BSCA 2ND YR 2ND SEM

CUSTOMS VALUATION SYSTEM

INCOTERMS 2020 (INTERNATIONAL CHAMBER OF COMMERCE)

What is Incoterms?

It refers to a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating
to international commercial law. The word “Incoterms” is an abbreviation of International commercial terms, and the
chosen Incoterms rule is a term of the contract of sale.

Although the Incoterms rules are primarily intended for international sales they can be applied to domestic contracts by
reference. Trade terms are, in fact, key elements of international contracts of sale, since they tell the parties what to do
with respect to:

 carriage of the goods from seller to buyer; and

 export, import and security-related clearance.

Incoterms also explain the division of costs and risks between the parties. (In short, Incoterms refers to the agreement
between buyer and seller with respect to cost and risks.

The Four Categories of Incoterms Rules

 “E-Term” or Ex-works/Ex-factory term, signifies the minimum obligation for the seller.
 “F-Terms” or free terms, signifies that the seller must hand over the goods to a nominated carrier Free of risk
and expense to the buyer.
 “C-Terms” or additional costs terms, signifies that the seller must bear certain costs (freight and insurance) even
after the critical point for the division of the risk of loss of or damage to the goods has been reached.
 “D-Terms” or delivered terms, signifies that the goods must arrive at a stated destination and the seller’s
delivery obligation is extended to the country of destination.

INCOTERMS 2020
1. EXW Ex-Works … named place of delivery
2. FCA Free Carrier … named place of delivery
3. FAS Free Alongside Ship … named port of loading/shipment/export
4. FOB Free on Board … named port of loading/shipment/export
5. CPT Carriage Paid-to … named place of destination
6. CFR Cost and Freight … named port of unloading/shipment/import
7. CIP Carriage and Insurance, Paid-to … named place of destination
8. CIF Cost, Insurance and Freight … named port of unloading/shipment/import
9. DAP Delivered at Place … named place of destination
10. DPU Delivered at Place Unloaded … named place of destination
11. DDP Delivered Duty Paid … named place of destination

Blue means any mode or modes of transport terms (Multimodal terms)

Red means sea and inland waterway transport only (Vessel only terms)

“Ex Works (EXW)” - It means that the seller delivers when it places the goods at the disposal of the buyer at the seller’s
premises or at another named place (i.e., works, factory, warehouse, etc.). The seller does not need to load the goods on
any collecting vehicle, nor does it need to clear the goods for export, where such clearance is applicable.
 The Buyer will bear all the
cost and risk of bringing the
goods to his place

The Seller’s only responsibility is to prepare the goods (means properly packed
and marked with the country of origin) at his own premises.

Formula: Ex-Works (EXW)

References
Cost of goods USD
Plus Packing Cost
Marking/Labeling +
Ex-Works (EXW) USD

“Free Carrier (FCA)” - means that the seller delivers the goods to the carrier or another person nominated by the buyer
at (1.) the seller’s premises or (2.) another named place. The parties are well advised to specify as clearly as possible the
point within the named place of delivery, as the risk passes to the buyer at that point.

1. Carrier’s Pick-up - the carrier will pick-up the goods at the sellers premises.
2. Seller’s Delivery - the seller will deliver the goods to the buyer’s named carrier.

Carrier means a person or thing that carries, holds or conveys something. It can be a vessel, aircraft, truck, train, freight
forwarder, consolidators or NVOCC’s.

Carrier designated by the buyer

(importer) will pick-up the goods from
the seller’s warehouse

The difference between Ex-works and Free Carrier (Carrier’s Pick-up) is that the seller is required to clear the goods for
export. It means that the seller needs to secure and pay for the export clearances.

Formula: Free Carrier (FCA)

References
Cost of goods USD
Plus Packing Cost
Marking/Labeling +
Ex-Works (EXW) USD
Plus Export Clearance +
Free Carrier (Carrier’s Pick-up) USD

“Free Carrier – Seller’s Delivery”

The difference between Free Carrier (Carrier’s Pick-up) and Free Carrier (Seller’s Delivery) is the inland freight. The Seller
is required to deliver the goods to the carriers place at his/her expertise and risk.

