Customs Modernization and Tariff Act (CMTA)

Customs Modernization and Tariff Act (CMTA)

• CMTA aims to protect and enhance government revenue
• CMTA also seeks to institute fair, transparent customs and tariff management
• The goal is to efficiently facilitate international trade
• This involves preventing customs fraud and illegal acts
• Modernizing customs and tariff administration is paramount

Policy Implementation

• Programs for continuous enhancement of customs systems and processes are to be developed and implemented
• These will harmonize customs procedures
• Customs rules, regulations, policies, and procedures must be clear and transparent
• They should also align with international standards and customs best practices
• Transparency and accessibility of customs information is to be established
• This includes customs laws, rules, regulations, administrative policies, procedures, and practices
• The purpose is to ensure informed compliance by stakeholders
• Consultation, coordination, and cooperation are necessary with government agencies and the private sector
• This collaboration aids in implementing and developing customs policy
• A fair and expeditious administrative and judicial appellate remedy is to be provided
• This is for customs related grievances and matters
• Modern customs administration practices are sought, including information and communications technology
• This technology is for implementing customs functions
• Professionalism and meritocracy are to be instituted in customs tax administration
• This is achieved by attracting and retaining competent customs officers and personnel

Definition of Key Terms

• Abatement: Reduction of duties and taxes where payment hasn't been made

• Actual or Outright Exportation: Customs procedure for goods in free circulation leaving the Philippines to remain permanently outside

• Admission: Bringing imported goods into a free zone

• Airway Bill (AWB): A transport document for airfreight, contract of carriage with details like liability limits and transport instructions

• Appeal: Remedy sought by a person aggrieved by a Bureau action before the Bureau, Secretary of Finance, or court

• Assessment: Process of determining duties, taxes, and charges on imports/exports

• Authorized Economic Operator (AEO): Accredited importer, exporter, customs broker, etc., based on WCO standards and national best practices

• Bill of Lading (B/L): Transport document for water-borne freight, functions as a contract of carriage, includes carrier conditions and transport instructions

• Bureau: Refers to the Bureau of Customs

• Carrier: Person transporting goods, like airlines or shipping lines

• Clearance: Completion of customs and government formalities for goods to enter consumption, warehousing etc.

• Commission: Refers to the Tariff Commission

• Conditional Importation: Temporary admission of goods relieved from import duties/taxes for a specific purpose and re-export

• Customs Broker: Holder of a valid Certificate of Registration under the "Customs Brokers Act of 2004"

• Customs Office: Any customs administrative unit authorized to perform customs and tariff functions

• Customs Officer: Person whose duty involves discretion in performing Bureau functions

• Customs Territory: Areas in the Philippines where customs and tariff laws are enforced

• Entry: Act of bringing imported goods into customs territory

• Exportation: Act of bringing goods out of Philippine territory

• Export Declaration: Statement indicating procedures for taking out exported goods

• Flexible Clause: Presidential power upon NEDA recommendation to adjust tariff rates, establish import quotas, or impose additional duties

• Foreign Exporter: Entity whose name appears on export documents to the Philippines

• Free Zone: Special economic zones registered with PEZA

• Goods: Articles, wares, merchandise subject to import/export

• Goods Declaration: Statement indicating procedure for entry or admission of goods

• Importation: Bringing goods from a foreign territory into the Philippines

• Freight Forwarder: Local entity facilitating transport without being a carrier

• International Freight Forwarder: Responsible for assembly/consolidation of shipments for international transport

• Jurisdictional Control: Bureau's power and rights in exercising supervision and police authority

• Lodgement: Registration of a goods declaration with the Bureau

• Non-Vessel Operating Common Carrier (NVOCC): Entity providing point-to-point transport services, may not own a vessel

• Outright Smuggling: Importing goods without complete documents to evade taxes/duties

• Perishable Good: Goods liable to perish or depreciate greatly, may be sold at auction

• Port of Entry: Domestic port open to international trade, includes principal and subports of entry

• Port of Discharge: Place where shipments are unloaded

• Reexportation: Exportation of goods that were previously imported

• Release of Goods: Bureau's action to allow goods undergoing clearance to be placed at the disposal of the party concerned

• Refund: Return of duties and taxes paid on goods

• Security: Guaranty ensuring satisfaction of an obligation to the Bureau

• Smuggling: Fraudulent import/export of goods with knowledge of fraudulent activity

• Taxes: All taxes, fees, and charges collected by the Bureau per this Act and the National Internal Revenue Code

• Technical Smuggling: Importing goods with fraudulent declaration to reduce taxes/duties

• Tentative Release: Release of goods under disputed assessment with a cash bond

• Transit: Customs procedure for goods transported under control from one office to another or to a free zone

• Transshipment: Transfer of goods under customs control from importing to exporting transport within one customs office

