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Customs duties refer to the name iven to taxes on the importation and exportation of commodities, the tariff or
tax assessed upon merchandise imported from, or exported to, a foreign country. It may also refer to taxes
imposed on goods exported from or imported into a country.
Customs and tariffs are synonymous with one another because they both refer to taxes imposed on imported
and exported wares, articles and merchandise.
“Identical Goods” shall mean goods which are the same in all respects, including
physical characteristics, quality and reputation.
“Similar goods” shall mean goods which, although not alike in all aspects, have
like characteristics and like component materials which enable them to perform
the same functions and to be commercially interchangeable.
The quality of the goods, their reputation and the existence of a trademark shall
be among the factors to be considered in determining whether goods are similar
Method Four- Deductive Value The dutiable value of the imported goods under this method shall be the
deductive value which shall be based on the unit price at which the imported
goods or identical or similar imported goods are sold in the Philippines, in the
same condition as when imported, in the greatest aggregate quantity, at or about
the time of importation of the goods being valued, to persons not related to the
person from whom they buy such goods, subject to certain dedctions.
Method Five- Computed Value The deductible value under this method shall be the computed value which shall
be the sum of:
(1) The cost or value of materials and fabrication or other processing
employed in producing the imported goods;
(2) The amount for profit and general expenses equal to that usually
reflected in the sale of goods of the same class or kind as the goods
being valued which are made by producers in the country of exportation
for export to the Philippines;
(3) The freight, insurance fees and other transaction expenses for
importation of goods;
(4) Any assist, if its value is not included under paragraph (1) hereof; and
(5) The cost of containers and packing, if their values are not included under
paragraph (1) hereof.
Method Six- Fallback Value If the dutiable value cannot be determined under the preceding methods
described above, it shall be determined by using other reasonable means and on
the basis of data available in the Philippines.
No dutiable value shall be determined under Method Six on the basis of:
(1) The selling price in the Philippines of goods produced in the Philippines;
(2) A system that provides for the acceptance for customs purposes of the
higher of two alternatives;
(3) The price of goods in the domestic market of the country of exportation;
(4) The cost of production, other than computed values, that have been
determined for identical or similar goods in accordance with Method Five;
(5) The price of goods for export to a country other than Philippines;
(6) Minimum customs values; or
(7) Arbitrary or fictitious values.
(1) Regular duties - which can be specific duties, ad valorem duties, or a combination of both.
(2) Special duties – which are intended to protect local industries against unfair competition from foreign goods:
Kinds of Regular 1. Advalorem Duty - Duty based on the value of the imported article.
Customs Duties 2. Specific Duty -Duty based on the dutiable weight of goods number or measurement.
3. Mixed or Compound Customs Duty – They are imposed both ad valorem and specific
customs duties, e.g., 10% ad valorem plus P100 per piece.
4. Alternating Duty – alternates between ad valorem and specific
Kinds of Special 1. Anti-Dumping
Custom Duties 2. Countervailing
3. Marking
4. Discriminatory
5. Safeguard Duties
Comparison of Special Duties
1. Anti- It is a special duty imposed on the importation of a product, commodity or article of
dumping duty commerce into the Philippines at less than its normal value when destined for domestic
consumption in the exporting country which is the difference between the export price and
the normal value*** of such product, commodity or article. (see Section 301(s)(1), TCC)
***
Normal value for purposes of imposing the anti-dumping duty is the comparable price at
the date of sale of like product, commodity or article in the ordinary course of trade when
destined for consumption in the country of export (see Section 301(s)(3), TCC, as
amended by RA 8752)
Nature Imposed on imported goods where it appears that a specific kind or class of foreign article
is being imported into or sold or is likely to be sold in the Philippines at a price less than its
fair value.
Purpose To protect local industries from undue competition
Amount/Rate Difference between the export price and the normal price
Note:
(1) The imposing authority for the anti-dumping duty is the DTI Secretary in the case of
non-agricultural product, commodity, or article or the DA Secretary in the case of
agricultural product, commodity or article.
Note: The Philippine Government may avail of this remedy to protect its local industry
against unfair competition. For example, where goods to be imported to the Philippines
are given subsidy by the foreign origin, importer may impose a lower price, threatening to
cause material injury to the domestic products, Hence countervailing duty may be
imposed.
Purpose To protect local industries from undue competition
Amount/Rate Amount of subsidy
Imposing Non-agricultural products: Secretary of Trade and Industry
Authority
Agricultural products: Secretary of Agriculture
Judicial Review Any interest party who is adversely affected by a final ruling imposing a countervailing
duty may file with the CTA a petition for review within thirty (30) days from his receipt of
notice of the assailed decision. But such appeal shall not stop or suspend the imposition of
the duty
3. Marking Duty A marking duty are the additional customs duties imposed on foreign articles (or its
containers if the article itself cannot be marked) not marked in any official language in the
Philippines in a conspicuous place as legibly, indelibly and permanently in such manner as
to indicate to an ultimate purchaser in the Philippines the name of the country of origin.