Formula: Free Carrier (FCA)

References
Cost of goods USD
Plus Packing Cost
Marking/Labeling +
Ex-Works (EXW) USD
Plus Export Clearance
Inland freight +
Free Carrier (Seller’s Delivery) USD

“Free Along-side Ship (FAS)” - means that the seller delivers when the goods are placed alongside the vessel (e.g., on a
quay or a barge) nominated by the buyer at the named port of shipment. The risk of loss of or damage to the goods
passes when the goods are alongside the ship, and the buyer bears all costs from that moment onwards.

(2.) Cargo delivered at

(1.) Cargo delivered shipside via
at pier-side barge/lighter

Formula: Free Along-side Ship (FAS)

References
Cost of goods USD
Plus Packing Cost
Marking/Labeling +
Ex-Works (EXW) USD
Plus Export Clearance
Inland freight +
Free Carrier (Seller’s Delivery) USD
Plus Freight Forwarders Doc’s Fee
Export Terminal Handling Charges +
Free Along-side Shipp (FAS) USD

“Free on Board (FOB)” - means that the seller delivers the goods on board the vessel nominated by the buyer at the
named port of shipment or procures the goods already so delivered. The risk of loss of or damage to the goods passes
when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.
 Cargo must be placed on board the
vessel (meaning, the seller must pay
for the loading charges)

Formula: Free on Board (FOB)

References
Cost of goods USD
Plus Packing Cost
Marking/Labeling +
Ex-Works (EXW) USD
Plus Export Clearance
Inland freight +
Free Carrier (Seller’s Delivery) USD
Plus Freight Forwarders Doc’s Fee
Export Terminal Handling Charges +
Free Along-side Shipp (FAS) USD
Plus Vessel Loading Charges +
Free on Board (FOB) / Customs Value USD

“Carriage Paid-to (CPT” - means that the seller delivers the goods to the carrier or another person nominated by the
seller at an agreed place (if any such place is agreed between the parties) and that the seller must contract for and pay
the costs of carriage necessary to bring the goods to the named place of destination.

Formula: Carrier Paid-to (CPT)

References
Cost of goods USD
Plus Packing Cost
Export Terminal Handling Charges
Vessel Loading Charges
Main Carrier Freight Charges +
USD

“Cost and Freight (CFR)” - means that the seller delivers the goods on board the vessel or procures the goods already so
delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must
contract for and pay the costs and freight necessary to bring the goods to the named port of destination.
 The cargo must be placed
on board the vessel, and the
Seller must pay for the
amount of ocean freight.

Formula: Cost and Freight (CFR)

References
Cost of goods USD
Plus Ocean Freight +
Cost and Freight (CFR) USD

“Carriage and Insurance Paid-to (CIP)” – means that the seller delivers the goods to the carrier or another person
nominated by the seller at an agreed place (If any such place is agreed between the parties) and that the seller must
contract for and pay the costs of carriage necessary to bring the goods to the named place of destination. The seller also
contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.

The Seller
must pay the
Cost of
Carriage
(Air/Ocean/Fr
eight) as well
as the
insurance
covering the
shipment..

Formula: Carriage and Insurance Paid-to (CIP)

References
Free Carrier (FCA) USD
Plus Freight Forwarders Doc’s Fee
Export Terminal Handling Charges
Vessel Loading Charges
Main Carrier Freight (Ocean/Air)
Insurance (Marine/Air Cargo) +
Carriage and Insurance Paid-to (CIP) USD

“Cost, Insurance and Freight (CIF)” - means that the seller delivers the goods on board the vessel or procures the goods
already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The
seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. The
seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.

