Philippines Import Tax Calculation Method 2019

Philippines Import Tax Calculator 2019

Calculate duties, taxes, and fees for importing goods to the Philippines under 2019 regulations

Comprehensive Guide to Philippines Import Tax Calculation (2019 Method)

The Philippines import tax system in 2019 followed specific regulations under the Tariff and Customs Code of the Philippines (TCCP) as amended by Republic Act No. 10863 (Customs Modernization and Tariff Act – CMTA). This guide explains the exact calculation method used by the Bureau of Customs (BOC) in 2019, including duty rates, value-added tax (VAT), excise taxes, and other fees.

1. Key Components of Import Tax Calculation

Import taxes in the Philippines consist of several components that are calculated sequentially:

  1. Customs Duty – Based on the product’s HS code classification
  2. Value Added Tax (VAT) – 12% of the total landed cost
  3. Excise Tax – For specific products like alcohol, tobacco, and petroleum
  4. Other Fees – Processing fees, storage fees, and special assessments

2. Step-by-Step Calculation Process (2019 Method)

The calculation follows this exact sequence:

Step Calculation 2019 Rate
1. CIF Value Cost + Insurance + Freight Varies
2. Customs Duty CIF Value × Duty Rate 0% to 65%
3. VAT Base CIF Value + Customs Duty N/A
4. Value Added Tax VAT Base × 12% 12%
5. Excise Tax Applicable to specific goods only Varies
6. Total Import Cost CIF + Duty + VAT + Excise + Fees N/A

3. Customs Duty Rates by Product Category (2019)

The Philippines uses the ASEAN Harmonized Tariff Nomenclature (AHTN) to classify products. Here are the general duty rate ranges for 2019:

Product Category Duty Rate Range (2019) Examples
Essential Goods 0% – 5% Rice, medicines, basic food items
Non-Essential Consumer Goods 5% – 20% Clothing, furniture, appliances
Luxury Items 20% – 50% High-end watches, jewelry, luxury cars
Automotive 15% – 30% Cars, motorcycles, auto parts
Electronics 1% – 10% Smartphones, computers, TVs
Industrial Machinery 0% – 10% Manufacturing equipment, agricultural machinery

4. Special Considerations in 2019

Several important factors affected import tax calculations in 2019:

  • ASEAN Trade Agreements: Goods from ASEAN member countries enjoyed reduced duty rates under the ASEAN Trade in Goods Agreement (ATIGA), with many products at 0% duty.
  • TRAIN Law Impact: The Tax Reform for Acceleration and Inclusion (TRAIN) law, implemented in 2018, continued to affect excise taxes on certain products in 2019, particularly:
    • Petroleum products (₱6.00 to ₱10.00 per liter)
    • Alcoholic beverages (₱32.00 to ₱40.00 per liter)
    • Tobacco products (₱32.50 to ₱35.00 per pack)
  • De Minimis Value: Shipments valued at ₱10,000 or below were exempt from duties and taxes under BOC Memorandum Order No. 04-2019.
  • Valuation Methods: The BOC used six methods for customs valuation in this order:
    1. Transaction value method (primary)
    2. Transaction value of identical goods
    3. Transaction value of similar goods
    4. Deductive value method
    5. Computed value method
    6. Fallback method

5. Practical Example Calculation (2019)

Let’s calculate the import taxes for a ₱100,000 shipment of electronics from China in 2019:

  1. Product Value: ₱100,000
  2. Shipping Cost: ₱15,000
  3. Insurance: ₱5,000
  4. CIF Value: ₱100,000 + ₱15,000 + ₱5,000 = ₱120,000
  5. Customs Duty (5% for electronics): ₱120,000 × 5% = ₱6,000
  6. VAT Base: ₱120,000 + ₱6,000 = ₱126,000
  7. VAT (12%): ₱126,000 × 12% = ₱15,120
  8. Processing Fee (₱500 fixed): ₱500
  9. Total Import Cost: ₱120,000 + ₱6,000 + ₱15,120 + ₱500 = ₱141,620

6. Common Mistakes to Avoid

Importers in 2019 often made these calculation errors:

  • Incorrect HS Code Classification: Using the wrong harmonized system code could result in underpayment or overpayment of duties. Always verify with the Bureau of Customs Tariff Commission.
  • Undervaluing Shipments: The BOC had strict valuation methods in 2019. Undervaluing could lead to penalties under Section 1400 of the CMTA.
  • Ignoring Excise Taxes: Many importers forgot to include excise taxes for products like alcohol, tobacco, and petroleum.
  • Missing Documentation: Incomplete paperwork (commercial invoice, packing list, bill of lading) could result in additional storage fees of ₱500-₱2,000 per day.
  • Currency Conversion Errors: All values must be in Philippine Pesos. The BOC used the Bangko Sentral ng Pilipinas (BSP) reference exchange rates for conversion.

