Tariffs and regulations

Tariffs

The country has adopted the eight-digit harmonised system (HS) code incorporating the ASEAN Harmonised Tariff Nomenclature to promote uniformity in the classification of goods and facilitate trade within ASEAN member countries.

Most duties are ad valorem, assessed on the export value plus insurance and freight charges. An ASEAN margin of preference on the existing tariff is negotiated periodically on a product-by-product basis. The Philippines is a member of the Association of South East Asian Nations (ASEAN) and preferential rates are applied to imports from other members.

As a signatory to the ASEAN, Australia, New Zealand Free Trade Agreement (AANZFTA), it is expected to deliver new opportunities and create greater certainty across the board for Australian exporters and investors in the Philippines. AANZFTA tariff finder provides an easy reference for Australian exporters who want to know what the applicable tariff rate is for their products.

A minimum-access volume (MAV) restriction for pork, poultry, potatoes, coffee, corn, and sugar continues to be implemented. Importers can apply for their MAV allocation through Intercommerce, based on a Systematic Distribution Procedure as well as on a first come, first served basis. Philippine importers are required to apply for their import allocation per year. Importers who are out of quota are subjected to higher tariff rates.

Value-Added Tax

A value-added tax (VAT) of 12 per cent is levied on the sale of goods and services and on the import of goods into the Philippines. The VAT on imported goods is based on the total value used by the Bureau of Customs in determining tariffs and duties. Exempted from payment of VAT are, amongst others, agricultural and marine food products in their original state and breeding stock and genetic materials.

Excise Taxes

Excise taxes, both specific and ad valorem, are levied on:

  • wines and spirits, beer
  • cigarettes and tobacco products
  • lubricating oils and grease
  • processed gas
  • waxes
  • denatured alcohol
  • cinematographic films
  • saccharine
  • coal
  • cars, non-essential goods
  • mineral products
  • naphtha and other similar products of distillation
  • asphalt and petroleum and other fuel products.

Non-tariff barriers

Imports are classified into three categories:

  • Freely Importable Commodities
  • Regulated Commodities
  • Prohibited or Banned Commodities

Regulated imports include goods restricted for reasons of public health and safety and protection of domestic industries.

Importation of agricultural products is allowed subject to quarantine requirements. Importers have to secure an import permit (or a Sanitary and Phyto-Sanitary (SPS) Permit) for agricultural products from the following agencies: Bureau of Animal Industry (BAI) for chicken, beef, pork, lamb, dairy, and other animal products; Bureau of Plant Industry (BPI) for horticulture produce; and the Bureau of Fisheries and Aquatic Resources (BFAR) for seafood. On 23 November, the Department of Agriculture advised that their office has to validate existing and newly issued SPS.

Exports of fresh fruits from Australia to the Philippines have commenced with the acceptance by the government of the revised Specific Commodity Understanding No 2 (conditions for export of fruit fly host fruits from Australia to the Philippines) which allows cold disinfestation treatment of fruits to be conducted either in-transit or pre-shipment (on-shore) in Australia.

There are no protocols in place for the importation of game meat such as crocodile, kangaroo and emu. Applications for the issuance of a special permit for the one-time importation of game meat will have to be lodged with the BAI.

The Food and Drug Administration (FDA) requires any company that imports raw materials, ingredients and/or finished products for its own use or for wholesale distribution to other establishments or outlets, to secure a License to Operate (LTO) and a Certificate of Product Registration (CPR) for the product. FDA has a different set of requirements for registration food products classified as Category I (bakery products, non-alcoholic beverages, dairy, pasta, oils and fats, confectionery, snack foods, coffee, etc) or Category II (alcoholic beverages, foods for infants and children, food supplements, among others).

Used textiles/garments remain prohibited imports.

The Philippine Government uses the transaction value system of import valuation in compliance with the World Trade Organization (WTO) agreement on customs valuation. This system looks at the price agreed upon by the buyer and seller, including other payments made by the buyer for the goods as purchased.

The Philippine Bureau of Customs (BOC) monitors the entry of goods into the country and uses a selection system to determine the appropriate clearance channel of imports. Shipments classified:

  • low risk are assigned to the 'green lane' and cleared for release without physical inspection
  • high risk are assigned to the 'yellow lane' and subject to documentary examination
  • higher risk are assigned to the 'red lane' and undergo documentary and physical inspection.

To qualify for the 'super green lane' list, an importer:

  • must not have been the subject of disciplinary action
  • must have had transactions with the BOC for at least one year
  • should be among the top 1000 importers in terms of duties and taxes paid.

