Import incentives under the Bayanihan Act

Luningning M. Pizarra Worldtrade Management Services Senior Manager, PwC Philippines 08 Apr 2020

Like many countries, the coronavirus disease 2019 (COVID-19) pandemic has placed most of the cities and provinces in the Philippines under quarantine to restrict the movement of people. While quarantine is being enforced to contain the spread of the disease, it also limits the movement of essential workers and slows down the flow of critical goods needed to address the situation.

To tackle the crisis, Republic Act no. 11469 or the Bayanihan to Heal As One Act was passed, declaring a state of public health emergency throughout the country. Among its key provisions are tax exemptions for importation of health care equipment and supplies; and adopting measures that minimize the disruption of supply chains to ensure the availability of essential goods.

Easing taxes and permits

The Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC) issued their respective guidelines on exemptions from customs duties, VAT, and excise tax, as applicable, of imported supplies and equipment. Both Revenue Regulations (RR) 6-2020 and Customs Administrative Order (CAO) 7-2020 are effective during the three-month implementation of the RA, which may be extended by Congress.

Both regulations release importers from tax liabilities when importing goods such as personal protective equipment (PPE) like gloves, gowns, masks, goggles, face shields, surgical equipment and supplies; laboratory equipment and its reagents and maintenance; medical equipment and devices; consumables such as alcohol, sanitizers, tissue, thermometers, hand soap, detergent, sodium hypochlorite, cleaning materials, povidone iodine; common medicines in tablet and suspension form like paracetamol, mefenamic acid, vitamins, hyoscine, oral hydration solution and cetirizine; and COVID-19 testing kits and others identified by the Department of Health. The exemption applies whether the goods are imported for donation or commercial purposes.

In addition, manufacturers of health-related equipment and supplies are given the same tax and duty exemption on imported materials used for production, provided that the company is registered with any government incentive promotion agencies or included in the master list of the Department of Trade and Industry (DTI).

RR 6-2020 further exempts imported donated goods intended for the national government or its agencies from donor’s tax and relaxes the requirements for a permit called Authority to Release Imported Goods (ATRIG) to facilitate fast clearance of goods from customs.

As stipulated in CAO 7-2020, the tax and duty exemptions can be availed of by securing the appropriate endorsement from the Department of Finance (DoF). Given that the DoF endorsement will take time to secure, the BoC is allowing the filing of a Provisional Goods Declaration (PGD) to immediately clear goods while the exemption endorsement is in process. The importer is required to submit the endorsement after the quarantine period.

The BoC also waived its requirement to present a certificate of product registration (CPR) from the Food and Drugs Authority (FDA) prior to the clearance of regulated products. Effectively, shipments containing donations of PPEs, ventilators, respirators and its accessories for treatment of COVID-19 patients, and face mask importation of private companies for their own use will be cleared by the BoC without a CPR.

The same applies for commercial importation of medical equipment and supplies, except that the importer will have to produce a license to operate (LTO) from the FDA and proof of pending application for CPR. Importers of ventilators, respirators, and their respective accessories for commercial purposes will only need to provide a copy of their LTO.

Expediting clearance and movement of containers

Another memorandum was jointly signed by the secretaries of the DoF, the Department of Agriculture (DA), and the DTI on 2 April to facilitate the immediate customs clearance and improve the flow of containerized cargoes of essential goods. Joint Administrative Order (JAO) 20-01 was immediately made effective to prioritize the clearance and movement of shipments containing food, medicine, and medical and basic goods.

Since food and medical supplies are regulated, the agencies under the DA and the FDA cut the processing time of applications for import permits to three working days to reduce the time spent in the preparation of documents for customs clearance.

The BoC also reduced its clearance processing time to effect immediate release containers from port terminals. To do this, importers must file goods declarations to the BoC within two days from the arrival of goods. For imported goods enclosed in a refrigerated container, the declaration can be filed prior to its arrival. In return, the BoC will complete its assessment within 24 hours. The importer is expected to pay import taxes within 24 hours from the issuance of the BoC’s tax assessment. After the payment of taxes, importers have three days to claim the goods from customs warehouses or container terminal yards.

It appears that the government has rolled out policies to ensure that the people will be provided with what they need at this time. COVID-19 shall pass. After this trying time, perhaps we will come out from isolation as better people with better systems in place.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of PricewaterhouseCoopers WMS Pte. Ltd. — Philippine Branch. The content is for general information purposes only, and should not be used as a substitute for specific advice.

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Luningning M. Pizarra

Worldtrade Management Services Senior Manager, PwC Philippines

Tel: +63 (2) 8845 2728

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