The cargo must be placed

on board the vessel, and the
Seller must pay for the
amount of ocean freight
and marine insurance
 Formula: Cost, Insurance and Freight (CIF)
References
Free on Board (FOB) USD
Plus Ocean Freight
Marine Insurance +
Cost, Insurance and Freight (CIF) USD

“Delivered at Place (DAP)” - means that the seller delivers when the goods are placed at the disposal of the buyer on
the arriving means of transport ready for unloading at the named place of destination. The seller bears all risks involved
in bringing the goods to the named place.

The Seller must deliver the goods to the place

designated by the Buyer (not unloaded); however,
the responsibility of clearing the goods for import
lies with the Buyer.

Note: Clearing for import means, releasing the goods from Customs by payment of duties, taxes and other collectible
charges.

Formula: Delivered at Place (DAP)

References
Cost and Freight (CFR) USD
Main Carrier Unloading Charges
Import Terminal Handling Charges
Transportation to Buyer’s Place +
Delivered at Place (DAP) USD

“Delivered at Place Unloaded (DPU)” - means that the seller delivers when the goods, once unloaded from the arriving
means of transport, are placed at the disposal of the buyer at a named place of destination. The seller bears all risks
involved in bringing the goods to the named place including the unloading.

The Seller must deliver the goods to the place

designated by the Buyer (unloaded); however, the
responsibility of clearing the goods for import lies
with the Buyer.

Formula: Delivered at Place Unloaded (DPU)

References
Cost and Freight (CFR) USD
Main Carrier Unloading Charges
Import Terminal Handling Charges
Transportation to Buyer’s Place
Unloading Charges to Buyer’s Place +
Delivered at Place Unloaded (DPU) USD

“Delivered Duty Paid (DDP)” – Means that the seller delivers the goods when the goods are placed at the disposal of the
buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination. The
seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to clear
the goods not only for export but also for import, to pay any duty for both export and import and to carry out all
customs formalities.

The Seller must deliver the goods to the place

designated by the Buyer (not unloaded); and clear
from both export and import formalities including
payment of duties and taxes.

Formula: Delivered Duty Paid (DDP)

References
Cost and Freight (CFR) USD
Main Carrier Unloading Charges
Import Terminal Handling Charges
Transportation to Buyer’s Place
Import Duties and Taxes
Brokerage Fees +
Delivered Duty Paid (DDP) USD

IMPORTANT NOTES/EXPLANATIONS:
CHAPTER ONE
 “E” terms (mininum para sa seller example susunduin ni buyer yung product ready to pick up ni seller)

 “C” terms (babayaraan ni seler yung cost)

 “D” terms (minimum para sa buyer example hihahatid ni seller kay buyer yung goods)

 How to read incoterms: Kung hanggang saan natapos ang obligation ni seller then place ng Warehouse
Example: Exwork … name place of delivery
 Exworks Osaka, Japan

 Multimodal (puro name of placed Yung Vessel only terms named port of loading/shipment/export)

 Exwork (si seller is no obligation to iload the goodssa arriving carrier (example truck) ni Buyer..)

 Free carrier (Agent ni buyer ang pupunta kay seller para ipick up ang goods (carrier nominated ni buyer)
o Seller iprovide lahat ng export clearances
o Example: electricfan kelangan ng bps export clearance.. Seller obligation is to pay for export clearances..
o ideliver ni seller sa named placed ni buyer hanggang sa mahatid niya ang goods sa carrier.
o Inland freight Gagastos ng pamasahe si seller para ihatid ang goods sa carrier..

 FAS
o Pier side (ilalagay sa tabi ng barko for loading sa port of loading bahala na si buyer pano ilagay sa
barko)/ ship side (nakadikit sa barko gamit ang barge)

 FOB (ipatong ang goods, sa vessel risk ni seller bahala na si buyer pano ilagay sa kanyang warehouse)

 CPT (kelangan bayaran ni seller yung cost of carriage, freight

o Main carrier air or sea freight from export to import

 CFR (same w fob but oblige to pay the ocean freight)

 CIP (same with fca and cpt but pay ni seller ang insurance)

 CIF (seller oblige to pay insurance and ocean freight)

 DAP (oblige ni seller ideliver yung goods to a name place ni buyer) key word: ready for unloading..
o Trabaho ni buyer na irelease ang goods sa bureau para agent ni seller pick up yung goods madeliver ni
seller ang goods sa warehouse ni buyer..
o Dap (oblige ni seller ideliver yung goods to a name place ni buyer) key …

 CFR only capable for small parcel/balikbayan boxes pay the contract of carriage not oblidge to get insurance +
maincarrier charges+

 DPU and DAP is same the diff. Sa DPU Is bayaran ni seller ang unloading..

