By: Mary Armi G. Milanes
Year 2019 left some of our countrymen in despair after Typhoon Ursula came uninvited on Christmas Day. As it barreled through the Visayas and Southern Luzon regions, many beloved were lost, while homes were damaged and several flights and ferry trips were cancelled.
Nevertheless, the Philippines remains fortunate to be able to receive outpouring aid from different organizations. Aid, whether local or foreign, often comes in the form of basic goods, which are distributed during emergency relief operations. When sourced internationally, these goods will ordinarily be considered as importations which are bound by specific guidelines.
The guidelines currently governing international donations is the “Guidelines and Procedures on Customs Clearance of International Donations Availing of Duty and/or Tax Exemption during Calamities”, which was issued right at the heels of Typhoon Yolanda in 2014. This issuance provides guidelines for senders and recipients of donated goods abroad on circumstances, and the procedures which must be followed to avail of duty and/or tax exemptions.
Recently, however, the Bureau of Customs (BOC) reiterated that imported international donations will undergo regular importation procedures and payment of customs duties and taxes. However, goods which are consigned to the following consignees may be exempted from customs duties: (1) national government agencies; (2) foundations or relief organizations registered with the DSWD; (3) non-stock, non-profit educational institutions; (4) or disabled persons.
In order to avail of the duty and tax exemption, a Tax Exemption Indorsement (TEI) should be secured from the Department of Finance-Revenue Office. The basic documentary requirements to secure the TEI include (1) Recommendation or endorsement for duty and/or tax-exemption from the appropriate government agency such as DSWD, NEDA, DepEd, CHED, etc.; (2) Letter Request addressed to the Secretary of Finance; (3) Import Bill of Lading or Airway Bill; (4) Import Invoice; (5) Packing List; and, (6) Deed of Donation. Once the TEI is approved, it shall be transmitted to the Bureau of Customs-Tax Exempt Division for transmittal to the proper Collection District for further processing.
It can be observed that the BOC’s recent press release does not completely align with the July 2014 guidelines. Particularly, the recent press release limits the exemption to the four abovementioned consignees and fails to capture the exemption granted to goods consigned with foreign embassies, international organizations, and specialized agencies. However, with the DOF’s Manual of Tax Exemption in place, they may still be subject to exemption, provided that they likewise secure a TEI. The said manual was developed for the use and guidance of DOF in processing tax exemptions. It also enlists the additional mandatory requirements (e.g. affidavit of end-use/ownership, DFA recommendation, and other certifications) which may grant the importation a tax exemption in accordance with its applicable legal basis.
Although the Bureau of Customs has not released any updated guidelines and procedures aside from the guidelines on international importations released in July 2014, donors are advised to stay abreast of the guidelines and follow procedures to avoid any delays in the distribution of relief goods. While these relief goods come with the best of intentions, all of these are rendered useless if the goods waste away in wait. Paramount importance, then, must be given in the prompt delivery of goods. After all, in emergency situations, the speedy delivery of assistance can save more lives.
Mary Armi G. Milanes is a Supervisor from the Tax Group of KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member firm of KPMG International. KPMG RGM&Co. has been recognized as a Tier 1 tax practice and Tier 1 transfer pricing practice by the International Tax Review.
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