Tanggera

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That day at Customs

Posted by on 12/28/11 • Categorized as Manila News,Personal

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20111228-142840.jpgA few days before Christmas this year, my friends and I ordered some clothes and accessories from a HongKong-based online store. We had a little over $53+ worth of declared clothes and $46 shipping fee. Last December 27, I got a call from a forwarder called RAF and was asked to pay P3,000 worth of taxes and duties for the clothes I ordered. I was horrified! Why would I pay more than 100% of the stuff I purchased? It was bordering on insanity! I quickly asked to be forwarded to the persons in charge in assigning taxes but was advised to call them a few hours after because their office opens at 2PM. Wow.

I ordered from the same website twice and haven’t been taxed. I don’t know what kind of backward system they have but they apparently charge packages on random – they call it “spot checking”. Why don’t they actually charge people who order in huge amounts instead of relying on mere guesswork? After being bounced back from one person to another, someone (Arnold) from the forwarding company finally entertained my call. He advised me to come over and get the package on the same day and that we already have an outstanding storage fee of about P500. So, on top of the P3,000 they’re expecting us to pay another P500. Great! What a Christmas for the guys at customs.

I didn’t stand for paying outrageous taxes that we don’t even hear of. We went to the pier cargo office near NAIA and had our package assessed. Some lessons from the experience:

1. Customs charged us 15% of the declared amount of our package and our shipping fee. Unfortunately for us, they only had air freight option that was way expensive. I think taxing small packages’ shipping fees should be abolished. If someone wants to explain why this is reasonable, you may do so in the comments section.

2. Customs does random checking, so you’re just “lucky” if you got your package without paying duties. The problem is, if the merchant failed to declare or “misdeclared” your order, Customs will arbitrarily tax you. Ask the merchant you’re transacting with to honestly declare your purchases and include your invoice in the package. In our case, we showed them our receipt and had our duties reassessed from P3,000 to P1,400++ (this includes tax, VAT and stamps).

3. If you’re not aware of how much your duties should be, you most likely have paid more than you’re supposed to. Always ask the percentage of your taxes and the breakdown. For some reason, I don’t believe that getting an official receipt means that you paid your duties right. I have this nagging feeling that Customs people get commissions from the packages they tax. Just a feeling. What do you think?

4. All packages that are held are charged P460+ from one day to a week. Kahit daplis lang. If they called me the day my package arrived (package got here on Dec 22 but I got notified Dec 27), I would have instantly fixed everything from my end.

I got my package that night and was so stressed out, I had two beers. At the end of the day, we all have to live with the system, but it doesn’t mean that we should just say “ganito talaga sa Pilipinas” when there’s something wrong. Speak up, know your rights and responsibilities and don’t be apathetic. The system continues to be cancerous as it is because of people who stay mum and pretend that everything’s okay. Getting my taxes assessed right this time is a small victory for me. What do you speak up about?

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  • http://twitter.com/briankingong Bong

    Yun na nga yung sinasabi ko kay Comm. Biazon eh. You know what, my friend asked about paying taxes when importing. For example, you’re due Php 1,000,000 (the right/legal tax), they will offer (but not force, in fairness) you to just pay Php 500,000 (still with receipt) but they will openly tell you that Php 300,000 goes to the government and Php 200,000 goes to them. Sad sad sad. Of course, as much as we want to pay the right taxes, a lot of people, will be tempted to go for the second, illegal, option, presented with it, right? We must combat that also.

  • http://twitter.com/ruffybiazon Ruffy Biazon

    Thank you for your write up. I had the very same experience and reaction when I first ordered online. That was way before I got appointed as Commissioner of Customs. Wanting to find out the reason behind it, I researched and began with the legal basis of the charges, which agencies are involved and what the process is. Now that I am with Customs, I know much more. 

    Nowadays, I advise people to either expect high charges for their online-ordered and courier-delivered packages or just find other means of getting their online purchase to get to them. My wife and I are regular online shoppers and we have opted for the second option. 

    To begin with, express courier services such as, but not limited to, DHL, UPS, FedEx are really expensive. And in the computation of duties and taxes, it is the landed cost which is the basis. This means that the cost of bringing the goods from its origin to its destination is included in the computation. In addition to the duties and taxes, Value Added Tax is also charged, which is based on the total of various charges aside from the dutiable value of the item.