 DDP (all risk and cost shall be beared by the seller hanggang makarating sa buyer)
 METHODS OF VALUATION

What are the Six (6) Methods of Valuation

Method One: Transaction Value

Method Two: Transaction Value of Identical Goods

Method Three: Transaction Value of Similar Goods

Method Four: Deductive Value

Method Five: Computed Value

Method Six: Fallback Value

Note: Methods One to Three shall be applied in sequential order, while Methods Four and Five may be reversed at the
request of the importer provided that the Commissioner of Customs agrees to such request taking into consideration that
the reversal of the sequential order will not give rise to real difficulties for the BOC in determining the dutiable value under
method five. Where the dutiable value cannot be determined under the provisions of Method One to Five, it shall be
determined under the provisions of Method Six.

METHOD ONE: TRANSACTION VALUE

It refers to the Price Actually Paid or Payable (PAPP) for the goods when sold for export to the Philippines adjusted
according to Article 8 of WTO Agreements and subject to specific conditions.

What is Price Actually Paid or Payable (PAPP)?

It is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods.

What is the meaning of “sold for export”?

Adjustments (Additions) - In determining the dutiable value under the provisions of Method One, the following adjustment
shall be added to the price actually paid or payable for the imported goods being valued to the extent that they are: (1.)
incurred by the buyer; (2.) there is objective and quantifiable data to form the basis of the adjustment; and (3.) such value
has not been included in the price actually paid or payable.

C Commissions and Brokerage Fees (except buying)

A Assist
R Royalties and License Fees Cost not related to INCOTERMS
P Proceeds of any subsequent resale, disposal or use.

I Insurance
E Expenses Cost related to INCOTERMS
T Transport Cost

(C) Commissions and brokerage fees (except buying commissions)

Selling commissions are fees paid by the seller to his agent in the promotion and sale of his products, selling commission
may take the form of indentor’s commission, selling agent’s commission, or manufacturer’s representative commission.
Brokerage fees as herein mentioned refers to a commission paid to a broker who arranges the transaction between a
seller and a buyer. It does not refer to the Customs Brokers Professional Fees in customs clearance paid by the importer
which is considered a post importation expense.

SELLING COMMISSION

XSELLER
SELLER BUYER

AGENT
  The Seller will request the services of an Agent for a commission (selling) to find a prospected buyer to his/her
goods.
 The Agent will find the a suitable Buyer then inform the Seller and collect the commission for the service rendered.
 The Buyer and the Seller will then agree to a contract of sale for the importation of the goods.

(A) Assists

It refers to the value, apportioned as appropriate, of certain goods and services supplied directly or indirectly by the buyer
free of charge or at a reduced cost for use in connection with the production and sale for export of the imported goods,
to the extent that such value has not been incorporated in the price actually paid or payable. Those goods and services
are:

 Materials, components, parts and similar items incorporated in the imported goods;
 Tools, dies, moulds and similar items used in the production of the imported goods;
 Materials consumed in the production of the imported goods; and
 Engineering and development, artwork, design work, and plans and sketches undertaken elsewhere than in the
Philippines and necessary for the production of the imported goods.

(R) Royalties and License Fees

Refers to the payment that the buyer must pay in relation to patents, trade marks and copyrights.

Charges for the right to reproduce the imported goods in the Philippines shall not be added to the price actually paid or
payable for the imported goods in determining the dutiable value.

