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The Philippine Retailers Association is asking the Bureau of Customs to scrap the minimis rule on imports due to unfair competition
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PRA said the policy puts local retailers at a disadvantage as it allows increased e-commerce activity from foreign retailers to enter the country without duties and taxes.
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Moreover, the policy ‘raises concerns about counterfeit and low-quality goods entering the market’
The Philippine Retailers Association (PRA) is asking the Bureau of Customs (BOC) to scrap the de minimis rule on imports due to unfair competition.
PRA said the policy, which exempts imported goods valued at P10,000 or less from customs duties and taxes, puts local retailers at a disadvantage as it allows increased e-commerce activity of foreign retailers who essentially don’t pay duties and taxes.
“This exemption not only leads to substantial revenue loss for the government but also compromises the principle of fair taxation,” PRA said in a letter to Customs Commissioner Bienvenido Rubio dated May 6.
Moreover, PRA said the policy “raises concerns about counterfeit and low-quality goods entering the market.”
Under Section 423 of Republic Act No. 10863, otherwise known as the Customs Modernization and Tariff Act, CMTA, no duties and taxes are to be collected on goods with a free-on-board (FOB) or free carrier (FCA) value of P10,000 and below, a huge increase from the previous de minimis value of P10. The new policy is being implemented under BOC Customs Administrative Order (CAO) No. 02-2016 issued in 2016.
READ: PH Customs order raises de minimis threshold to P10K from P10
PRA noted that while the rule has been proven effective in the past, it said it is imperative to revisit existing rules and policies to keep up with the current trends in retail and e-commerce.
“It is crucial for the government to reassess and update trade policies, especially concerning marketplace orders from China,” PRA said, noting that while these transactions are small individually, “collectively resemble bulk smuggling, gradually harming local businesses.”
“While local retailers do not intend to turn its back from healthy competition for the greater benefit of the consuming public, it is also imperative that the playing field be leveled in order to encourage development and growth,” PRA added.
The group acknowledged though that outright removal of the policy may be “too aggressive” and proposed other measures, such as lowering the threshold or limiting the de minimis use per consumer per month and apply tax if the goods are for commercial resale, not personal use.
The government may also provide a certain limitation or threshold as it imposes tax on goods for commercial resale.
Last year, PRA also issued a position paper urging policymakers to re-evaluate and remove the de minimis value on imported goods, particularly on online retail purchases.