• Traveler: Person temporarily entering/leaving a country

• Third Party: Person dealing directly with the Bureau on behalf of another

Importation rules

• Importation begins when the vessel/aircraft enters Philippine territory with intent to unload
• Importation terminates when duties/taxes are paid or secured at the port of entry
• It can also terminate when goods are legally free from duties/taxes and have left the Bureau’s jurisdiction

Duty and Tax on Imported Goods

• All goods imported into the Philippines are subject to duty upon importation
• This includes goods previously exported from the Philippines, unless stated otherwise

Penalties and Interest

• Unpaid duties, taxes, and charges incur a legal interest of 20% per annum from the final assessment date
• This also applies to any fine or penalty imposed

Import Duty Rates

• Import duty rates are effective at the date of importation or upon withdrawal from the warehouse for consumption
• For withdrawals from free zones into customs territory, the duty rate is that of the time of withdrawal.

Customs Public Auction

• In goods sold at a customs public auction, duty rates at the auction date apply

The Declarant

• A declarant can be a consignee or someone with the right to dispose of goods
• They lodge a goods declaration with the Bureau
• The declarant can be the importer holding the bill of lading
• They can also be the exporter owning the goods
• Additionally a customs broker under authority can be a declarant
• A duly empowered agent can serve as declarant
• Juridical persons authorize a responsible officer to sign the goods declaration

Goods Declaration Processing

• Goods declaration is processed by the declarant or a licensed customs broker
• There will be a transition period of two years where a specific subparagraph will not be implemented
• The Bureau will allow two years after the act takes effect, which is where the said subparagraph takes effect

Declarant Responsibilities

• The declarant is responsible for the accuracy of the goods declaration
• They are responsible for the payment of all duties, taxes, and other charges on imported goods
• Licensed customs brokers are responsible for the declaration's accuracy

Signed Declaration

• The declarant must sign the goods declaration
• Even if assisted by a licensed customs broker that signs the declaration

Errors and Penalties

• The Bureau will not impose substantial penalties for inadvertent errors lacking fraudulent intent/gross negligence
• A penalty may be imposed to deter repetition of errors, but it must not be excessive

Use of Technology and Information

• Adoption of information and communications technology is crucial
• This is for enhancing customs control
• Technology must support cost-effective, efficient operations toward a paperless environment
• The Bureau shall communicate, exchange, and process trade- and logistics-related information
• Security in data/communication is essential, aligned with local/international standards
• This also covers disaster preparedness, as well as business continuity, and maintaining uptime goals

Electronic Documents

• Electronic documents, permits, licenses, and certificates are acceptable
• They carry the same legal effect as any other legal writing, so long as requirements are met
• The Bureau shall also recognize these and transmit approvals electronically

Payment Processing

• The Bureau can accept and acknowledge payments electronically

Stakeholder Consultation

• All technology implementation requires consultation with affected parties and stakeholders

Bureau and Third Parties

• Parties can transact with the Bureau directly or through a designated third party
• Direct transactions should not be treated worse than those via a third party
• A designated third party has same rights and obligations as the designating party

Financial Secretary

• The Secretary of Finance sets guidelines for the relationship between the Bureau and third parties

General Application of information

• All the Bureau's laws, decisions, rulings, circulars, and memoranda, must be published adhering to the law
• Accessibility is fostered
• Information of general application related to customs which is not confidential is for the general public
• There must be new information or changes to customs law made readily available prior to its effective date

Information of a Specific Nature

• Information that isn't confidential is related to a specific matter requested by an interested party for legitimate use
• The Bureau may require a reasonable fee for requested information
• Release of information shall be within a reasonable time

Decision and Ruling

• Binding and advance decisions/rulings are issued at the request of interested parties
• The time pertaining to importation or exportation of goods based on Section 1502
• Written notification of the decision shall be sent to the party of interest
• Notification is to be within the period specified by this act or similar regulations
• Reasons shall be included within an adverse decision
• The party appealing it shall be notified of their right to appeal
• A decision must be issued within 30 days from the submission of information being necessary

Forms, grounds, and Right to Appeal

• Any decision or action may be appealed by a party impacted adversely
• The appeal period is within 15 days from the date of the decision or order that is questioned
• All appeals must be in writing
• Any appeal must specify which grounds are pertaining to the appeal
• There shall be ample time provided for the submission of supporting evidence

Types of Importation

• Goods are "entered" in the Philippines for consumption
• This is when the electronic goods declaration and supporting documents, are lodged with customs

Importation and Exportation

• All goods can be freely imported/exported without permits/licenses, unless otherwise provided

Regulated Goods

• Regulated goods require securing declarations, clearances, licenses, and other requirements prior to import/export
• Requirement submissions are allowed after arrival if in governing laws/regulations