(See Section 303, TCC)
Nature Duty imposed on an ad valorem basis imposed for improperly marked articles
Purpose To prevent possible deception
Amount/Rate 5% ad valorem of the goods
Imposing Commissioner of Customs
Authority
Judicial Review None
What are the 1. The article is incapable of being marked
exceptions to 2. The article cannot be marked prior to importation to the Philippines without injury
marking of 3. The article cannot be marked prior to importation to the Philippines except at an
articles? expense economically prohibitive of its importation
4. The marking of the container of such article will reasonably indicate the origin of such
article
5. The article is of a crude substance
6. Such article is for the use of the importer and not intended for sale in its imported or
other form
7. Such article is to be processed in the Philippines by the importer or for his own account
and not for the purpose of concealing the origin of such article
8. The ultimate purchaser by the Character of the article necessarily know the country of
origin of such article
9. Such article was produced more than 20 years prior to its importation into the
Philippines
10. Such article cannot be marked after importation except at an expense economically
12. Tariff and Customs Code Page 4 of 12
prohibitive and the failure to mark the article before importation was not due to any
purpose of the importer, producer, seller or shipper to avoid compliance.
4. It is an additional customs duty imposed upon articles wholly or in part, the growth or
Discriminatory / product of, or imported in a vessel of any foreign country whenever the President shall
Retaliatory Duty find as a fact that such country:
a. Directly or indirectly upon any Philippine product unreasonable charge, exaction,
regulation or limitation which is not equally enforced upon like articles of other foreign
countries
b. Discriminates in fact against the commerce of the Philippines as to place the Philippines
at a disadvantage compared with the commerce of any foreign country (See Section 304,
TCC)
Nature Duty imposed on imported goods whenever it is found as a fact that the country of origin
discriminates against the commerce of the Philippines in such a manner as to place the
commerce of the Philippines at a disadvantage compared with the commerce of any foreign
country.
Note: For example, a foreign country imposed very high and unreasonable duties on
Philippine articles entering its jurisdiction, while not imposing the same high rates on other
countries goods.
Purpose To protect the national interest
Amount/Rate Not exceeding 100% ad valorem
Imposing President of the Philippines
Authority
Judicial Review None
5. Safeguard Safeguard measures are emergency measures including tariffs to protect domestic
Duty industries and producers from increased imports which inflict or could inflict serious injury
on them.
Duty Drawback
Refund of customs duties paid on the following goods after compliance with all the condition and documentary
requirements provided by law:
(1) On fuel used for the propulsion of vessels1;
(2) On petroleum oils, oils obtained from bituminous minerals, and crude oil, eventually used for generation of
electric power and for the manufacture of city gas2;
(3) On goods made from imported materials and which are exported within one (1) year after the importation3.
1
A refund or tax credit not exceeding 99% of the duty imposed shall be allowed on all fuel imported into the Philippines used
for propulsion of vessels engaged in trade with foreign countries, or in the coastwise trade (Sec. 900(A), R.A. No. 10863).
2
A refund tax credit not exceeding fifty percent (50%) of the duty imposed shall be allowed on petroleum oils, oils obtained
from bituminous materials, and crude oil imported by non-electric utilities, sold directly or indirectly, in the same form
or after processing, to electric utilities for the generation of electric power and for the manufacture of city gas (Sec. 900(B),
R.A. No. 10863).
Note: For a Letter of Credit (“L/C”) transaction, a duly accomplished L/C, including a Pro-forma Invoice and
Import Entry Declaration for Advance Customs Import Duty (“ACID”) is required. A Pro-forma Invoice is
required for a non-L/C transaction (e.g., Draft Documents against Acceptance (“D/D”), Documents against
Payment (“D/P”), Open Account (“OA”) or self-funded documentation.
3
Upon exportation of goods manufactured or produced in the Philippines, a refund or tax credit not exceeding 100% of the duties
paid shall be allowed on the improved materials used including the packing, covering, putting uo, marking or labeling
thereof (Sec. 900©, R.A. No. 10863).
1. Export Declaration
2. Export Clearance
Pursuant to the applicable rules of origin, the BOC or any other designated government agency may
determine the origin of goods for export and, if appropriate, issue the corresponding certificates of origin.
However, the exporter may adopt a self-certifivation system, provided, that it is duly accredited by the BOC or
any other authorized government agency (Sec. 503, R.A. No. 10863).
7. Insurance policy if applicable
8. Post loading Certificates (optional)
4. The agency which is charged with assessing and collecting customs revenues, curbing illicit trade and all forms
of customs fraud, and facilitating trade through an efficient and effective customs management system.