(P) Proceeds

The value of any part the proceeds of any subsequent resale, disposal or use of the imported goods that accrues directly
or indirectly to the seller.

An example of this is that when the contract of sale between buyer and seller states that a certain percentage of the sales
proceeds of an imported article is remitted to the seller.

(I) Insurance

It refers to the charges for the insurance for the goods during transportation, loading, unloading and handling. WCO
Advisory Opinion 13.1 states that the word “insurance” should be interpreted as referring solely to the goods during the
transport of the imported goods to the port or place of importation.

(E) Expenses or other incidental expenses

Refers to all incidental expenses incurred in the exporting country relative to the exportation of goods. It includes among
others:

 Cost of packing, whether for labor or materials;

 Cost of containers which are treated as being one for Customs purposes with the goods in question;
 Cost of marking or labeling of containers;
 Cost for securing export clearances/licenses/permits; and
 Export documentation fees

(T) Transport Cost

Refers to the cost of transportation of the imported goods to the port of entry in the Philippines. It includes loading,
unloading and handling charges associated with the transport of the imported goods to the port of entry in the Philippines.

The following are deemed associated with the transport cost:

 Inland freight (the transportation cost from seller’s warehouse to the main carrier);
 Unloading of goods from the arriving means of transport in the port of loading;
  Loading of goods to the main carrier (either vessel / aircraft);
 Export terminal handling charges incurred in the port of loading; and
 Main carrier freight (ocean freight / airfreight).

Adjustments (Deductions)

The dutiable value must not include the following charges or costs, if they are distinguished from the price actually paid
or payable for the goods:

 Charges for construction, erection, assembly, maintenance or technical assistance, undertaken after importation
on imported goods such as industrial plant, machinery or equipment;
 Cost of transport after importation (transportation cost from Port of Discharge/Unloading/Import to the buyer’s
designated place/warehouse); and
 Duties and taxes and other charges (Customs Brokers Professional Fee) paid for the imported goods.

METHOD TWO: TRANSACTION VALUE OF IDENTICAL GOODS

If the dutiable value of imported goods cannot be determined with the use of Method One, the dutiable value shall be
determined under Method Two or the Transaction value of Identical Goods sold for export to the Philippines and exported
at or about the same time as the goods being valued.

What are the criteria before the goods are considered identical?

 Same in all respects, including physical characteristics, quality and reputation;

 Same country of origin as the goods being valued; and
 Same manufacturer as the goods being valued.

METHOD THREE: TRANSACTION VALUE OF SIMILAR GOODS

If the dutiable value of the goods cannot be determined under the preceding methods, the dutiable value shall be the
Transaction Value of Similar Goods sold for export to the Philippines and exported at or about the same time as the goods
being valued.

What are the characteristics of a similar goods?

 Closely resembling the goods being valued in terms of component materials and characteristics;
 Capable of performing the same functions and are commercially interchangeable with the goods being valued;
and
 Produced in the same country as and by the producer of the goods being valued

Note: Both Methods 2 and 3 follows the same rules. The Forty-Five (45) Days Rule.

What is the Forty-Five Days Rule?

It means that the identical or similar goods that going to be used as basis of the dutiable value shall come from the time
frame of 45 days before and after the date of the bill of lading or airway bill of the goods being valued.

When applying for either methods, the identical or similar goods to be used shall be in the same commercial level and in
substantially the same quantity as the goods being valued. Where no such sale is found, the transaction value of identical
or similar goods sold at a different commercial level and/or different quantities, adjusted to take account of the differences
attributable to commercial level and/or to quantity, shall be used.

METHOD FOUR: DEDUCTIVE VALUE

By this method, the dutiable value is determined on the basis of the sales in the Philippines of the goods being valued or
of identical or similar imported goods, less certain specified expenses resulting from the importation and sale of the goods
on a unit price basis.