    Below are the computations:

    A. Basic Formula   Total Duties and Taxes = Customs Duty+VAT+IPF+ Excise Tax (if applicable)

    B. How to Arrive at Customs Duty    
    Customs Duty = Customs Value (Dutiable Value) x Foreign Exchange Rate x Rate of Duty    Dutiable Value = Cost of Goods+ Freight + Insurance + Other Charges and Costs    Exchange Rate = As published weekly through Customs Memorandum Circular    Rate of Duty = As per classification of goods under AHTN, Section 104, TCCP

    C. How to Arrive at Value Added Tax (VAT)    
    VAT = 12% of Total Landed Cost (TLC)    TLC = Dutiable Value + Bank Charges + Customs Duty + Brokerage Fee + Arrastre Charge + Wharfage Due + Customs Documentary Stamp (CDS) + Import Processing Fee (IPF)

    D. Customs Documenetary Stamps (CDS) = Fixed Amount of P265.00

    E. Import Permit Fee (IPF) Table per CAO 2-2001    

    DV of shipment                
    IPF/entry    Up to P250,000            =     P 250.00    
    Over P250,000 to P500,000    =        500.00    
    Over P500,000 to P750,000    =        750.00    
    Over P750,000             =        1,000.00

    These computations are prescribed by law, not a whimsical or discretionary policy by the Bureau of Customs. There is legal basis for this. As long as what you pay for is receipted, it goes to the coffers of government.

    Under the law, ALL items imported into the Philippines have to be taxed. The Philippine Tariff and Customs Code provides:

    “Section 100. Imported Articles Subject to DutyAll articles, when imported from any foreign country into the Philippines, shall be subject to duty upon each importation, even though previously exported from the Philippines, except as otherwise specifically provided for in this Code in other laws.”

    This means that whether the goods are ordered online and delivered by courier or brought into the country by a traveler or imported via the commercial importation channels, they are all subject to duty and tax.

    There are, of course, some exceptions, which are listed also in the Tariff and Customs Code in Section 105. Due to the lenghty provision of the law, I will just provide a link to the FAQs page of the Bureau of Customs :  http://www.customs.gov.ph/faqs.php#1.4

    The rate of import duty varies depending on the commodity imported, ranging from 3 to 50%. The schedule of rates is listed under Section 104, Tariff and Customs Code of the Philippines (TCCP), as amended.

    Certain commodities are exempt from the payment of import duties upon compliance with formalities prescribed and approved by the Secretary of Finance. Section 105 of the TCCP governs what is termed as Conditionally-Free Importations. Other special laws also provide tax and duty-free treatment on certain importations.

    It is important to note that the participation of the BUreau of Customs is just to assess the duties and taxes to be paid by the consignee. THe BOC does not handle, store or deliver the packages. The notification to the consignee of the package’s arrival, storage and the delivery of the goods is the responsibility of the courier service (UPS, DHL, FEDEX, EMS, Philipine Postal Corporation). Therefore, the delays in advising the consignee, the delay in delivery, and the corresponding storage fees are not from the BOC.

    However, in the case of EMS / Postal Service packages, the postal service notifies the consignee, who is then expected to go to EMS/Philpost to witness the assessment by Customs and pay the duties. IN the express courier services, they are able to pay the duties and taxes in behalf of the consignee and they just charge you upon delivery.

    Remember to demand receipts for whatever government charges that you pay for. As long as it is properly receipted with a Government of the Philippines receipt, it will go to the government’s coffers. These frontline personnel are audited for the receipts they issue, so it is impossible for them to pocket portion of the receipted amount without getting caught. For feedbacks, feel free to email me at commissionerboc2011@yahoo.comThank you very much!

  • http://twitter.com/murderprincepau Paulo Ducut

    Dapat walang bayad yan, binayaran na yan ng nagpadala, so dapat libre na yan, at di nila dapat bubuksan yan kung hindi nakaharap sa may-ari. this has to stop. I myself often get packages overseas I paid fully but I am not surprised that the customs and the post office charge me for receiving mg parcel. kung tamang tax, okay lang, pero sobra na yata sila kung maningil madalas, may resibo nga, kaya di ako makaangal. I should have told the person I am buying from to use UPS or DHL, kasi kahit mahal, di siguradong gagaguhin ang mga gamit mo, I dont know sa FedEx kasi may Controversy sila but as much, the corruption at the customs has to be stopped, and the one sending the packages already paid for the taxes, why charge more?

