Value of tax-exempt balikbayan goods raised to P150,000

MANILA, Philippines – The Senate has approved on third and final reading the Customs Modernization and Tariff Act (CMTA), which also raises to P150,000 from P10,000 the tax-exempt value of pasalubong cargo brought in or sent by Filipinos overseas.

Senate President Pro Tempore Ralph Recto hailed the approval of the measure.

Although the provision on the tax treatment of balikbayan boxes is but one of many in the 311-page bill, “it is one that is most awaited by overseas Filipino workers (OFWs),” Recto said yesterday.

“We can now report to them that the Balikbayan Box Law has passed the Senate,” he added.

Recto filed Senate Bill 2913, or what he dubbed as the BBL, last August after a public outcry over a Bureau of Customs (BOC) plan to open and inspect balikbayan boxes revealed outdated regulations, one of which taxes any box whose contents are worth more than P10,000.

Sen. Juan Edgardo Angara, chairman of the Senate ways and means committee, later incorporated the provision on increasing the ceiling for taxation of goods sent through balikbayan boxes under Section 800 of CMTA.

“Once the CMTA is signed, each balikbayan box would be protected by Super Section 800,” Recto said, noting that it defines “conditional-free and duty-exempt importation.”

Under this section, “residents of the Philippines, OFWs, other Filipinos while residing abroad or in their return to the Philippines shall be allowed to bring in or send to their families or relatives in the Philippines balikbayan boxes which shall be exempt from duties and taxes.”

The “total dutiable value” of the boxes shall not exceed P150,000.

The privilege can only be enjoyed “up to three times in a calendar year,” Recto said, quoting the proposed law.

“This means that an OFW can send two boxes at the same time provided that their total worth is not more than P150,000. That will be counted as one shipment,” Recto said.

The boxes, however, must contain “personal and household effects only and shall neither be in commercial quantities, nor intended for barter, sale or for hire.”

“This is to prevent senders from abusing this privilege. With this privilege comes the duty to observe the law. It also comes with penalties so that smugglers won’t take advantage of it,” Recto said.

The bill also includes a provision indexing rates to inflation, “so that it will not take another quarter of a century to adjust the tax-exempt ceiling for balikbayan boxes,” Recto said.

“Every three years after the effectivity of this act, the secretary of finance, upon recommendation of the (Customs) commissioner, shall review the value herein stated and shall adjust its present value using the consumer price index as published by the Philippine Statistics Authority,” Recto quoted the provision.

He said the “antiquated provision” of slapping a 50 percent duty on the value of a balikbayan box in excess of P10,000 was set 28 years ago through former president Corazon Aquino’s Executive Order 206.

Even BOC Memorandum Circular 7990, which ups the maximum value of a tax-exempt balikbayan box to $500, is more than 25 years old, he said.

Recto said the proposed CMTA also increases to P350,000 the tax-exempt ceiling of “personal and household effects” that a returning resident who had lived abroad for 10 years may ship to the Philippines.

Recto said this provision was not in the BBL he filed but a brainchild of Angara, principal sponsor of CMTA.

Recto praised Angara for shepherding the CMTA, with its many complicated provisions, to approval.

The CMTA is a consolidation of eight bills, two of which are authored by Recto. The other bill Recto filed is Senate Bill 456, which slaps higher penalties for smuggling.

The measure has been described by Angara as a “broad reform measure which simplifies rules, aligns tariff regime with treaties, promotes transparency and combats smuggling.” – With Evelyn Macairan