Balikbayan boxes get P150,000 tax-free ceiling

MANILA, Philippines – President Aquino has signed into law the Customs Modernization and Tariff Act, provisions of which include raising the tax exemption ceiling for balikbayan boxes sent home by overseas Filipino workers (OFWs).

Aside from promoting transparency in the graft-ridden Bureau of Customs (BOC) and making collection of taxes more efficient, the law raises the tax exemption on consumer goods sent home by overseas Filipinos to their families, from the present P10,000 to P150,000.

Secretary Herminio Coloma Jr. of the Presidential Communications Operations Office informed Palace reporters that the measure – signed by Aquino last Monday – is now Republic Act 10863.

The author of the bill, re-elected Marikina Rep. Miro Quimbo, said the new law would be a major step toward trade facilitation. He said earlier he had no doubt the President would sign the measure.

“The CMTA is actually an enabling law that makes us comply with our treaty obligation under the revised Kyoto Convention which the Senate ratified in 2010. Effectively, the CMTA makes the BOC shift its emphasis into a border control agency instead of a revenue center,” Quimbo said.

“The CMTA approval is a major step towards making trade facilitation a reality in our country and will go far in terms of preventing another port congestion,” he said. “For every day of delay of a commodity results in an increase of five percent on the price.

“It’s a major step that shows how Congress has really stood tall, I mean amidst all this economic development and trying to find a way to even harness and make it easier for investors to come in,” he pointed out.

The law declares it is the state that should institute fair and transparent customs and tariff management and facilitate international trade, prevent and curtail any form of customs fraud and illegal acts, and modernize customs and tariff administration.

The CMTA will also address smuggling, which causes huge revenue losses to the government because of the illegal entry of imported goods and services in the local market, Quimbo reiterated.

The CMTA was among the priority measures of the House in the 16th Congress as identified earlier by outgoing Speaker Feliciano Belmonte Jr.

It defines smuggling as “the fraudulent act of importing any goods into the country, or the act of assisting in receiving, conceiving, buying, selling, disposing or transporting such goods, with full knowledge that the same has been fraudulently imported, or the fraudulent exportation of goods. Goods referred to under this definition shall be known as smuggled goods.”

The measure aligns the Customs and Tariff Code of the Philippines with the standards and recommended practices of 140 countries, thus making it easier for traders, importers and exporters to comply with border requirements.

It introduces trade facilitation programs for highly compliant and “low risk” importers who may enjoy the benefit of deferred payment of duty and taxes, among others.

‘Another milestone’

In a statement, BOC chief Alberto Lina called Aquino’s signing of the measure “truly another milestone for his administration and the continuing reforms we continue to institutionalize in the bureau.”

Lina, named BOC chief only in April 2015, said he and his officials were able to work toward the passage of RA 10863.

“I am very pleased that in my short time in the BOC, and with the dedication and hard work of the Customs workforce, I was able to shepherd this overdue bill into law, with support from our colleagues in Congress for prioritizing the measure,” he added.

“The CMTA will establish the requisite foundation for a cashless, faceless and paperless environment in Customs, reducing corruption and technical smuggling that will result in enhanced revenues,” Lina said.

“Efforts are already underway to attune current BOC systems to the new provisions in the CMTA focused on business process re-engineering, computer-based systems development, organizational development, capacity building and external communication and education,” he added.

Meanwhile, Sen. Juan Edgardo Angara welcomed the enactment of RA 10863, saying a provision in the law raising the tax exemption ceiling for balikbayan boxes would help minimize cases of corruption within the BOC.

The law raises the tax exemption on consumer goods sent home by overseas Filipinos to their families from the present P10,000 to P150,000. This privilege can be availed of up to three times a year.

“We thank the President and our colleagues in the Senate and the House of Representatives who helped in bringing about this law that aims to remove the taxes on balikbayan boxes sent by OFWs and to reform the old and rotten system at Customs,” Angara said.

“With the increase in the values, we lessen the discretion of the Customs officials to inspect goods and collect taxes, thus minimizing cases of corruption and smuggling,” he added.

The issue of balikbayan boxes was put in the spotlight last year following reports of tampering of boxes allegedly by Customs personnel.

The BOC cited rampant smuggling – firearms included – to justify the random inspection of balikbayan boxes.

Angara said OFWs should not be penalized with high taxes and should be spared from tampering and stealing of items in their balikbayan boxes.

Furthermore, Filipinos who have stayed in a foreign country for at least 10 years and are returning to the Philippines will also be granted tax exemption for the personal and household effects they bring home, not exceeding P350,000 in value.

For Filipinos who have been living overseas for at least five years, they will be entitled to tax and duty free personal and household effects amounting to P250,000, while those who have stayed abroad for less than five years would enjoy a P150,000 tax-free ceiling.

Angara noted that the bill also provides for an automatic indexation of values to inflation every three years to ensure they are updated.

“The CMTA aims to overhaul and modernize the bureau which has long been perceived as one of the most corrupt and under-performing government agencies in the country,” Angara said.

“Even president-elect Rodrigo Duterte wants to abolish this agency. But we expect that with the strict implementation of this law and with the support of the incoming Duterte administration, we will see reforms in the Bureau of Customs,” he added. – With Marvin Sy, Evelyn Macairan