Professional Documents
Culture Documents
Aban
(PROF. CABANEIRO) A2011 1
Customs duties
Customs duties are duties which are charged upon
commodities on their being imported in or exported out
of a country
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TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
(PROF. CABANEIRO) A2011 2
1. To increase, reduce, or remove existing protective
rates of import duty, provided that the increase
should not be higher that 100% ad valorem;
2. To establish import quota or to ban imports or any
commodity; and
3. To impose additional duty on all imports not
exceeding 10% ad valorem
Additional notes:
1. An order issued by the President pursuant to the flexible
tarif clause shall take efect thirty (30) days after
promulgation, except in the imposition of additional duty
not exceeding ten percent (10%) ad valorem which shall
take efect at the discretion of the President.
2. In the case of imposition of additional duty, the
investigation
of
the
Tarif
Commission
and
recommendation of NEDA are needed.
ARTICLES SUBJECT TO CUSTOMS DUTIES
Goods for customs duty purposes
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Kinds of goods/merchandise
1. articles subject to duty
2. prohibited importations
3. conditionally-free importations
Articles subject to duty
As a general rule, all articles when imported from a
foreign country including those previously exported from
the Philippines are subject to duty unless otherwise
specifically provided in the Code.
Prohibited importations
1. Dynamite, ammunitions and other explosives, firearms
and weapons, except when authorized by law.
2. Written or printed articles containing any matter
advocating of inciting treason, rebellion or subversion
against the Philippine Government, or forcible resistance
to any law of the Philippines.
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(PROF. CABANEIRO) A2011 3
3. Written or printed articles, paintings, or other
representations of an obscene or immoral character.
4. Articles, instruments, drugs and substances designed and
intended to produce unlawful abortion and printed
materials promoting unlawful abortion.
5. Machines, apparatus or mechanical devices used in
gambling
6. Lottery and sweepstakes tickets except those authorized
by the Philippine Government
7. Articles made of precious metals but actual fineness of
quality not indicated.
8. Any adulterated or misbranded drug in violation of the
Food and Drugs Act.
9. Marijuana, opium poppies, or any other narcotic or
synthetic drugs declared habit-forming, or preparation
thereof, except when authorized by the Philippine
Government, and opium pipes and parts thereof.
10. All other articles and parts thereof, the importation of
which is prohibited by the law or rules and regulations
issued by competent authority.
Conditionally-free importations
Conditionally-free importations are articles which are
exempt from import duties upon compliance with the
formalities prescribed in or with regulations promulgated
by the Commissioner of Customs with the approval of the
Secretary of Finance.
Enumerate several conditionally-free importations
1. Aquatic products caught or gathered by fishing vessels of
Philippine registry
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TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
(PROF. CABANEIRO) A2011 4
position of the person importing them, for their own use
and not for barter or sale, accompanying such persons,
or arriving after within a reasonable time.
8. Importation for the use of foreign embassies, legations,
and other agencies of foreign governments which accord
the same privilege to the corresponding agencies of the
Philippines in their countries.
9. Imported articles donated to, or for the account of, any
duly registered relief organization, not operated for profit,
for free distribution among the needy, upon certification
by the DSWD or DECS as the case may be.
10. Animals (except race horses) and plants for scientific,
experimental,
propagation,
botanical,
breeding,
zoological and national defense purposes.
TRANSACTION VALUE
Transaction value is the price actually paid or payable for
the goods when sold for export to the Philippines.
KINDS OF DUTIES
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EXPORT VALUE
Export value is that which, at the time of exportation, the
same or identical, like or similar article is freely ofered
for sale in the principal export markets of the exporting
country for exportation to the Philippines, in the usual
wholesale quantities and in the ordinary course of trade
(excluding internal excise taxes to be remitted or
rebated).
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(PROF. CABANEIRO) A2011 5
1. Determined by the declared value of the imported goods
by the importer.
2. If Commissioner of Customs has reason to doubt the truth
or accuracy of the declaration or documents provided in
support of the declared value of importation, he may
require the importer to give further explanation and
submit additional documents.
