REPUBLIC ACT NO.

1937

AN ACT TO REVISE AND CODIFY THE TARIFF AND CUSTOMS LAWS OF THE
PHILIPPINES

Customs Duty This refers to taxes levied on imported or exported goods. The two types of customs
duties collected under international trade are import and export duty.
Types of Custom duties:
 An ad valorem duty is a fixed percentage of the value
 A specific duty is a duty of a specific amount of money that does not vary with the price of
the goods but with its weight, volume, surface, etc.

Tariff - This is a rate of tax levied on imports or exports.

The Philippines Custom system is based on the Standard International Trade Classification (SITC) of
the United Nations

The basis of applied duty rates is to follow the domestic and global economic developments. This
provides protection to local producers, especially in the sectors concerning manufacturing and
agriculture.

All importation, unless exempt by law, are subject to Custom Duties.

All importation, unless exempt by law, are subject to VAT.
Importations subject to Excise Tax:
 Alcohol and alcohol products
 Tobacco and tobacco products
 Non-essential/luxury products
 Petroleum products

Bureau of Customs
The Bureau of Customs (BOC) is an attached agency of the Department of Finance. It is charged with
assessing and collecting customs revenues, curbing illicit trade and all forms of customs fraud, and
facilitating trade through an efficient and effective customs management system.

Section 101. Imported Articles Subject to Duty. Lodgement - refers to the registration of a goods
declaration with the Bureau, in a manner prescribed under customs laws, rules and regulations.

Period within Which to Lodge. Goods declaration must be lodged within fifteen (15) days from the
date of discharge of the last package from the vessel or aircraft.

Goods Declaration - refers to a statement made in a manner prescribed by customs laws, rules and
regulations for the entry or admission of imported goods

Types of imported goods:

Freely Importable Goods – refers to goods that may be freely imported into the Philippines without
need for import permits, clearances or licenses, unless otherwise provided by law or regulation.
Regulated Importation – refers to goods that are subject to regulation, which shall be imported only
after securing the necessary clearances, licenses, and any other requirements prior to importation.
Restricted Importation - Except when authorized by law or regulation, these importations are
prohibited
De Minimis Importation – importation of negligible amount on which no duty is collected to
minimize importation and custom administration cost. Threshold amount, P10,000 and below
FCA/FOB.

CAO 06-2016
Balikbayan box exemption allows up to three balikbayan boxes per calendar year provided that the
total value does not exceed P150,000.
Such exemption could be increased to P250,000 for Filipino nationals who have stayed in a foreign
country for at least five years, and up to P350,000 if the Filipino national has stayed outside the
Philippines for at least 10 years.
The balikbayan boxes exemptioncovers only personal and household effects, which should not be in
commercial quantities nor intended for barter, sale, or hire.

SEC. 104. Rates of Import Duty.

The maximum rate shall not exceed one hundred per cent ad valorem.
An additional 100% across the board duty shall be levied on the products of any foreign country
which discriminates against Philippine export products.

DATERMINATION OF CUSTOM DUTY

A. Ad valorem, Dutiable value
B. Specific, Dutiable weight

DUTIABLE VALUE
SECTION 201. Basis of Dutiable Value.
(A) Method One - Transaction Value= which shall be the price actually paid or payable for the
goods when sold for export to the Philippines, adjusted by adding:
The following to the extent that they are incurred by the buyer:
(a) Commissions and brokerage fees (except buying commissions);
(b) Cost of containers;
(c) The cost of packing, whether for labour or materials;
(d) The amount of royalties and license fees related to the goods being valued;
(e) The cost of transport of the imported goods from the port of exportation to the port of
entry in the Philippines;
(f) Loading, unloading and handling charges associated with the transport of the imported
goods from the country of exportation to the port of entry in the Philippines; and
(g) The cost of insurance.

(B) Method Two. -Transaction Value of Identical Goods.

- transaction value of identical goods sold for export to the Philippines and exported at or about the
same time as the goods being valued. "Identical goods!' shall mean goods which are the same in all
respects, including physical characteristics, quality and reputation. For goods to qualify, production
would have to be in the same country as the identical goods.

(C) Method Three. -Transaction Value of Similar Goods.

- transaction value of similar goods sold for export to the Philippines and exported at or about the
same time as the goods being valued. "Similar goods " shall mean goods which, although not alike in
all respects, have like characteristics and like component materials which enable them to perform the
same
functions and to be commercially interchangeable.
For goods to qualify, the value of goods must be:
 Closely resembling the similar goods
 Capable of performing the same function
 Commercially interchangeable
 Produced in the same country and by the same manufacturer as the similar goods
(D) Method Four -Deductive Value (based on selling price locally).
- based on the unit price at which the imported goods or identical or similar imported goods are sold
in the Philippines, In the same condition as when imported, in the greatest aggregate quantity, at or
about the time of the importation of the goods being valued.

E) Method Five -Computed Value (cost to produce + importation cost).

-The dutiable value under this method shall be the computed value which shall be the sum of:
(1) The cost or the value of materials and fabrication or other processing employed in
producing the imported goods;
(2)The amount for profit and general expenses equal to that usually reflected in the sale of
goods of the same class or kind as the goods being valued which are made by producers in
the country of exportation for export to the Philippines;
(3)The freight, insurance fees and other transportation expenses for the importation of the
goods;
(4) Any assist, if its value is not included under paragraph (1) hereof, and
(5) The cost of containers and packing, if their values are not included under paragraph (1)
hereof.

(F) Method Six - Fallback Value.

- it shall be determined by using other reasonable means and on the basis of data available in the
Philippines.

