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The Bureau of Customs is proposing guidelines on the establishment of non-manufacturing customs bonded warehouses for international shipping and air transport operations
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The proposed customs administrative order will apply to importation of petroleum products, goods, and supplies used for international shipping or air transport operations for use or consumption outside the Philippines
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BOC is accepting position papers on the draft CAO from June 9 to 17
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Stakeholders are also invited to attend the online public consultation on the draft CAO to be held on June 17
The Bureau of Customs (BOC) is proposing guidelines on the establishment of non-manufacturing customs bonded warehouses (NCBWs) for international shipping and air transport operations.
The proposed customs administrative order (CAO) will apply to importation of petroleum products, goods, and supplies used for international shipping or air transport operations for use or consumption outside the Philippines.
It will implement Sections 109 (U) and 135 of the National Internal Revenue Code of 1997 (Tax Code), as amended by Republic Act (RA) No. 12066, or CREATE MORE, in relation to Title VIII of RA No. 10863, otherwise known as the Customs Modernization and Tariff Act (CMTA).
Under the laws, importation of fuel, goods, and supplies used for international shipping or air transport operations are exempt from value-added tax (VAT). International carriers of Philippine or foreign registry directly importing petroleum products, on their use or consumption outside the Philippines, are also exempt from excise tax.
BOC said it is accepting position papers on the draft CAO from June 9 to 17. Stakeholders are also invited to attend the online public consultation on the draft CAO to be held on June 17.
Under the draft CAO, the NCBW ISAT (international shipping or air transport) is a type of NCBW but the imported goods are not destined for domestic consumption.
It is also a type of an industry-specific CBW but the importation covers finished goods which are not for manufacturing or production of finished products. The petroleum product is for direct supply or sale to international shipping or air transport operations.
The NCBW ISAT will be an exception to the general rule that finished products are not allowed to be imported if the same are not used as a component in the manufacture/production of another finished product for export.
Petroleum products directly imported by international carriers of Philippine or foreign registry on their use or consumption outside the Philippines are exempt from excise tax and VAT. By direct importation, the international carriers of Philippine or foreign registry will be the sole, direct and exclusive importer of the petroleum products, including ancillary activities related to the importation.
Petroleum products, goods, and supplies imported by NCBW ISAT to international shipping or air transport operators will be exempt from VAT, and refund for excise tax paid on such products is allowed, upon presenting proof that the petroleum products were sold to client international carriers of Philippine or foreign registry, for their use or consumption outside the Philippines.
Customs duties, if applicable, will be subject to payment upon importation, but the direct importer or supplier will be allowed for a refund in accordance with the CMTA.
On the application for NCBW ISAT, the existing rules and regulations on the accreditation of CBWs will govern the processing of applications by international carriers and suppliers.
To ensure proper inventory, monitoring and liquidation of petroleum products, goods, and supplies covered under the proposed CAO, BOC has set certain conditions—in addition to those prescribed by the port as approved by the commissioner—taking into consideration the peculiar condition of the individual applicant. The conditions vary for the direct importers eligible for exemption from VAT and excise taxes, and for suppliers eligible for exemption from VAT, and refund for excise taxes. If any petroleum products, goods, and supplies is used for other purposes, they will then be subject to payment of VAT and excise tax.
All NCBW ISAT will be required to post a performance bond, a general warehousing bond (GWB), and a general transport security bond (GTSB).
The performance bond in the amount of P10 million will cover any penalties for violations of the proposed CAO, the CMTA, and other applicable rules and regulations.
The GBW will cover the VAT and excise taxes of goods in the case of direct importers and VAT of goods in case of the suppliers.
The GTSB, meanwhile, will ensure the complete and immediate delivery of goods and the payment of pertinent customs charges and expenses and other transfer costs.
Moreover, the transfer from the port of discharge to the client/end-user or extension NCBW ISAT will be subject to continuous underguarding, unless the transfer is carried out through a pipeline.
Any violation to the proposed CAO will be subject to administrative sanctions. Penalties include payment of VAT, and excise taxes, computed per flight/voyage subject of the violation, covering the full volume of supplied petroleum products. If the violator is the client, the client and the supplier will be jointly and severally liable.
Interest and charges will also be applied, as well as other penalties applicable under CAO No. 01-2022 (amended guidelines on the establishment, operation, supervision, and control of CBWs).