3. If Commissioner still has reasonable doubt as to the
accuracy of the declared value after the explanation and
additional documents are given, he may apply two
alternative methods, to wit:
a. The dutiable value shall be the transaction value of
identical goods sold for export to the Philippines at
or about the date of the exportation of the goods
being valued; or
b. If the dutiable value cannot be determined under the
preceding method, it shall be the transaction
value of similar goods sold for export to the
Philippines at or about the date of exportation of
the goods being valued.
4. If still not able to determine the dutiable value:
a. The unit price at which the imported goods or
identical or similar goods are sold domestically, in the
same condition as when imported, in the greatest
aggregate quantity, to persons not related to the
seller, at or about the time of the importation of the
goods being valued;
b. The computed value; or
c. Any other reasonable means consistent with GATT.
Reiteration of the sequence in determination of value
1st - Transaction value
2nd - Transaction value of identical goods
3rd - Transaction value of similar goods
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SIMILAR GOODS
Similar goods 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.
Reasonable doubt
Reasonable doubt refers to any condition that creates a
probable cause to make the Commissioner of Customs
believe in the inaccuracy of the invoice value of the
imported goods, as reflected by the importer in his
customs declaration, for valuation purposes.
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3. If the buyer and the seller are related to one another, and
such relationship influenced the price of the goods.
RELATED SELLERS AND BUYERS
1. Officers or directors of one anothers businesses.
2. Legally recognized partners in business.
3. Employer and employee.
4. Any person who directly or indirectly owns, controls or
holds 5 % or more of the outstanding voting stock or
shares of both seller and buyer.
5. One of them directly or indirectly controls the other.
6. Both of them are directly or indirectly controlled by a
third person.
7. Together, they directly control a third person.
8. Members of the same family including brothers and
sisters (whether full or half-blood), spouse, ancestors,
and lineal descendants.
Basis
1.
2.
3.
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COUNTERVAILING DUTY
Duty imposed on articles, upon the production,
manufacture or export of which any bounty or subsidy is
directly or indirectly granted in the country of origin
and/or exportation, and the exportation of which into the
Philippines will likely injure an industry in the Philippines
or retard or considerably retard the establishment of such
industry, [Sec. 302, Tarif and Customs Code].
Situation:
Sometimes imported products enjoys certain
subsidy from their government. So, they have an advantage.
Our local products for example, does not enjoy similar subsidy.
We should counter that advantage by imposing countervailing
duties. The purpose there is to protect our local products against
unfair competition.
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RETALIATORY DUTY
Duty imposed upon articles of a foreign country which
discriminates against Philippine commerce in such a
manner as to place it at a disadvantage compared with
the commerce of another foreign country, [Sec. 304,
Tarif and Customs Code].
TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
(PROF. CABANEIRO) A2011 8
Retaliatory or Discriminatory duty duty imposed on
imported goods whenever it is found as a fact that the country
of origin discriminates against the commerce of the Philippines
in such manner as to place it at a disadvantage compared with
the commerce of any foreign country.
Question:
What is the extent of the flexible power of the
President of the Phils. under the TCC?
Answer:
That includes the power to impose discriminatory
duties. The President upon recommendation of the Tarif
Commission may increase the tarif rates by not more than 5x or
meaning 500x of the tarif rates. He may also decrease the tarif
rates by not less than 50%.
He can only exercise these powers in the interest of the
national economy, national security and general welfare of the
people.
DRAWBACKS
A drawback is a device resorted to for enabling a
commodity afected by taxes to be exported and sold in
foreign markets upon the same terms as if it had not
been taxed at all. It may be full or partial.
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Harbor fees
Harbor fees are imposed on vessels entering into or
departing from a port of entry of the Philippines.
Wharfage dues
Wharfage dues are assessed against the cargo of a
vessel engaged in foreign or coastwise trade, based in
the quantity weight or measure received and/or
discharged by such vessel.
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Berthing fees
Berthing fees are assessed against a vessel for mooring
or berthing at a pier, wharf, or river at any port in the
Philippines.
Storage charges
Storage charges are assessed on articles for storage in
customs premises, cargo sheds and warehouses.