The sales in the Philippines must meet the following conditions:

The imported goods of identical or similar goods have been sold in the Philippines in the same condition as imported;

Sales of the imported goods being valued or of identical or similar goods have taken place at or about the time of
importation of the goods being valued (45 days rule);

The purchaser must not be related to the importer from whom he buys such goods; and

The purchaser in the Philippines must not have supplied, assists, either directly or indirectly.

The term “unit price” means the price at which the greatest aggregate quantity is sold in sales to persons who are not
related to the persons from whom they buy such goods at the first commercial level after importation at which such sales
takes place

EXAMPLE NO.1

Unit Price Number of Total Quantity

Sale Sales sold at each
Quantity price
1 – 10 PHP 100.00 10 sales of 65
units 5 units
5 sales of 3
units
11 – 25 PHP 95.00 5 sales of 55
units 11 units
Over 25 PHP 90.00 1 sale of 30 80
units units
1 sale of 50
units

The greatest number of units sold at a price is 80; therefore, the unit price (NRP) in the greatest aggregate quantity is PHP
90.00.

Example No. 2:
There were two sales that’s occur. In the first sale, 500 units are sold at a price of PHP 95.00 each. In the second sale, 400
units are sold at a price of PHP 90.00 each.

In this example, the greatest number of units sold at a particular price is 500; therefore, the unit price in the greatest
aggregate quantity is PHP 95.00

A. Sales B. Totals

Sale Quantity Unit Price Total Quantity Sold Unit Price

40 units PHP 100.00 65 units PHP 90.00

30 units PHP 90.00 50 units PHP 95.00

15 units PHP 100.00 60 units PHP 100.00

50 units PHP 95.00 25 units PHP 105.00

25 units PHP 105.00

35 units PHP 90.00

5 units PHP 100.00

In this example, the greatest number of units sold at a particular price is 65; therefore, the unit price in the greatest
aggregate quantity is PHP 90.00

Formula in determining the Dutiable Value using Method Four: Deductive Value

Net Retail Price (NRP) PHP

Divide: Fixed ÷ 1.20 Whole Sale Allowance

Domestic Whole Sale Price (DWP) PHP

Divide: Fixed ÷ 1.25 Profit & General Expenses

Buyer’s Price PHP

Divide: Fixed ÷ 1.12 Value Added Tax

Landed Cost PHP

Divide: Varies ÷ 1.RD Customs Duty

 Dutiable Value PHP

Formula in determining individual value Formula in determining individual value

Landed Cost (LC) PHP

Domestic Whole Sale Price (DWP) PHP

Multiply: Fixed x 0.12

Multiply: Fixed x 0.20
Value Added Tax (VAT) PHP
Whole Sale Allowance (WSA) PHP

Dutiable Value (DV) PHP

Buyer’s Price PHP Multiply: Varies x 0.RD

Multiply: Fixed x 0.25 Customs Duties (CUD) PHP

Profit & General Expenses (P&GE) PHP

METHOD FIVE: COMPUTED VALUE

Under this method, the dutiable value is determined on the basis of the cost of production of the goods being valued, plus
an amount of profit and general expenses usually reflected in sales from the country of exportation to the Philippines of
goods of the same class or kind.

The dutiable value may be calculated as follows:

1. Determine the aggregate of the relevant costs, charges and expenses or the value of:
 Materials employed in producing the imported goods;
 Fabrication, production or other processing costs for the imported goods (direct and indirect labor, factory
overhead);
 The following are to be added if not yet included:

 Cost of containers which are treated as being one for customs purposes with the goods in question;
 Cost of packing whether for labor or materials;
 Assists; and
 Engineering, development, artworks, design work, and plans and sketches undertaken in the Philippines and
charged to the producer.
2. Add the amount of profit and general expenses equal to that usually reflected in sales of goods of the same class or
kind as the goods being valued which are made by the producers in the country of exportation for export to the
Philippines;
3. Add the cost of transport, loading, unloading and handling charges to the port or place of entry in the Philippines.
DUTIABLE FREIGHT AND INSURANCE

(CMO 22-2007)

Dutiable Insurance

1. If the terms of sale are CIF/CIP, the amount of the actual insurance premium shall be used in the assessment,
provided that if such amount is lower than 2% of the FOB value of general cargo and 4% of the FOB value for
dangerous/inflammable goods, chemicals and other high risk cargoes, the same shall be subject to further
verification by the BOC.

