No taxes on balikbayan boxes
It is a given fact that Filipinos are everywhere and can be found in almost every nook of this globe. Based on a 2015 survey on overseas Filipinos, there are 2.4 million Overseas Filipino Workers (OFWs) in the world. These Filipinos, one way or another, find ways to send cash or gifts to their loved ones.
By virtue of Republic Act No. 10863, otherwise known as the Customs Modernization and Tariff Act (CMTA), in relation to Customs Administrative Order (CAO) No. 5-2016, Balikbayan Boxes sent by Qualified Filipinos While Abroad (QFWA) are no longer subject to duties and taxes. QFWA is a collective term used to refer to non-resident Filipinos, OFWs, and resident Filipinos. The CAO covers exemption from duties and taxes of consolidated shipments of Balikbayan Boxes sent through any port of entry by QFWA to families or relatives in the Philippines.
For purposes of the exemption, a Balikbayan Box refers to a corrugated box or other container up to a maximum volume of 200,000 gross cubic centimeters, often transported by freight forwarders either by sea or air. It shall only contain personal and household effects and shall neither be in commercial quantities nor intended for barter, sale or for hire. Thus, sole proprietorships and juridical entities are not qualified to avail of the benefits.
The duty and tax exemption can be availed of by QFWA up to three times in a calendar year subject to the following conditions:
1. Balikbayan Boxes brought in by QFWA from abroad as accompanied or unaccompanied baggage of passengers shall be included in counting the availment;
2. The total Free Carrier Act (FCA) value for all Balikbayan Boxes per sender in any calendar year should not exceed P150,000. However, de minimis importation or those with Free on Board (FoB) or FCA value of P10,000 or less shall not be counted. A shipment that is above P10,000 shall be automatically considered as one availment; and
3. A shipment of Balikbayan Boxes sent by a qualified sender, regardless of the number of ultimate consignees and number of Balikbayan Boxes in one consolidated shipment covered by one master bill of lading or master airway bill, shall be considered one availment.
The term “consolidated shipments” refers to two or more shipments from two or more individual consignor/senders abroad, assembled, and consolidated at one point of origin or exportation and shipped together under a single master ocean bill of lading or master airway bill of lading by a consolidator to its deconsolidator in the Philippines. Balikbayan Boxes brought in through means other than consolidated shipments shall be covered by a different CAO, but shall be included in counting the frequency of availment of the privilege under the CMTA.
CAO No. 5-2016 outlines the obligations of QFWAs, as follows:
1. Ensure that only personal and household goods are sent through the consolidated shipment of Balikbayan Boxes;
2. Accomplish, sign, and submit the Information Sheet which shall serve as the packing list containing basic information of the sender, consignee, contents of the package, and the number of availments within the calendar year;
3. Submit documents such as photocopy of passport and invoice/receipt covering the goods contained in the Balikbayan Boxes;
4. Oblige the consolidator to comply with RA 10173 or the Data Privacy Act of 2012, particularly Section 20 regarding security of personal information; and
5. Require the consolidator to transmit the Information Sheet and supporting documents as mentioned in the CAO to the deconsolidator in a secured electronic format before arrival of the goods in the Philippines and within the prescribed period.
Any QFWA, deconsolidator, and all other participants who use the duty and tax-exempt privilege as a conduit for smuggling or other fraud against the Bureau of Customs ( BoC) shall be liable to an administrative fine of P300,000, criminal prosecution under the CMTA, and cancellation of registration as importer or broker, as may be applicable.
The BoC shall establish a registration system and/or database of deconsolidators, QFWA, as well as their respective families and relatives as ultimate recipients or consignees, who may enjoy the benefits of such exemption.
To avail of the tax and duty exemption, a processing fee of P250, inclusive of the legal research fee of P10, shall be collected by the BoC per house bill of lading/ house airway bill. The Commissioner shall periodically review the processing fee and may revise the amount based on prevailing costs.
With the improved duty and tax benefits for the personal and household goods of QFWAs, there is also a corresponding obligation on the part of the sender not to abuse the benefits and comply with the restrictions set forth in the implementing rules.
While the sight of Balikbayan Boxes always evokes a childlike excitement from families and friends of OFWs, there is more reason to be delighted now that exemptions from tax and duties are in place. Perhaps, our kababayans can expect an increase in the frequency and amount of these boxes with more pasalubongs contained in them from their loved ones abroad. Thanks to the CMTA, the term ‘ Balikbayan’ has been given a more insightful connotation of giving back to the people (i.e. balik-sabayan).
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The firm will not accept any liability arising from the article.