Arrastre charges
Arrastre charges are imposed on all imported and
exported articles and baggage of passengers for their
handling, receiving and custody.
Tonnage dues
Tonnage dues are paid by the owner, agent, operator or
master of a vessel engaged in foreign trade based on the
net tonnage of the vessel or weight of the articles
discharged or laden.
Other fees and charges
Charged and collected for services rendered
documents issued by the Bureau of Customs.
and
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GOVERNMENT IMPORTATIONS
All importations by the government for its own use or
that of its subordinate branches or instrumentalities, or
corporations, agencies or instrumentalities owned or
controlled by the government shall be subject to the
duties, taxes, and other charges provided in the Tarif and
Customs Code, [Sec. 1205 Tarif and Customs Code].
When importation begins and when deemed terminated
Importation begins when carrying vessel or aircraft enters
the jurisdiction of the Philippines with an intent to unload.
TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
(PROF. CABANEIRO) A2011 10
Cargo manifest
All cargo, exported or imported, shall be included in the
cargo manifest, except the ships stores.
Import entry
A declaration to the Bureau of Customs showing the
description, value, tarif classification and other
particulars of the imported article to enable the customs
authorities to determine the correct customs duties and
internal revenue taxes due on the importation.
Person authorized to make an import entry
1. Importer, being the holder of the bill of lading
2. A duly licensed customs broker, acting under
authority from the holder of a bill of lading
3. A duly empowered agent or attorney in fact for each
holder of a bill of lading
Import entry filed by person other than importer
If filed by a party other than the importer, the importer
himself is required to declare under oath and under
penalties of falsification or perjury that the declarations
and statements contained in the entry are true and
correct. Such statements constitute prima facie evidence
of knowledge and consent of the importer.
Period for filing of import entry
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ABANDONMENT
Abandonment is the renunciation by an importer of all his
interests and property rights in the imported article.
Express abandonment
When the owner, importer or consignee of the imported
article expressly signifies in writing and under oath to the
Collector of Customs his intention to abandon his
shipment in favor of the government, within ten days
after filing of the import entry, he shall be relieved from
payment of duties, taxes and other charges and
expenses.
Implied abandonment
1. When the owner, importer, consignee or interested party,
after due notice, fails to file an entry within thirty (30)
days, which shall not be extendible, from the date of
discharge of the last package from the vessel or aircraft;
OR
2. Having filed an entry for his shipment, the owner,
importer or consignee, or other interested party fails to
claim his importation within fifteen (15) days, which shall
not be extendible, from the date of posting of the notice
to claim such importation.
Effects of abandonment
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(PROF. CABANEIRO) A2011 11
1. Owner, importer, consignee or other interested party
deemed to have renounced all of his interests and
property rights over the articles.
2. Abandoned article shall be ipso facto deemed the
property of the government and shall be disposed of in
accordance with the provisions of the Code.
3. It does not relieve owner or importer from any criminal
liability which may arise from any violation of law
committed in connection with the importation of the
abandoned article.
Smuggling or unlawful importation
Any person who shall fraudulently import or bring into the
Philippines, or assist in doing so, any article, contrary to
law, or shall receive, conceal, buy, sell, or in any manner
facilitate the transportation, concealment, or sale of such
article after importation, knowing the same to have been
imported contrary to law, shall be guilty of smuggling.
After
importation,
the
act
of
facilitating
the
transportation, concealment or sale of the unlawfully
imported article must be with the knowledge that the
article was smuggled.
However, upon trial, if the
defendant is found to have been in possession of such
article, this shall be sufficient to authorize the conviction
unless the defendant explains his possession to the
satisfaction of the court.
Three
1.
2.
3.
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ADMINISTRATION
Who is in charge?
The offices charged with the administration and
enforcement of the law are the Tarif Commission and the
Bureau of Customs.
Functions of the Tariff Commission
The Commission shall investigate:
1. The administration of and the fiscal and industrial
efects of the countrys tarif and customs laws;
2. The relations between the rates of duty on raw
materials and finished or partly finished goods;
3. The efects of ad valorem and specific duties and of
compound specific and ad valorem duties;
4. All questions relative to the arrangement of
schedules and classifications of articles under the
tarif law;
5. The tarif relations between the Philippines and
foreign countries, commercial treaties, etc.