2. If a shipment is covered by a local or domestic insurance, the amount of insurance premium actually paid may be
accepted. However, If the premium is lower than 2% of the FOB value of general cargo and 4% of the FOB value
for dangerous/inflammable goods, chemicals and other high risk cargoes, then a Certification from the insurance
company as to the actual premium paid shall be presented to the BOC together with the Original Official Receipt.
A copy of that Official Receipt shall be certified as a true copy by the assigned Customs Appraiser/Examiner which
shall be attached to the original Working Entry.

3. For shipments not covered by a local insurance, then the amount of insurance declared on the entry may be
accepted, provided that if such amount is lower than 2% of the FOB value of general cargo and 4% of the FOB
value for dangerous/inflammable goods, chemicals and other high risk cargoes, the same shall be subject to
further verification by the BOC.

4. For direct importations by the government, the original copy of the Marine Open Policy issued by the Government
Service Insurance System (GSIS) together with a true copy shall be presented to the BOC (Attn: Import Assessment
Service) certified by the latter. The Bureau shall apply the actual GSIS insurance premium rate.

A. If insured by a Surety company other than GSIS, apply rule number 2.

B. If not covered by a local insurance, apply rule number 3.

Note: The amount of insurance shall be declared in the IEIRD box no. 90 and the equivalent appropriate box in the SAD
for the electronic lodgement.

Summary of Rules in Dutiable Insurance

1. If the term of sale are CIF/CIP: The actual amount of insurance premium paid shall be used.
2. If covered by Local Insurance Premium: The amount of insurance premium may be used, provided that it is not
lower than 2% FOB for general cargo or 4% FOB for special/dangerous goods. If lower, a certification from the
insurance company and the official receipt must be presented with the Bureau of Customs.
3. If not covered by a Local Insurance Premium: The amount of insurance declared on the entry (SAD) may be
accepted, provided that such amount is not lower than 2% FOB for general cargo or 4% FOB for special/dangerous
goods.
4. If direct importations by the Government covered by GSIS: The actual GSIS Premium rate shall be used, provided
that the original copy of the Marine Open Policy issued by the Government Service Insurance System (GSIS)
together with a true copy shall be presented to the BOC (Attn: Import Assessment Service) certified by the latter.

Dutiable Freight

1. The freight charge to be applied shall be based on the amount indicated in the Air Waybill or Bill of Lading.
2. If no freight charge is indicated on the Air Waybill, Bill of Lading, and/or Invoice then the declared freight charge
on the Import Entry and Internal Revenue Declaration (IEIRD)/Single Administrative Document (SAD) may be
considered therein, provided that if the amount indicated is lower than 70% of either IATA rate or Conference
rate for airfreight shipment and sea freight shipment, respectively, the same shall be subject to further verification
by the BOC.
 3. If the freight charge is lower than 70% of either the IATA or Conference rate, the importer must present a
Certification from the Carrier/Forwarder and/or Official Receipt as to the actual freight charges paid.
4. In case of bulk shipments, the certified copy of Charter Party document or Freight Contract, and stowage Plan
shall be presented to show the actual freight charge, all of which shall be attached to the working copy of the
entry.
5. For bulk/general cargo shipments made by the National Food Authority (NFA), the freight charge if not lower than
10% of the CFR value of the commodity may be accepted.
6. In case of refrigerated shipment, a certification from shipping lines as to the freight paid must be presented for
Customs verification.
In the absence of a certification from the shipping lines, the following freight charges may be used as reference:

Reefer Container Size: Freight Charge: BAF:

Country of Exportation:

