The importation of professional instruments and household effects are exempt but the importation of the car is subject to

VAT . Illustration 2
Mr. Kung Fu, a Chinese martial arts master, arrived in the Philippines with an immigration visa. He brought with him the following
which he declared as his personal effects:

10 pieces of brand new iPhone 6 P 150,000 each

10 pieces of brand new IBM laptops P80,000 each
5 desktop computers P40,000 each
1 piece of used laptop P 30,000
1 piece of used iPhone 4S 20,000
1 piece of used calculator 400
Used clothes, apparel and travelling bag 7,000

The used laptop, iPhone 4S, calculator and apparel are apparently personal effects which are past consumptions; hence, these are
exempt from VAT.
The nature and quantity of the iPhone 6, IBM laptops and desktop computers is clearly inconsistent with the concept of personal
effects. These items are unquestionably for domestic consumption; hence. Subject to VAT.

IMPORTATION EXEMPT UNDER SPECIAL LAWS AND TREATIES

 Import that are exempted by special laws, treaties and international agreements to which the Philippine government is a signatory is
not subject to the VAP on importation.

THE VAT ON IMPORTATION

Other importation of goods is subject to VAT regardless of whether the:
1. Importer is engaged or not engaged in the trade business.
2. Importer is a VAT or non-VAT business
3. Importation is for business or personal use
4. Non-resident seller is engaged or not engaged to business

The basis of the VAT on importation

The VAT on importation is computed as 12% of the total landed cost of the importation.
Composition of landed cost:
A. Dutiable value
B. Other in-land costs
1. Custom duty
2. Excise tax, if nay
3. Other in-land costs, such as:
a. Bank charge
b. Brokerage fee
c. Arrastre charge
d. Wharfage due
e. Documentary stamp tax
f. Import processing fees

The dutiable value, also called transaction value, refers to the total value used by the Bureau of Customs in determining customs
duties, such as:
1. Cost of the goods
2. Freight
3. Insurance
4. Other charges and costs to bring goods herein


import
The dutiable vale encompasses all costs incurred in bringing the goods up to the Philippine port and prior t any other in-land costs of

*The customs duty is computed as: Dutiable value x Exchange rate x Rate of Duty

Illustration 1
MRS Trading Corporation imported goods from abroad for domestic Sale. Shown below are the details of the importation.
Peso value of supplier’s invoice P2,000,000