1. Customs officer shall classify, value, and determine the
duties and taxes to be paid; prepare and submit an
assessment report
2. There are tentative assessment in the following cases:
o When the duties and taxes initially assessed are disputed; and
o In provisional goods declarations
• In both cases, the goods can be released upon posting of proper security
• These become final upon final readjustment
 Cont. (Assessment and Payment Duties
and Taxes, Interest, and Surcharge)
3. Any readjustment of appraisal, classification or return by the
District Collector cannot be altered or modified EXCEPT:
a. Within 1 year after payment of the duties, upon statement of error in
conformity with Sec 912, as approved by the District Collector
b. Within 15 days after such payment, upon request for appraisal or
reclassification addressed to the Commissioner by the District Collector, if
the appraisal or classification is deemed to be low
c. Upon request for reappraisal and/or reclassification, in the form of a
timely protest addressed to the District Collector by the interested party if
the latter should be dissatisfied with the appraisal or return
d. Upon demand by the Commissioner after the completion of compliance
audit in accordance with the provision of this Act
Cont. (Assessment and Payment Duties and Taxes,
Interest, and Surcharge)
4. Duty shall not be assessed in any case upon an amount less than the entered value,
unless by direction of the Commissioner in cases when:
a. Importer certifies at the time of entry that the entered value is higher than the dutiable
value and that the goods are so entered in order to meet increases made by the appraiser
in similar cases
b. Lower assessment shall be allowed only when the importer’s contention is sustained by a
final decision, and shall appear that such action of the importer was taken in good faith
after due diligence and inquiry
5. Assessment are deemed final 15 days after receipt of the notice of assessment by
the importer or consignee
6. Generally, goods are released when:
o The duties, taxes, and other lawful charges have been paid or secured
o All the pertinent laws, rules, and regulations have been complied with
7. Assessment shall be conclusive upon all parties 3 years from the date of final
payment of duties and taxes, or upon completion of the post clearance audit (in
absence of fraud and when goods have been finally assessed and released)
 Misdeclaration, Misclassification, and Undervaluation in
Goods Declaration
 Misdeclaration - occurs when there is a difference in the quantity, quality,
description, weight, or measurement of the goods stated in
the goods declaration and the goods itself
 Misclassification – occurs when the description of the goods is wrong or
insufficient, or when the wrong tariff heading is used
 Undervaluation occurs when:
o The declared value fails to disclose in full the price actually paid
o An incorrect valuation method is used or the valuation rules are improperly
observed
 When the misdeclaration, misclassification, and undervaluation is intentional
or fraudulent, a surcharge of 500% shall be imposed and the goods shall be
seized
 Cont. (Misdeclaration, Misclassification, and Undervaluation in Goods
Declaration)

 When the misdeclaration, misclassification, and

undervaluation leads to a discrepancy in duty and tax to be
paid, a surcharge may be imposed
 A discrepancy of more than 30% is prima facie evidence of fraud
 No surcharge shall be imposed if:
• Discrepancy is less than 10%
• Declared value (undervaluation) or tariff classification declaration
(misdeclaration/misclassification) is rejected as a result of an official
ruling
• Declared value (underaluation) or declared tariff heading
(misdeclaration/misclassification) is rejected in a formal customs dispute
settlement process involving difficult or highly technical question on
application
Unlawful Importation or Exportation
Smuggling
Smuggling refers to the fraudulent act of importing goods to the Philippines
Includes the following:
1. Act of assisting in receiving, concealing, buying, selling, disposing, or
transporting such goods, with full knowledge that the same has been
fraudulently imported
2. Fraudulent exportation of goods
3. Importing goods without complete customs prescribed importation, or without
being cleared by customs or other regulatory government agencies, for the
purpose of evading payment of prescribed taxes, duties and other government
charges; (Outright smuggling)
4. Importing goods by means of fraudulent, falsified or erroneous declaration of
the goods to its nature, kind, quality, quantity, or weight, for the purpose of
reducing or avoiding payment of prescribed taxes, duties and other charges
(Technical smuggling)
Other Fraudulent Practices
Remedies
Government Administrative