Balikbayan Box Law (BBL) OK to exempt most OFW cargo from taxes - Recto

Senate President Pro Tempore Ralph Recto today hailed the passage of the Customs Modernization and Tariff Act (CMTA) which raises to P150,000 the tax-exempt value of pasalubong cargo brought in or sent by overseas Filipinos.

Although the provision on the tax treatment of balikbayan boxes is but one of the many in the 311-page bill, "it is one that is most awaited by Overseas Filipino Workers (OFWs)," Recto said.

"And we can now report to them that the Balikbayan Box Law (BBL) has passed the Senate," Recto said.

Recto filed Senate Bill 2913, or what he dubbed the "BBL", in August last year after a public outcry over a Bureau of Customs' (BoC) plan to open and inspect balikbayan boxes revealed outdated regulations, one of which taxes any box whose contents is worth more than P10,000.

The BBL was later incorporated into the CMTA as Section 800 by Senator Sonny Angara, chair of the Senate Ways and Means committee.

"'Yan ang Super Section 800 na nagbibigay pribilehiyo sa mga OFWs na mag-uwi o magpadala sa Pilipinas ng mga bagay na kanilang pinaghirapan na hindi bubuwisan," he said.

"Kapag pirmado na ang CMTA, bawat balikbayan box ay protektado ng Super Section 800," Recto said.

Recto said Section 800 of the proposed CMTA defines "conditional-free and duty-exempt importation."

Under this section, "residents of the Philippines, Overseas Filipino Workers, other Filipinos while residing abroad or in their return to the Philippines shall be allowed to bring in or send to their families or relatives in the Philippines balikbayan boxes which shall be exempt from duties and taxes."

The "total dutiable value" of the boxes shall not exceed P150,000.

The privilege can only be enjoyed "up to three times in a calendar year," Recto said, quoting the proposed law.

"This means that an OFW can send two boxes at the same time provided that their total worth is not more than P150,000. That will be counted as one shipment," Recto said.

The boxes, however, must contain "personal and household effects only and shall neither be in commercial quantities, nor intended for barter, sale or for hire," the said section further reads.

"This is to prevent senders from abusing this privilege. With this privilege comes the duty to observe the law. And it also comes with penalties so that smugglers won't take advantage of it," Recto explained.

The bill also includes a provision indexing rates to inflation, "so that it will not take another quarter-of-a-century to adjust the tax-exempt ceiling for balikbayan boxes," Recto said.

"Every three years after the effectivity of this Act, the Secretary of Finance, upon recommendation of the Commissioner (of Customs), shall review the value herein stated and shall adjust its present value using the Consumer Price Index as published by the Philippine Statistics Authority," Recto quoted the provision.

Recto said the "antiquated provision" of slapping a 50 percent duty on the value of a balikbayan box in excess of P10,000 was set 28 years ago through President Corazon Aquino's Executive Order 206.

Even the BoC Memorandum Circular 7990 which ups the maximum value of a tax-exempt balikbayan box to $500 is more than 25 years old, he said.

Recto said the proposed CMTA also increases to P350,000 the tax-exempt ceiling of "personal and household effects" that a returning resident who had lived abroad for 10 years may ship to the Philippines.

Recto said this provision was not in the BBL he filed but a brainchild of Sen. Angara, principal sponsor of CMTA.

Recto praised Angara for shepherding the CMTA, with its many complicated provisions, to approval.

The CMTA is a consolidation of eight bills, two of which are authored by Recto. The other bill Recto filed is Senate Bill 456, which slaps higher penalties for smuggling.

The measure has been described by Angara as a "broad reform measure which simplifies rules, aligns tariff regime with treaties, promotes transparency, and combats smuggling."