A. Bureau of Internal Revenue
B. Bureau of Customs
C. Tariff Commission
D. Department of Finance
6. The task of controlling border so as to prevent entry of smuggled goods in the Philippines is a function of the
A. Department of Transportation
B. Philippine Coastguard
C. Department of National Defense
D. Bureau of Customs
7. All of the following, except one, are functions of the Bureau of Customs
A. Administer the Philippine tariff schedules and tariff nomenclatures;
B. Facilitation and security of international trade and commerce through an informed compliance program;
C. Supervision and control over the entrance and clearance of vessels and aircraft engaged in foreign commerce;
D. Prevention and suppression of smuggling and other customs frauds.
9. This refers to the price actually paid or payable for the goods when sold for export to the Philippines
A. Taxable value
B. Dutiable value
C. Assessed value
D. Landed cost
11. In determining the customs duties, an imported article shall be assessed based on dutiable value which shall be
computed by sequentially applying the following valuation methods. Which of the following methods is given
the highest priority?
A. Transaction Value of Identical Goods
B. Transaction Value
C. Transaction Value of Similar Goods
D. Deductive Value
13. Goods which are the same in all respects, including physical characteristics, quality and reputation. Minor
differences in appearances shall not preclude goods otherwise conforming to the definition from being regarded as
–
A. Identical goods
B. Similar goods
C. Opposite goods
D. Different goods
14. Goods which, although not alike in all respects, have like characteristics and like component materials which
enable them to perform the same functions and to be commercially interchangeable. The quality of the goods,
its reputation and the existence of a trademark shall be among the factors to be considered in determining
whether goods are –
A. Identical goods
B. Similar goods
C. Opposite goods
D. Different goods
15. Where the dutiable value cannot be determined under Deductive Value Method, the dutiable value shall be the
–
A. Fallback value
B. Deductive value
C. Computed value
D. Transaction value
19. The present system of customs valuation is the transaction value of the imported article. There are, however,
certain instances where the transaction value of the imported article could not be determined. Under this situation,
the BOC is allowed to use alternative methods of valuation. Which among the following methods is not recognized as
one of the alternative methods?
a. Normal Value
b. Deductive Value
c. Computed Value
d. Fallback Value
20. Which are regular tariff and duties impose by the Bureau of Customs?
a. Dumping duty
b. Countervailing duty
c. Marking duty
d. Ad valorem
21. What are special tariff and duties impose by the Bureau of Customs?
a. Compound duty
b. Alternative duty
c. Specific duty
d. Discriminatory duty
23. This is a customs duty that is computed on the basis of the transaction value of the imported article.
a. Anti-dumping duty
b. Specific customs duty
c. Ad valorem customs duty
d. Countervailing duty
25. Albert, a shrewd businessman, went to Europe for a pleasure trip. While in Madrid, Spain, he found out that a 50
oz. bottle of orange marmalade sells for the equivalent of P20 in the supermarkets. However, when he went to
Barcelona, he found out that a local producer of 50 oz. bottle of orange marmalade is willing to sell the same for
export at the price of P180 per dozen. Sensing a very good profit opportunity, because in the Philippines the
wholesale price charged by Philippine manufacturers of a similar bottle of orange marmalade is P25, he decided to
import 10,000 dozen of the item into the Philippines.
Under the above circumstances, what possible special customs duty may be imposed upon arrival of the 10,000 dozen
bottles of orange marmalade in the Philippines?
a. Marking duty
b. Anti-dumping duty
c. Countervailing duty
d. Discriminatory duty
26. Which among the following statements would be descriptive of a discriminatory duty?
a. It may be imposed by the Secretary of Finance upon recommendation of the Secretary of Foreign Affairs who
would know of the discriminatory practices from the various ambassadors posted in foreign countries.
b. The discriminatory duty is imposed in order to protect Philippine consumers from the influx of cheap imported
goods from other countries.
27. As a result of construction boom where the demand for steel billets soared to very high levels, a shortage
resulted.
Mighty company imported steel billets from Russia which are not manufactured in the Philippines. The selling price in
Russia of the steel billets is US$100 per ton, but were sold to Prieto Company at only US$50 per ton FOB Russian
Port. The Russian government grants a reward of US$5 per ton of steel billet which is exported. What customs duties
are due on the importation of the steel billets?
a. Only anti-dumping duties
b. Only regular custom duties
c. Regular custom duties and anti-dumping duties
d. Regular custom duties and countervailing duties
Mara Clara won the light flyweight title of the Women’s International Boxing Association that was held in one city in
China. She went back to the Philippines with an article she bought in that country. When it passed the Bureau of
Customs, the customs personnel made the following valuations:
Cost $400.00
Insurance 16.00
Postage 30.31
Tariff rate 15%
Documentary stamp tax P15.00
Exchange rate: US $1.00 = P45.143
30. The total tax payable before the belt is released from the Bureau of Customs is-
a. P5,804.00 b. P5,819.36 c. P3,022.17 d. P2,782.19
31. A device or scheme resorted to enable merchandise affected by taxes to be exported and later sold in foreign
countries under the same terms as if it is not taxed at all is called?
a. Import Entry
b. Manifest
c. Drawings
d. Draw back