DUTIABLE WEIGHT
SECTION 202. Bases of Dutiable Weight.
(a) gross weight, the dutiable weight thereof shall be the weight of same, together with the
weight of all containers, packages, holders and packing, of any kind, in which said articles are
contained, held or packed at the time of importation.
(b) legal weight, the dutiable weight thereof shall be the weight of same, together with the weight
of the immediate containers, holders and/or packing in which such articles are usually
contained, held or packed at the time of importation and/or, when imported in retail packages,
at the time of their sale to the public in usual retail quantities
(c) net weight, the dutiable weight thereof shall be only the actual weight of the articles at the
time of importation, excluding the weight of the immediate and all other containers, holders
or packing in which such articles are contained, held or packed.

GROSS WEIGHT LEGAL WEIGHT NET WEIGHT

SECTION 203. Rate of Exchange.

For the assessment and collection of import duty upon imported articles and for other purposes,
the value and prices thereof quoted in foreign currency shall be converted into the currency of
the Philippines at the current rate of exchange or value specified or published, from time to time,
by the Central Bank of the Philippines.

PART 2. -SPECIAL DUTIES

SECTION 301. Anti -Dumping Duty
Anti -dumping duty refers to a special duty imposed on the importation of a product, commodity or
article of commerce into the Philippines at less than its normal value when destined for domestic
consumption in the exporting country, which is the difference between the export price and the
normal value of such product, commodity or article.
Dumped import product refers to any product, commodity or article of commerce introduced into the
Philippines at an export price less than its normal value in the ordinary course of trade, for the like
product, commodity or article destined for consumption in the exporting country, which is causing or
is threatening to cause material injury to a domestic industry, or materially retarding the establishment
of a domestic industry producing the like product.

SECTION 302. Countervailing Duty.

-"Whenever any product, commodity or article of commerce is granted directly or indirectly by the
government in the country or origin or exportation, any kind or form of specific subsidy upon the
production, manufacture or exportation of such product, commodity or article, and the importation of
such subsidized product, commodity or article has caused or threatens to cause material injury to a
domestic industry or has materially retarded the growth or prevents the establishment of a domestic
industry as determined by the Tariff Commission (hereinafter referred to as the 'Commission'), the
Secretary of Trade and Industry, in the case of non-agricultural product, commodity or article, or the
Secretary of Agriculture, in the case of agricultural product, commodity or article (both of whom are
hereinafter simply referred to as 'the Secretary,' as the case may be) shall issue a department order
imposing a countervailing duty equal to the ascertained amount of the subsidy.

Marking Duty (for Failure to Mark.)

-If at the time of importation any article (or its container, as provided in subsection "b " hereof), is not
marked in accordance with the requirements of this section, there shall be levied, collected and paid
upon such article a marking duty of 5 per cent ad valorem, which shall be deemed to have accrued at
the time of importation, except when such article is exported or destroyed under customs supervision
and prior to the final liquidation of the corresponding entry.

Discriminatory Duty As stipulated under Section 304 of the TCCP, the discriminatory duty is a new
or additional duty in an amount not exceeding 100% ad valorem, imposed by the President by
proclamation upon articles of a foreign country which discriminates against Philippine commerce or
against goods
coming from the Philippines in such manner as to place the commerce of the Philippines at a
disadvantage compared with the commerce of any foreign country

SECTION 514. Export Products Subject to Duty and Rates.

There shall be levied, assessed and collected an export duty on the gross F.O.B. value at the time of
shipment based on the prevailing rate of exchange, of the following products in accordance with the
schedule specified in the column Export Duty.

EXPORT PRODUCTS
Wood Products
1. Logs
2. Lumber
3. Veneer
4. Plywood
Mineral Products
1. Metallic ores and concentrates
a) Copper
b)Iron
c)Chromite
2. Gold
3. Non -Metallic
a)Clinker, cement
b)Portland cement
4. Mineral fuel
a)Bunker fuel oil
b)Petroleum pitch
5. Silver
Plant and Vegetable Products
1. Abaca (stripped hemp, unmanufactured)
2. Banana
3. Coconut
a) Copra
b) Coconut oil
c)Copra meal/cake
d) Desiccated coconut
4. Pineapple
a) Pineapple sliced or crushed
b) Pineapple juice or juice concentrate
5. Sugar and Sugar Products
a) Centrifugal sugar
b)Molasses
6. Tobacco a) Tobacco leaf b) Scrap tobacco
Animal Products
1. Shrimps and Prawns

For purposes of computing the duty, the cost of packaging and crating materials shall be deductible
from the export value, provided such materials are domestically manufactured using a substantial
portion of local raw materials, as determined by the Board of Investments.

ASSESSMENT OF TOTAL TAX DUE TO GOVERNMENT:

FOB/FCA Value (FREIGHT ON BOARD/FREE CARIER)

ADD: Dutiable Insurance
ADD: Dutiable Freight
Dutiable Value(Foreign Currency)__________________ _______.
Multiply by: Exchange Rate
Dutiable Value(PHP)_____________________________ _______
Multiply by: Rate of Duty(%)
Customs Duty___________________________________ _______
ADD the following:
Php0.00
Brokerage Fee (check if applicable)
Customs Documentary Stamp_______________________ Php15.00
Total Landed Cost(TLC)
ADD:Excise Tax, if any
Value-Added Tax(VAT) Base
Multiply by: VAT rate 12%
Value Added Tax_________________________________ _______

Summary:
Customs Duty
Value Added Tax
Excise Tax, if any
Customs Documentary Stamp Php15.00
Total Amount Due to the Government:____________