The United States/Philippines import-export trade is worth more than $140 billion annually. Before you can cut yourself a piece of that action, you need to learn about Philippines import taxes and duties and when your business needs an import license for the Philippines. Handle the paperwork first and then work on cracking the Filipino market.
Import Regulations in the Philippines
Under import regulations in the Philippines, goods shipped into the country fall into four categories:
- Free imports: These goods don't require an import permit, clearance or license. It's the Philippines's default setting: Goods fall into this category unless import regulations in the Philippines specifically assign them to another category.
- Regulated imports: These items can only be imported after you secure the necessary clearances, licensing and other paperwork.
- Restricted importation: Unless you're covered by a specific exemption, import regulations in the Philippines prohibit these items. They include dynamite, firearms, gambling devices, opium pipes, marijuana, weapons of mass destruction and toxic substances.
- Prohibited imports: There's no exemption that will let you ship these items. It includes material advocating for treason or rebellion against the Filipino government, abortion information or drugs, obscene materials, adulterated or misbranded food, and goods made of gold and silver without a stamp indicating the fineness of the metal.
The U.S. Department of Commerce has information and links on its website for figuring out where your proposed imports fall under the schemata of Philippines law.
Even if your goods fall into the free import category, there's still some paperwork you and the recipient in the Philippines need to provide. The basics include a bill of lading from the ship or plane that brought them into the islands, a letter of credit for payment, a packing list and a declaration of value.
On top of the basics, you may need added paperwork. If you're shipping something from one of the nations with which the Philippines has a free-trade agreement, you have to document the source. If the goods are regulated, you're going to need an import permit.
The Import Permit
When a company wants an import license for the Philippines, it's usually best to designate one person as the representative in the process. If you have a branch operation up and running in the Philippines, it should be one of your own people, and if you're shipping to a Philippines company, it will be one of theirs. The person should have the authority to handle all import-related matters.
Whoever applies for the import permit will have some paperwork to submit:
- A clearance report by the Filipino National Bureau of Investigation. This can take a while, so the applicant for the import permit should apply for this one first.
- A personal profile with a signed photograph
- Copies of two valid government IDs
- A new-importer application form, notarized
- A customs form showing that the applicant has paid the relevant fees
- A form authorizing the applicant to sign for all imports
There are other business documents the government may require, such as photos of the company's warehouse and proof that they either own or lease it. The Philippines Department of Trade says that until it goes completely digital, it wants most of this material in hard copy.
Taxes and Tariffs
Money for Philippines import taxes and duties is another factor in trading there. Currently, there's no tariff or tax unless the goods are worth at least $10,000 Philippines pesos, equivalent to around $200 American dollars.
For nonagricultural goods, tariffs average 6.7%, but they can be as high as 65% or as low as zero. The highest tariffs target goods that already have high domestic production. There's also a value-added tax of 12% on imported goods.
The Philippines Tariff Commission has an online tool for figuring out tariffs on various classes of imports.
- ASEAN Briefing: Import and Export Procedures in the Philippines – Best Practices
- Philippines Department of Trade and Industry: Import Facilitation
- International Trade Administration: Philippines - Import Requirements and Documentation
- Taikuun: How to Get an Import License in the Philippines
- Republic of the Philippines Tariff Commission: Philippines Tariff Finder
Fraser Sherman has written about every aspect of business: how to start one, how to keep one in the black, the best business structure, the details of financial statements. He's also run a couple of small businesses of his own. He lives in Durham NC with his awesome wife and two wonderful dogs. His website is frasersherman.com