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Customs Exempt Packages Valued Less than P10k from Tax

  • October 12, 2016
  • Posted by: Atty. James Biron
  • Categories: Featured, Legal News, Tax
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The Bureau of Customs issued Customs Administrative Order No. 02, s. 2016 which makes imported items with a declared value of less than Php10,000 no longer subject to tax.

It was signed by Customs Commissioner Nicolas Faeldon and approved by Finance Secretary Carlos Dominguez III last September 28, 2016.

This CAO implements Section 423, Chapter 3, Title IV, and other relevant sections of Republic Act No. 10863, otherwise known as the Customs Modernization and Tariff Act (CMTA).

The increase in the covered amount was mandated to minimize importation and customs administration cost in the clearance of importations with de minimis value, without compromising customs border enforcement control. Goods with de minimis value are considered importations of negligible amount and entitled to immediate release. The law sets the de minimis value at Php10,000, which was previously P10 only, free carrier (FCA) or free on board (FOB), or below.

Certain exceptions to this tax free importations were identified by the Customs Administrative Order No. 02, s. 2016. Thus, the following importations shall not be entitled to immediate release as de minimis importations:

  1. Importations declared as “without value” or “of no commercial value” or with specific amount but qualified by the phrase “for customs purposes” or analogous phrases; in which case the importer must declare the value as supported by applicable documents like invoice
  2. Tobacco and liquor products
  3. Goods subject to requirements or conditions imposed by concerned agencies, unless for personal use and within limits allowed
  4. Prohibited and restricted importations
  5. Importations to be entered conditionally free, for warehousing, for transit and/or admission to free zone

Violations of this Customs Administrative Order No. 02, s. 2016 shall be penalized in accordance with Title XIV of the CMTA and other applicable penal provisions.

The full text of this CAO is available below

[gview file=”https://www.jamesbiron.com/wp-content/uploads/2016/10/20161010-others-cao-rrd.pdf”]

Image source: Latimes.com


Author: Atty. James Biron
Atty. James S. Biron is a corporate lawyer specializing in foreign investments, trade, mergers and acquisitions, planning and financing of projects and capital raising. Clients served include real estate, construction, energy, information technology, agriculture, education, medical and casino gaming companies.

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