Calvin’s Hub

I had the pleasure to ask some questions regarding our highly irregular Bureau of Customs to our friendly licensed customs broker, Mr. Phillip. He was very helpful in helping me understand how Fedex and BOC was able to charge me an insane amount for an item I bought online and shipped from Singapore.

Through that post, I saw a lot of people getting irked with how Customs charge them for imported goods. So I compiled a list of questions and asked Mr. Phillip to answer them.

Here is some sort of FAQ if you’re planning to have an item shipped here from abroad.

1. Which method of shipping is better for the recipient? Via post office (regular) or via courier such as Fedex, DHL, etc.?

Both are better but it depends who is best in clearing your shipment on time and will free you of any hassle. My advice, if the goods are only letters, documents, etc. try to send it via EMS. If the items are loose cargo (LCL) or the so called “balikbayan boxes” send it thru so called “Balikbayan Cargo Forwarders”. Take note it will take a month or two for this kind of shipment method because it’s via seafreight!

2. What are the factors that comes into play why I have to pay Php4000 for an item valued at Php6000? Is paying almost or more than 50% of the cost normal?

Customs is implementing the WTO (World Trade Organization) Valuation System called “Transaction Value”. The dutiable value of an imported article subject to an ad valorem rate of duty shall be the transaction value, which shall be the price actually paid or payable for the goods when sold for export to the Philippines.

Usually, the cost of insurance and cost of transport of the imported goods from the port of exportation to the port of entry in the Philippines is also added in your dutiable value (purchased price).

3. Sometimes, people are not being taxed? How come?

There are a lot of scenarios that can happen. One thing for that is that shipment imported has Tax Exemption duly provided by the consignee. But NOT all shipments can be subjected to Tax Exemption especially personal shipments.

4. Are used or free items such as replacement items also taxable?

Yes as per section 100 of Tariff and Customs Code of the Philippines:

ALL ARTICLES, when imported from any foreign country into the Philippines, SHALL BE SUBJECT TO DUTY UPON EACH IMPORTATION, even though PREVIOUSLY EXPORTED FROM the Philippines, EXCEPT as otherwise SPECIFICALLY PROVIDED for in this CODE or in OTHER LAWS

Calvin: Bummer. This is so unfair!

5. What is the rate of duty for and how do i know if they applied the correct rate for my item?

The rate of duty is the duty apply on the shipment arrived and based on World Customs Organization’s Harmonized Tariff System. This depends on the item you purchased or imported here in the Philippines.

It would be better if the seller or shipper determine the correct harmonized code so that customs can easily find the correct rate of duty.

Calvin: You can determine the rate of duty on the Tariff Commission’s website. Mobile phones don’t have rate of duty by the way while garment has the highest at 15%.

6. Is there an online calculator on how you can estimate how much Customs should charge you?

Not that I know of. But if you need to know the basics how to compute the duty and tax, you have to seek assistance of a licensed customs broker. Few courier companies has their own system of computing the duties and taxes.

Calvin: We’ll see if we can program one for you guys.

7. What happens if I can’t or I won’t pay for the item because the tax is too high?

Customs will treat the shipment as abandoned as per section 1801 to 1802 of Tariff and Customs Code of the Philippines (PD1464) as amended by RA 7651.

There is 30 days period starting from the date of discharge of the last package of the shipment and not extendible and 15 days after filing of the necessary import entry. Abandonment can be categorized as:

• Express Abandonment – expressly signifies in writing his intention to abandon the shipment to the Collector of Customs.
• Implied Abandonment – the importer fails to file necessary import entry within 30 days from discharge of the last package OR importer is duly notified and filed an entry but FAILS to claim his importation 15 days after the FINAL ASSESSMENT or notice to claim his importation.

Once abandoned, Customs will auction the abandoned goods as per section 2601  of the Tariff and Customs Code of the Philippines as implemented by CMO 5-2003 or the Rules and Regulations on Public Auction or Negotiated Sale.

Calvin: Or… sell it on eBay.ph?

I’m going to ask our friendly and helpful customs broker to subscribe to this post so if you have any more questions, maybe you can ask them in the comments.

You might also be interested in:

• Oops… Philippines Customs did it again
• FedEx and the insane Philippines Customs Taxes
• Early Christmas for Customs officers?
• Philippine’s or Philippines’? What should I use?

Filed under: Think About It, Tips n' Trix