Prohibited Goods

• The following are prohibited in terms of importation and exportation
• Goods advocating treason or bodily harm
• Instruments/drugs for unlawful abortion
• Obscene/immoral materials
• Goods with misleading metal fineness marks
• Adulterated food/drugs
• Infringing goods
• Explicitly prohibited items by law

Restricted Goods

• The following can only be authorized by law or require specific regulation
• Dynamite, gunpowder and other explosives
• Mechanical gambling devices
• Lottery/sweepstakes tickets
• Narcotics, drugs, or derivatives, are authorized the Dangerous Drugs Board for medicinal purposes
• Opium pipes
• Restricted goods

Relief Consignment - Calamity Support

• Goods like food and medicine meant for calamity victims are entered as relief consignment
• Requirements include:
• Simplified goods declaration
• Lodging and checking goods declaration and release of goods on arrival
• Waiver of charges for clearance beyond designated hours
• Examination/sampling only in exceptional cases
• The Department of Finance and Department of Social Welfare and Development jointly issue regulations

Duty and Tax Treatment- Relief Consignment Calamity Support

• Relief consignments for calamity victims are exempt from duties and taxes

Officials and Bureau of Customs

• The Bureau is headed by a Commissioner
• At least four but no more than six Deputy Commissioners
• All are Presidential Appointees
• The Deputy appointed shall come from within the bureau

Commissioner Powers

• The powers and functions of the Commissioner are as follows:
• Interpret the act exclusively under original jurisdiction
• Exercise any customs power
• Review customs actions that were performed
• Delegate the powers vested in customs officers
• Assign or reassign any customs officer
• Perform all other duties of the act

Exclusions from power

• These are the exclusions from the delegation of act powers
• Rules and Regulations promulgation
• Rulings revocation
• Customs obligation compromise

Bureau of Customs Functions:

• Collect customs revenue

• This includes dues, fees, charges, fines, penalties relating to importing goods under this Act

• Simplify customs procedures and harmonize them to enable movement of goods

• Prevent smuggled goods from entering through border control

• Prevent customs fraud and smuggling in general

• Enable international trade facilitation with compliance programs

• Supervise Vessels during entrance

• Supervision of handling of foreign arrivals for revenue collection and preventing contraband

• Control of imports and exports including facilities, etc. for revenue

• Conduct a compensation study

• Exercise exclusive original jurisdiction over forfeiture cases

• Enforcement of this Act in general

Commissioner's Report

• Commissioners report goes to the President, the Congress, NEDA
• The report is an annual one for the Bureau's performance no later than last day of March of the following year

Enacting Rules and Regulations

• Commissioner will enact to enforce this act
• Subject to the approval by the Secretary of Finance
• Congress, NEDA, and Tariff commission receive electronic access to regulations
• Electronic copies of goods declarations regularly get sent to the NEDA, PSA, Bureau of Internal Revenue, Tariff Commission

Customs Districts and Ports

• The Philippines will need necessary Customs Districts
• Respective limits of the districts may change over time by the Commissioner
• Subject to the approval of the Financial Secretary
• The districts must be supervised by a district collector and necessary deputy(s)
• Location choice will be based on requirements by district

All Ports of entry

• Supervised by Customs District
• Collectors assigned to entries in principal ports
• Deputy assigned to entry-ports of other type

Principal Ports of entry

• Aparri shall contain these ports
• Manila
• San Fernando
• Cebu
• etc.
• All other ports that have been created following this act

Port Operators

• These parties require:
• Effective bureau enforcement
• Hampering business and commercial operations
• Seaports
• Suitable areas for examination
• Airport authorities and operators
• Free customs equipment

President's power

• Upon recommendation of the Financial Secretary
• The president may close or open a port of entry
• The Commissioner will reassign the existing personnel upon closure

Assigning Employees

• Financial Secretary approval requires,
• Commissioner may assign employees
• No effect on current tenure, reduction of salary or status

District Collector Duties

• Ensuring entry
• Legal compliance of regulation
• Preventing contraband import and export
• Tax/Duty assessment
• Anti-smuggling

Deputy Succession

• Deputy discharges duties if collector is vacated due to being absent or disabled
• Designee carries the authority to the commissioner within 24 hours to report

Keeping Records

• Authorized Bureaus must maintain records with official transactions with papers following authorities
• Authorized officials will also be permitted access
• Authentication and dry seal must affix

Police Authority

• Implemented effectively with the following people:
  • District collectors
  • Deputy collectors
  • Agents
  • Police
  • Guards

AFP officers may exercise power of police authority

• Authorization given from Commissioner
• BIR officials only where internal revenues are involved
• Coordination enforced among exercising police authority
• The Bureau turns over any goods seized unless by other rules or regulations
• Financial Secretary must approve the implementation details of scope, area, and procedures