Goods exempt from inspection requirements include:

  • fresh, frozen or chilled foodstuffs, live animals, works of art, current newspapers and periodicals, private motor vehicles and parcel post
  • consignments valued at less than US $500 Free on Board (FOB) (Incoterms 2000)
  • purchases by the government or any of its corporations, agencies and instrumentalities
  • manufactured armaments imported by the Department of National Defence
  • raw materials and supplies for the semiconductor and allied enterprises (conditions apply)
  • crude oil and petroleum products in bulk (conditions apply)
  • precious artefacts, metals and gemstones
  • imports by export processing zone enterprises
  • a letter of credit will be opened by the Central Bank or its agents upon presentation of the proforma invoice

Product certification, labelling and packaging

Labelling and Marking

All goods must have labels in English or Filipino with the following information:

  • brand, trademark or trade name
  • physical or chemical composition (where applicable)
  • metric length
  • net contents or weight
  • country of manufacture
  • name and address of manufacture or repacker
  • name and address of importer or distributor

Drugs must be labelled with the product's generic name and must appear above the brand name, in a larger typeface, enclosed in a border with a contrasting background.

Failure to comply with any part of the above regulations is subject to penalty. Goods not bearing adequate marks of origin are subject to a marking duty of five per cent.

For further information, visit the Food and Drug Administration (FDA) website.

Packaging

Packing should be secure and guard against tropical dampness and heat. Contents should not be indicated on outer containers. The use of rice, straw and chaff is prohibited. Excluding shipments of over 500 barrels or cases, all packages and cases in each shipment must be numbered consecutively.

Special certificates

Animals and animal products of cattle, sheep, swine and goats require a certificate of ante- and post-mortem inspection. Imports of livestock, meat and meat products, plants and plant products must be accompanied by health certificates issued by the approved authority in the country of origin. In Australia this is usually the Australian Department of Agriculture and Water Resources or relevant state department of agriculture.

A SPS certificate, issued by the approved authority in the country of origin, accompanying imports of plants and plant products, must be forwarded to the plant quarantine authorities at the port of entry.

Food, drugs, pharmaceuticals and cosmetics require certification that the items comply with Philippine specifications. This is in the form of a declaration by the shipper and must be filed with the Philippines Consulate.

Insecticides, Paris greens, lead arsenates and fungicides require a declaration by the manufacturer or shipper that the goods are not falsely labelled and are not dangerous to health.

Chemicals and chemical products must be accompanied by a certificate indicating the specific chemical name. Trade names should also be included.

The Philippine Food Fortification Law requires that all staple foods such as rice, sugar, flour, salt and cooking oil – be fortified and has identified Vitamin A, iron and iodine as the three most needed micronutrients in the country. The law aims to provide 50 per cent or more of the recommended daily allowance (RDA) of Vitamin A and iron among at risk groups, particularly children below six years old and women of reproductive age.

This law applies to all manufacturers or producers, importers, traders, tollees, retailers, repackers of staple foods as well as restaurants and food service establishments. Sanctions for non-compliance include fines of not more than P1 million and revocation of permits and licenses depending on the gravity of the offense.

Essences, flavouring extracts and other preparations containing distilled spirits (ethyl alcohol) require a certificate giving the source and percentage content of the alcohol used in the manufacture. Product registration with the FDA can take anywhere from three to six months, provided documentation is complete.

Certificates of Free sale are required for registering products with the FDA. It should be issued by a responsible government authority in the exporting country stating that the products are sold freely in that country and must be legalised by the Philippine Embassy or consulate.

Export entry is to be submitted only when specified in the letter of credit. If so specified, five copies are required.

Methods of quoting and payment

Quotes can in US or Australian dollars, CIF or FOB (Incoterms 1990). Terms of payment are usually stipulated through letters of credit.

Documentary requirements

Fax signatures are not permitted.

Note: Mail between Australia and the Philippines may be occasionally subject to delay and exporters should ensure that certification and dispatch (by air mail) of all documents is given the highest priority.

Commercial invoice

Three copies are required and must bear the following signed declaration: 'All the information contained herein is correct. The value (....... amount per unit) (Current Domestic Value) declared is the same value as that stated in all other documents filed in connection with this exportation.

Signed, ..................................... Director, Secretary, Partner, Proprietor'.

Detailed costs of the following must be shown:

  • FOB value separate from the Cost, Insurance and Freight (CIF) or cost and freight (C&F) value (Incoterms 1990)
  • value of packing materials used in consignment
  • value of labour used in packing goods for export
  • freight to docks
  • pier and handling charges.

Bill of lading

At least three signed negotiable and five non-negotiable copies are required. One negotiable and four non-negotiable bills are to be included with the original documents. One negotiable copy stamped 'For consular purposes only' together with one non-negotiable copy are to be presented to the Consulate. The bill of lading must show gross weights, quantity and volume (in kilograms), freight and other charges.

Packing List

Five copies are required and must be certified by seller, manufacturer, exporter or his duly authorised representative.

Insurance

Normal commercial practice. However, advice should be obtained from Philippine importers and insurance companies.

Weight and measures

The legal units of measurement in the Philippines is based on the metric system or the SI (International System of Units). The use of the metric system is further reinforced by the Consumer Act of the Philippines.