6. The volume of importations compared
domestic production and consumption;
with
TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
(PROF. CABANEIRO) A2011 12
9. The nature, composition, and classification of
articles for customs revenue and other related
purposes which shall be furnished no NEDA, Board
of Investments, Central Bank and the Secretary of
Finance.
Duties, powers and jurisdiction of the Bureau of Customs
1. The assessment and collection of the lawful revenues
from imported articles and all other dues, fees, charges,
fines and penalties accruing under the tarif and customs
laws.
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IN GENERAL
Remedies available to the government
1. Seizure and forfeiture of goods and commodities
2. Judicial action against the taxpayer
Tax Remedies under the Tariff and Customs Code:
Remedies
Government
Impor
(1) Administrative or
extra-judicial
(2) Judicial
(a) Appeal to C
(b) Filing of cri
action again
Customs
TAX REMEDIES
TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
(PROF. CABANEIRO) A2011 13
1. Firs of all, the Collector shall cause all articles entering
the jurisdiction of his district and destined for importation
through his port to be entered at the customhouse. He
shall cause all such articles to be appraised and
classified, and shall assess and collect the duties, taxes,
and other charges thereon, and shall hold possession of
all imported articles, upon which duties, taxes, and other
charges have not been paid or secured to be paid,
disposing of the same according to law. [Section 1206,
Tarif and Customs Code]
2. The party adversely afected by the ruling or decision of
the Collector whereby liability for duties, taxes, fees or
other charges are determined, may protest such ruling or
decision. [Section 2308, Tarif and Customs Code]
3. The protest, which must be in writing, is filed with the
Collector within fifteen (15) days. No protest shall be
considered unless payment of the amount due after final
liquidation (i.e. computation of the liability) has first been
made and the corresponding docket fee actually paid.
4. Every protest shall be filed in accordance with rules and
regulations promulgated for the purpose, and shall point
out the particular decision or ruling of the Collector to
which exception is taken or objection made, and shall
indicate with reasonable precision the particular ground
or grounds upon which the protesting party bases his
claim for relief. [Section 2310, Tarif and Customs Code]
5. The scope of a protest shall be limited to the subject
matter of a single adjustment or other independent
transaction; but any number of issues may be raised in a
protest with reference to the particular item or items
constituting the subject matter of the protest. Single
adjustment refers to the entire content of one liquidation,
including all duties, fees, surcharges or fines incident
thereto. [Section 2310, Tarif and Customs Code]
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TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
(PROF. CABANEIRO) A2011 14
Incidentally, in case of appeals to the Court of Tax
Appeals from the decisions of the Secretary of Finance as a
consequence of the automatic review by the Secretary of
Finance of decisions emanating form Customs, the thirty-day
period of appeal under Republic Act No. 1125 will necessarily be
counted from the receipt of the decision of the Secretary of
Finance.
PROCEDURE IN PROTEST
Remedy
(1) File a protest
(2) If protest is
denied, Appeal
collectors ruling
(3) If CC affirm
collectors ruling,
Appeal
(4) If CTA affirm
collectors ruling,
Appeal
(5) If CA affirm
CTA, Appeal
Where
to file
Collecto
r
of
Custom
s
[Issues which
may be raised]
(a) Validity if the
assessment
or
collection
(b) Validity of
classification of
articles
Custom
s
Commis
sioner
(CC)
Questions of fact
or Question of
law
CT
Question of fact
or Question of
law
Question of fact
or
Question of law
Question of law
Prescriptive
Period
15 days from
the payment
of
Customs
duties
Within
15
days
from
receipt of the
Collectors
ruling
Within
30
days
from
receipt of the
decision
of
the CC.
Within
15
days
from
receipt of CTA
decision
Within
15
days
from
receipt of CA
decision
Automatic
review
and
supervisory
authority
Commissioner and Customs and Secretary of Finance
of
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TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
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Burden of proof in protest cases
In protest cases, the protestant has the burden of proving
the correctness of his contention for the issue is not
whether the Collector was wrong but whether the
importer is right.