7. 2019 vs. Previous Years: Key Changes

The 2019 import tax system had several important differences from previous years:

Aspect 2018 2019 Changes
De Minimis Value ₱10,000 Maintained at ₱10,000 (BOC MO 04-2019)
VAT Rate 12% Continued at 12% (no change)
Excise Tax on Fuel ₱2.50 – ₱4.35/liter Increased to ₱6.00 – ₱10.00/liter (TRAIN Law)
ASEAN Duty Rates 0% – 5% for most goods Expanded to more product categories
Processing Fees ₱300 – ₱1,000 Standardized at ₱500 for most imports
Customs Modernization Manual processes Implementation of CMTA (RA 10863) with digital systems

8. Required Documents for 2019 Imports

To properly calculate and pay import taxes in 2019, importers needed to submit:

  1. Commercial Invoice: Must show:
    • Detailed description of goods
    • Unit price and total value
    • Currency and exchange rate
    • Incoterms (FOB, CIF, etc.)
  2. Packing List: Itemized list with weights and dimensions
  3. Bill of Lading/Airway Bill: Proof of shipment
  4. Import Permit/License: For regulated goods (from DTI, DA, DOE, etc.)
  5. Certificate of Origin: Especially important for ASEAN preferential rates
  6. Insurance Certificate: If insurance was purchased separately
  7. Special Certificates: For products requiring:
    • FDA certification (food, drugs, cosmetics)
    • DENR permit (environmentally sensitive goods)
    • NTC approval (telecommunications equipment)

9. Strategies to Legally Reduce Import Taxes in 2019

Businesses could legally minimize import costs through these methods:

  • Free Trade Agreements: Utilize preferential rates from:
    • ASEAN Trade in Goods Agreement (ATIGA)
    • Philippines-Japan Economic Partnership Agreement (PJEPA)
    • ASEAN-China Free Trade Area (ACFTA)
  • Proper Valuation: Ensure accurate declaration using:
    • Transaction value method (most favorable)
    • Proper currency conversion at BSP rates
    • Complete documentation to justify values
  • Tariff Classification: Work with customs brokers to:
    • Find the most accurate HS code
    • Identify potential duty exemptions
    • Apply for advance rulings from BOC
  • Bonded Warehouses: Defer duty payments by storing goods in:
    • Customs Bonded Warehouses
    • Freeport Zones (Subic, Clark, Cebu)
    • Economic Zones (PEZA-registered)
  • Volume Discounts: Some products had reduced rates for:
    • Bulk shipments
    • Regular importers with good compliance records
    • Certain industrial inputs

10. Penalties for Non-Compliance in 2019

The Customs Modernization and Tariff Act (CMTA) introduced stricter penalties in 2019:

Violation Penalty (2019) Legal Basis
Undervaluation 200% – 800% of tax difference Section 1400, CMTA
Misdeclaration ₱10,000 – ₱200,000 fine + confiscation Section 1401, CMTA
Smuggling 2x value of goods + imprisonment Section 1402, CMTA
Late Payment 25% surcharge + interest Section 1502, CMTA
False Documents ₱50,000 – ₱500,000 fine Section 1403, CMTA
Unmanifested Cargo ₱20,000 – ₱200,000 fine Section 1404, CMTA

11. Resources and Official Sources

For authoritative information on 2019 import tax calculations:

12. Frequently Asked Questions About 2019 Import Taxes

Q: What was the VAT rate for imports in 2019?
A: The Value Added Tax rate was consistently 12% throughout 2019, applied to the sum of the CIF value and customs duties.

Q: Were there any duty exemptions in 2019?
A: Yes, several exemptions existed:

  • Shipments valued at ₱10,000 or below (de minimis)
  • Certain medical supplies and equipment
  • Educational materials and books
  • Goods for use in freeport zones
  • Personal effects of returning residents (up to ₱350,000)

Q: How were excise taxes calculated for alcohol in 2019?
A: Alcohol excise taxes in 2019 were:

  • Fermented liquor: ₱32.00 per liter
  • Distilled spirits: ₱150.00 per proof liter
  • Wine: ₱60.00 per liter (sparkling) or ₱40.00 per liter (still)
These were in addition to the regular customs duty and VAT.

Q: Could importers appeal customs valuations in 2019?
A: Yes, the process involved:

  1. Filing a protest with the District Collector within 15 days
  2. Providing additional documentation to support the declared value
  3. Potential appeal to the Commissioner of Customs
  4. Final appeal to the Court of Tax Appeals if necessary
The CMTA introduced more transparent appeal procedures in 2019.

Q: How did the TRAIN law affect import taxes in 2019?
A: The Tax Reform for Acceleration and Inclusion (TRAIN) law, implemented in 2018, had these continuing effects in 2019:

  • Higher excise taxes on petroleum, alcohol, and tobacco
  • Expanded VAT base (fewer exemptions)
  • Increased documentary stamp taxes on certain import documents
  • New tax on sugar-sweetened beverages (₱6.00 per liter)

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