The Philippines comprises thousands of islands and has a number of countries in its direct neighbourhood including China, Japan, Malaysia, Indonesia, Vietnam, Palau and Taiwan. The country’s imports and exports, reach about $80 billion USD each year. Some of its high volume export and import partners are Japan, China, and the US whereas. Philippines also has growing trade with Thailand and Korea.
How to register as an importer in Philippines?
Let’s take a look at what a person needs to do in order to register in the country as importer. The first step is to obtain the Import Clearance Certificate. You can get one from the Internal Revenue Bureau. Once you have the certificate, you can register at the BOC, the Bureau of Customs. At the same time, you should also create an account on the CPRS, which is the Client Profile Registration System. While your Import Clearance Certificate won’t require a renewal for 3 years, the CPRS account needs to be updated every year. Your CPRS account should be up and running within two weeks.
Documents required for import
Here’s a list of documents importers need to have with them when receiving their shipment.
- Packing list
- Bill of Landing
- Import Permit
- Origin Certificate
- Import Declaration
Some products require special permission before they can be imported into the country and hence separate documentation may need to be submitted. For instance, you will need the Certificate of Product Registration when importing products in the categories of medicine, chemicals, food, animals, and plants. You can get this certificate from the Food and Drug Administration of the Philippines.
The following products are prohibited from import into the Philippines.
- Explosives, weapons, and firearms or similar equipment or parts used in making such equipment
- Gambling-related products such as roulette wheels, pinball machines, marked cards, and loaded dice etc.
- Sweepstakes tickets and Lottery tickets(excluding advertisement of such items)
- All kinds of drugs that have been declared illegal or habit-forming and any products either derived from these drugs or used in making these drugs. Exceptions include drugs used in medicine and those explicitly allowed by the authorities.
- Opium pipes including import of any of their individual parts
- Hazardous or toxic items
An important point to note here is that a product that is prohibited from being imported is also not allowed to transit through the country.
The following products are also prohibited from importation:
- Any written or printed material that falls under certain categories is prohibited. These categories could include incitement of treason, incitement to resist regulations of the land, rebellion, and insurrection among other things.
- Any equipment, material or drugs that could directly help in abortion or be helpful in ultimately carrying out an abortion are prohibited.
- Any material that is immoral or obscene in nature is prohibited.
- Goods that are manufactured using precious metals or alloys or goods that are wrongly marked in terms of the quality or quantity of the metal used are prohibited.
- Food that has been adulterated or labeled wrongly is also prohibited. This includes adulterated drugs as well.
- Any products that infringe on intellectual property or are prohibited as per related laws.
- Any other item that is explicitly forbidden for importation into the country.
Taxes and tariffs on imports
Import tariffs in the Philippines can vary from zero to sixty-five percent depending on the type of product you are importing. On non-agricultural products, the tariffs are usually on the lower side whereas on products that have high production locally are subject to higher rates. Tariff rates are determined based on the HS codes used on import declarations.
A 12% Value Added Tax is also applied. However, goods worth below the P10,000 or USD200 mark are not subjected to any tariff or taxes.
Special Economic Zones
When it comes to importing raw materials or equipment used in manufacturing, special zones called “Special Economic Zones” are set up allowing for the import of such goods without the importer having to pay any tariffs or taxes. Here’s a list of the Special Economic Zones that exist in the Philippines:
- Freeport Area of Bataan.
- Poro Point Freeport Zone;
- Subic Bay Freeport Zone;
- Zamboanga City Special Economic Zone and;
- Clark Freeport Zone;
- John Hay Special Economic Zone;
- Cagayan Special Economic Zone;
All the Special Economic Zones are required to register with the PEZA or a regulatory authority.
Free Trade Agreements
Apart from a bilateral free trade agreement with Japan, the Philippines is also party to 6 other regional FTAs.
The regional FTAs stem from membership in ASEAN(Association of Southeast Asian Nations). When trading with the ASEAN nations, the tariffs are significantly low. As an added advantage of the ASEAN membership, the Philippines is also a part of the 5 different free trade agreements that the ASEAN bloc has managed to sign with the five countries China, India, Korea, Japan, and Australia/New Zealand.
The Philippines is located in a region with a lot of trade potential. India and China are the two largest countries by population on the planet and being located near both offers unique trade opportunities to both exporters and importers. Thanks to the collaboration with ASEAN nations, the Philippines is already enjoying a lot of trade benefits and is expected to be a part of any future trade deals signed by ASEAN with other nations. Therefore, it goes without saying that setting up a trading business in the Philippines today offers great growth potential.
The only thing traders need to keep in mind is to make sure they make use of local experts that are familiar with how trade and bureaucracy work in the region. Hiring local experts not only ensures seamless operations but also helps in potential delays and compliance issues. No one knows the regulatory landscape of the region better than those working with the system for years. The BOC or Bureau of Customs regularly issues memorandums relating to new regulations and administrative processes that traders may have a hard time keeping up with without help from professional experts.