CUSTOMS DUTIES AND TAXES The importer is responsible for the mistake of its broker. Thus, knowing how to compute the correct customs duties and taxes is paramount for enyone who imports. -CUSTOMS DUTIES Under Sec. 201 of the Tariff and Customs Code, the basis of the dutiable value (tax base of customs duty) is the transaction value which shall be the price actually paid or payable for the goods when exported to the Philippines. The said price is adjusted by adding some amounts deemed by law as part of the cost. Thus, customs duty is basically computed as follows: Cost +Insurance +Freight +Other Charges ------------------------ DUTIABLE VALUE ( in Foreign Currency) x Exchange Rate ------------------------- DUTIABLE VALUE ( in Pesos) x Duty Rate based on classification =============== CUSTOMS DUTY COST. This is the price of the goods agreed upon by the buyer and the seller. This amount is normally found in the Commercial Invoice. However, some adjustments are added to the price to arrive at the Cost such as royalties related to the imported goods and/or proceeds of subsequent resale of the imported goods that accrue to the seller. FREIGHT. This is the cost of transporting the goods from the country of origin to the Philippines. This amount is normally found in the Bill of Lading or, in cargoes entered via air, in the Air Waybill. INSURANCE. The amount of insurance premium depends on the nature of the imported goods. When the goods are classified as dangerous cargoes, the rate of insurance is 4% of the Cost. Otherwise, for general cargoes, the rate is 2%. EXCHANGE RATE. Exchange rate officially disseminated to the public by the Bangko Sentral ng Pilipinas each Friday shall be the exchange rate adopted the following day up to Friday the following week. If no rate is published by the BSP on a Friday, the latest rate published prior to that Friday (Thursday or Wednesday) shall apply. DUTY RATE. The Duty Rate depends on the classification of the imported goods. Based on the classification, a corresponding rate is provided in the AHTN or the ASEAN Harmonized Tariff Nomenclature. -VALUE ADDED TAX ON IMPORTATION Under Sec. 107 of the National Internal Revenue Code (NIRC), the 12 % VAT on importation shall be based on the Landed Cost which includes the following: Dutiable Value +Bank Charges (if under LC) +Customs Duty +Excise Tax (if any) +Brokerage Fee +Arrastre Charge +Wharfage +Customs Documentary Stamp +Import Processing Fee ------------------------------------ LANDED COST x 12% (VAT) ===================== VAT DUTIABLE VALUE & CUSTOMS DUTY. See computations above. BANK CHARGES. These charges are normally incurred when a Letter of Credit facility is used by the importer. EXCISE TAX. For certain imported goods, excise tax is also imposed by the NIRC. Said excise tax forms part of the Landed Cost which is the basis of the12% VAT on importation. BROKERAGE FEE. The rates vary depending on the value of the shipment. It starts from P1,300.00 for shipment not more than P10,000.00.The highest rate is P5,300.00 on the first P200,000.00 plus 1/8 of 1% in excess thereof. ARRASTRE AND WHARFAGE. The rate of Arrastre and Wharfage depends on the size container used for the shipment. For Arrastre the amount ranges from P110.00 to Php8,727.00. For Wharfage, the amount ranges from P34.00 to P779.05. CUSTOMS DOCUMENTARY STAMP. The amount is fixed at P265.00 regardless of the amount of the shipment. IMPORT PROCESSING FEE. The amount depends on the value of the shipment. It ranges from P250.00 to Php1,000.00. It should be noted that, other than the payment of the correct customs duties and taxes, the importer is likewise obliged to preserve the records of their importations for 10 years from the date of filing the Import Entry Declaration. Failure to do so will render the importer liable to pay an administrative fine equivalent to 20% ad valorem on the imported goods for which no records were kept. Brokers play an important role in facilitating international trade among nations. Through their service for a fee, goods are released to the importers. However, in case of failure to pay the correct amount of duties and taxes, the importer is liable for the harsh penalties imposed by law. The monetary penalty may range from 50% to 800% of the revenue loss. Not to mention the possible criminal prosecution, public humiliation and incarceration. This article is for general information only and not intended as a substitute for a professional advice on a specific tax issue. For questions or comments, the author may be reached via business_tax@yahoo.
Posted on: Tue, 24 Jun 2014 16:25:23 +0000
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