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3. Right to search vehicles or aircrafts and persons or
articles conveyed therein
4. Right to search vehicles, beasts and persons
5. Search of persons arriving from foreign countries
Right of police officer to enter enclosure without a
warrant
Any person exercising the police powers conferred under
said Code may at any time enter, pass through, or search
any land or enclosure or any warehouse, store or other
building, not being a dwelling house.
A warehouse, store or other building or enclosure used
for the keeping or storage of articles does not become a
dwelling house within the meaning hereof by reason of
the fact that a person employed as watchman lives in the
place, nor will the fact that his family stays therein with
him alter the case.
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TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
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sufficient bond, in an amount to be fixed by him, conditioned for
the payment of the appraised value of the article and/or any
fine, expenses and costs which may be adjudged in the case:
Provided that articles the importation of which is prohibited by
law shall not be released under bond.
2. Report seizure to Commissioner and Chairman,
Commission on Audit
3. Notification to owner or importer
4. Notification to unknown owner
5. Description, appraisal and classification of seized
property
6. Proceedings in case of property belonging to unknown
parties
7. Settlement of case by payment of fine or redemption of
forfeited property
Subject to approval of the Commissioner, the district
collector may, while the case is still pending, except when there
is fraud, accept the settlement of any seizure case provided that
the owner, importer, exporter, or consignee or his agent shall
ofer to pay to the collector a fine imposed by him upon the
property, or in case of forfeiture, the owner, exporter, importer
or consignee or his agent shall ofer to pay the domestic market
value of the seized article. The Commissioner may accept the
settlement of any seizure case on appeal in the same manner.
Settlement of any seizure case by payment of the fine or
redemption of forfeited property shall not be allowed in any case
where the importation is absolutely prohibited or where the
release of the property would be contrary to law.
8. Decision or action by collector in protests and seizure
cases
9. Review by Commissioner
The person aggrieved by the decision or action of the
Collector in any matter presented upon protest or by his action
in any case of seizure may, within fifteen (15) days after
notification in writing by the Collector of his action or decision,
give written notice to the Collector and one copy furnished to
the Commissioner of his desire to have the matter reviewed by
the Commissioner. Thereupon, the Collector shall forthwith
transmit all the records of the proceedings to the Commissioner,
who shall approve, modify or reverse the action or decision of
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the Collector and take such steps and make such orders as may
be necessary to give efect to his decision.
10. Notice of decision of Commissioner
Decision of the Commissioner of Customs shall be
appealed to the Court of Tax Appeals within thirty (30) days after
receipt of the decision. In case of automatic reviews, the
decision of the Secretary of Finance shall be appealed within the
same period after receipt of the decision of the Secretary.
11. Supervisory authority of Commissioner and of Secretary
of Finance in certain cases. Automatic review by the
Commissioner and Secretary on certain cases.
12. Authority of Commissioner to make compromise
Subject to the approval of the Secretary of Finance, the
Commissioner of Customs may compromise any case arising
under the Code or other laws or part of laws enforced by the
Bureau of Customs involving the imposition of fines, surcharges
and forfeitures unless otherwise specified by law.
Property not subject to forfeiture
The forfeiture of the vehicle, vessel, or aircraft shall not
be efected if it is established that the owner thereof or
his agent in charge of the means of conveyance used as
aforesaid has no knowledge of or participation in the
unlawful act.
However, a prima facie presumption shall exist against
the vessel, vehicle or aircraft under any of the following
circumstances:
1. If the conveyance has been used for smuggling at
least twice before;
2. If the owner is not in the business for which the
conveyance is generally used; and
3. It the owner is not financially in a position to own
such conveyance.
Burden of proof in seizure and/or forfeiture
In all proceedings taken for the seizure and/or forfeiture
of any vessel, vehicle, aircraft, beast or articles under the
provisions of the tarif and customs laws, the burden of
proof shall lie upon the claimant. Provided that probable
cause shall be first shown for the institution of such
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