  • Sing_bianca

    I bought shoes too and I was aked to pay 2k! That’s more than the total amount of the items I bought… The person next in line after me had his IPad shipped and was charged 3k… I really really don’t understand how they solve for the taxes.they say they base them on the price of items… But how is that the ratio of what i was charged to what was charged to the man after me seems unfair?… Also, I know they just guess and just put whatever Amount they thought of…. Worse, they still open the packages and even do ” usyoso” on what I will do with the items… Hay, sad reality how corruption is so prevalent in our country :(

  • Archer Mekhael

    Naghihintay lang sila ng lagay. :)
    As for me, I ordered a longboard from the US. I shipped it through USPS. When I received the package at the post office, they charged me 1,500 for it. I was shocked because as far as im concerned, the total value declared was just 50usd including the shipping (receipt included in the package). The problem was I did not have enough money to pay for the release of my item. Then suddenly this girl comes to me and says “Hijo, anu ba maitutulong ko sayo?”. I said “Kulang po kasi pera ko, inorder po ito ng ate ko for me, nakapangalan po ito sa kanya at kukunin ko lang”. Umalis sya saglit and when she came back, she told me “Sige, kung papayag ka 500 nalang pero walang resibo”. Sa loob loob ko, WTF! I was stressed out pero wla din ako magawa so i just paid 500. Next month, the same item arrived, it was my sister’s order. She was able to get it without paying a single peso. Kupal talaga mga tao sa gobyerno, lalo na sa customs.

  • http://swexie.me Swexie

    had the same prob before. nainis ako kasi yung tumawag sa akin eh sabi P250 lng ang taxes. pagdating ko sa fedex eh around P1400 and pinabayad sakin. Di na ako umorder ulit. Akala ko kasi nakamura ako sa clothes eh papatayin din pala ako sa taxes. And it’s sad that I could not have my goods re-assessed kasi pre-paid ng courier.

    • http://www.tanggera.com Faith Salazar

      I know. I think this is going to be my last online purchase from an international merchant. Good thing the courier called me up before they charged me P3,000. My mom sent me a laptop last year and I got charged P5,000 for tax. Fail.

  • http://twitter.com/VTrautmann Vincent Trautmann

    Dear Faith,

    Thank you for offering the space for these exchanges. I hope that my contribution is aligned with the spirit of your blog.

    Dear Mr. Commissioner, Dear Mr. Biazon,

    Thank you very much again for the clear and frank comments, your availability and your commitment to improve BoC’ operations.

    I respectfully continue to draw your attention to the issue of tax exemption on imported educational, cultural and scientific books – the so-called Florence Agreement. I insist on that topic not only because I am directly concerned – see the history of our exchanges on Twitter – but also because I feel that there is an interesting potential to improve the current situation through collective intelligence.

    The law is clear about the taxation/tax-exemption of imported books: see Executive Order 885 signed in June 2010. A year later and just before your appointment, the Department of Finance/BoC Commissioner followed up on that Executive Order with the position documented by Customs Memorandum Order No. 25-2011.

    The important question is, for me, about the execution of EO885 in the context of apparently contradicting tensions: expectations to meet budget/earnings targets, to respect the purpose/spirit of the law – both to tax certain materials and to foster education by exempting others, etc. How to best manage this?

    One might consider that the necessity of proof lies with the person who lays charges; I have tried nonetheless to come forward with a proposal by sending on November 9th 2011 a notarized affidavit.

    I hope that these comments will generate other ideas to implement a bona fide process and thus help you in your tasks.

    Remaining at your service.

    Vincent Trautmann

    #books #florenceagreement #EO885 #bonafideprocess

  • http://twitter.com/VTrautmann Vincent Trautmann

    Great news: the Department of Finance has enacted a bona fide process for the tariff-free importation of educational/cultural/scientific books for personal use. See Order 57-2011.

    My books have been released upon paying the regular 40 Pesos. I would like to hereby acknowledge the professionalism of the Postmaster and the people at our local post office. I am also thankful to Mr. R. Biazon, BoC Commissioner, when/if he supported this new DoF order.