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The Bureau of Customs has assigned a procedural code in its system for proper application of VAT provisions on local sales to domestic market enterprises
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Procedural code 062 has been instituted in BOC’s Electronic-to-Mobile System for mandatory use in the lodgement of all importations involving such local sales
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The VAT collection for such local sales is outside the mandate of BOC and under the jurisdiction of the Bureau of Internal Revenue
The Bureau of Customs (BOC) has assigned a procedural code in its system to properly apply value-added tax (VAT) provisions on local sales to domestic market enterprises (DMEs) or non-registered business enterprises (non-RBEs).
Procedural code 062 has been instituted in BOC’s Electronic-to-Mobile System, “thereby providing the necessary procedural mechanism in accordance with the law,” according to Customs Memorandum Circular (CMC) No. 11-2026.
A procedural code refers to specific numerical or alphanumeric codes used by BOC to classify import/export shipments, declaration types, valuation methods, or specific locations within its system.
CMC No. 11-2026 implements Bureau of Internal Revenue (BIR) Revenue Regulations (RR) No. 9-2025. This RR, in turn, implements Section 295(D) of the National Internal Revenue Code of 1997 (Tax Code), as amended by Section 18 of Republic Act (RA) No. 12066 (Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy or CREATE MORE), particularly on the treatment of local sales of goods and/or services by RBEs.
CMC No. 11-2026 is also in reference to CMC No. 113-2025, which implements RR No. 9-2025.
READ: BOC issues circular on goods sold locally by registered business enterprises
CMC No. 113-2025 noted that in relation to RR No. 9-2025, then Finance Secretary Ralph Recto, in a letter dated April 15, 2025, clarified that sales of goods and services to DMEs or non-RBEs are considered “local sales,” which is outside the mandate of BOC and under the jurisdiction of BIR.
Local sales of goods and/or services by an RBE is subject to 12% VAT, unless exempt or zero-rated under Titles IV and XIII of the Tax Code.
RR No. 9-2025 clarified that the location of the transactions and the RBEs, whether inside the economic zone, freeport, or customs territory are no longer the determining factors in the taxability for local sales of RBEs for VAT purposes.
Under CMC No. 113-2025, BOC will allow release of such goods upon the presentation of BIR Form No. 0605.
Aside from BIR Form No. 0605, CMC 113-2025 said “BOC Officers handling the release of the goods subject of local sale shall, collect the appropriate duties, applicable taxes other than VAT, and other fees and/or charges on the imported raw materials sold or as component of the finished product, whose collection were suspended at the time of importation by the RBE.”
Section 105 of the Customs Modernization and Tariff Act states that imported goods will be “subject to the import duty rates under the applicable tariff heading that are effective at the date of importation or upon withdrawal from the warehouse for consumption.”
“In case of withdrawal from free zones for introduction to the customs territory, the duty rate at the time of withdrawal shall be applicable on the goods originally admitted, whether withdrawn in its original or advanced form,” it added.
With this, RBEs “shall make an appropriate goods declaration for such raw materials and pay the corresponding duties, applicable taxes except VAT, and other fees and/or charges thereon, with attached BIR Form No. 0605,” CMC 113-2025 said. — Roumina Pablo
