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Tax-free padala: Good news and bad

18 December 2016

By Daisy CL Mandap

First, the good news: From Christmas Day, Dec. 25 this year, all personal effects sent home in boxes by Filipinos overseas will no longer be taxed if their total value does not exceed Php150,000.

The bad news is, a lot of requirements has been attached to the privilege that it may become more difficult for the senders and even the freight forwarders to get the cargo cleared as easily as in the past.

According to AFreight’s Asia Pacific head Susan Lozano, the “nitty-gritty” of the new rules is still unknown to them.

But from what has been announced, she said: “It is almost impossible to comply with it 100%. They did the press release on a Sunday (Dec 11) so I guess brokers are scampering to get details of the requirements and the consequences of non-compliance, up to this time”.

Lozano is also worried of repercussions should the trickle-down of the new rules is not immediately felt by consumers.

“Kami ang tatamaan dito, because it will be the forwarders that will face the ire of the OFWs if we cannot bring our prices down,” she said.

On Dec.11, the Bureau of Customs and the Department of Finance jointly signed the implementing rules and regulations (IRR) prescribing the guidelines on tax-free balikbayan boxes.

Customs Administrative Order (CAO) 05-2016, which takes effect on Dec. 25 states that qualified Filipinos abroad may send boxes containing personal effects and households goods, tax free, as long as the items inside do not cost more than Php150,000 and are not in commercial quantity.
This privilege can be availed of for a maximum of three times a year.

In announcing the new move, Customs Commissioner Nicanor Faeldon said: “We value the importance of each balikbayan box. (It) symbolizes the hardship of our (OFWs), and the love of Filipinos abroad for their families here in the country.”

Those qualified for the tax-free privilege are overseas Filipino workers, Filipinos who are permanent residents in another country but have retained their Filipino citizenship, and Filipinos who hold a temporary resident’s visa abroad, such as students and investors.

But unlike in the past when all they had to do was to complete a packing list for the goods that they’re sending, Filipinos who want to avail of the privilege must now submit a photocopy of the page in their Philippine passport with personal information, picture and signature.

Dual citizens  must produce, in addition to their Philippine passport, a photocopy of their foreign passport and proof of their dual citizenship.

And while Customs has adopted a “no opening of balikbayan boxes policy”, senders bear the burden of proving that the goods that they’re sending do not violate restrictions against commercial shipments and the total value.

Thus, they are required to submit an invoice, receipt or a similar document covering the goods in the balikbayan box, apart from an information sheet which shall take the place of a packing list.

Through these documents, the sender is made to certify that only personal effects and household goods, in noncommercial quantities, are contained in their shipment. These include clothes, foodstuff, grocery items, canned goods and other similar items.

A similar burden is passed on to both the international and the local forwarders.

International forwarders are required to submit the information sheets and supporting documents “in secured electronic format” to their Philippine counterparts, which in turn, must forward the documents in like manner to the BOC within a specified period.

For goods that take three days to ship, as those coming from Hong Kong, the documents must be submitted 24 hours before their arrival. Those for goods that ship within seven days must be submitted 48 hours before arrival.

Lozano said: “If you will note the requirements, these are very difficult to follow, especially the electronic transmission of information sheets within 24 hrs before the vessel’s arrival. A 40-ft container contains over 300 cartons, so what will happen if you have 5-6 containers arriving in one vessel?”

She said she is now in the process of getting her staff in Manila to clarify about possible repercussions if compliance is made only for some, and not all the boxes.

Until then, senders may just have to wait for a clearer picture to emerge before they can enjoy the privilege promised them under this new regulation.

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