Guangzhou, China 1x20' USD 1,300.00

Guangzhou, China 1x40' USD 1,700.00

Xiamen, China 1x20' USD 1,500.00

Xiamen, China 1x40' USD 1,800.00

Shanghai, China 1x20' USD 1,800.00

Shanghai, China 1x40' USD 3,200.00

Dalian, China 1x20' USD 1,350.00

Dalian, China 1x40' USD 1,680.00

Hong Kong 1x20' USD 800.00

Hong Kong 1x40' USD 1,600.00

Singapore 1x20' USD 900.00 USD 70.00

Singapore 1x40' USD 1,850.00 USD 140.00

Los Angeles, USA 1x20' USD 3,050.00

Los Angeles, USA 1x40' USD 6,100.00

COMPONENTS OF TAXABLE VALUE

Formula: Dutiable Value

Reference:

Customs Value/Free on Board USD

Plus: Dutiable Freight CMO 22-2007

Dutiable Insurance CMO 22-2007

Adjustments +
Dutiable Value USD

Multiply: Exchange rate x CMO 14-2019

Dutiable Value PHP

Formula: Taxable Value & Value Added Tax – via Sea Ports of Entry
(Formal Entry Consumption/Warehousing)

Reference:

Dutiable Value PHP

Plus: Customs Duty

Bank Charges 0.00125 DV under L/C only

Brokerage Fees CAO 1-2001

Arrastre Charges PPA-OMC 2-2018

Wharfage Dues

Customs Documentary 280.00 CMO 29-2015

Stamp
Import Processing Fee + CAO 2-2001

Landed Cost PHP

Plus: Excise Taxes +

VAT Base PHP

Multiply: VAT Rate x 0.12

Value Added Tax PHP

Formula: Taxable Value & Value Added Tax – via Airports of Entry
(Formal Entry Consumption/Warehousing)

Reference:

Dutiable Value PHP

Plus: Customs Duty

Bank Charges 0.00125 DV under L/C only

Brokerage Fees CAO 1-2001

Customs Documentary Stamp 280.00 CMO 29-2015

Import Processing Fee + CAO 2-2001

Landed Cost PHP

Plus: Excise Taxes +

VAT Base PHP

Multiply: VAT Rate x 0.12

Value Added Tax PHP

Formula: Taxable Value & Value Added Tax – via Sea Ports of Entry

(Informal Entry)

Dutiable Value PHP Reference:

Plus: Customs Duty

Brokerage Fees 700.00 CAO 1-2001

Arrastre Charges PPA-OMC 2-2018

Wharfage Dues

Customs Documentary Stamp + 30.00 CAO 8-2014

Landed Cost PHP

Multiply: VAT Rate x 0.12

Value Added Tax PHP

Formula: Taxable Value & Value Added Tax – via Airports of Entry

(Informal Entry)

Dutiable Value PHP Reference:

Plus: Customs Duty

Brokerage Fees 700.00 CAO 1-2001

Customs Documentary Stamp + 30.00 CAO 8-2014

Landed Cost PHP

Multiply: VAT Rate x 0.12

Value Added Tax PHP

Formula: Summary of Duties, Taxes & Other Collectible Charges

Reference:

Customs Duty PHP

Plus: Value Added Tax

Excise Taxes

Import Processing Fee CAO 2-2001

Customs Documentary Stamps CMO 29-2015

Container Security Fee + Containerized only

Total Amount Due to the Government PHP

Formula: Customs Duties Formula: Bank Charges

Dutiable Value PHP Dutiable Value PHP

Multiply: Rate of Duty (AHTN) x Multiply: Fixed rate (1/8 of 1%) x 0.00125

Customs Duty PHP Bank Charges PHP

Rates of Brokerage Fees - Formal Entry (Consumption/Warehousing)

Dutiable Value Range Brokerage Fee

Up to PHP 10,000.00 PHP 1,300.00

Over PHP 10,000.00 to PHP 20,000.00 PHP 2,000.00

Over PHP 20,000.00 to PHP 30,000.00 PHP 2,700.00

Over PHP 30,000.00 to PHP 40,000.00 PHP 3,300.00

Over PHP 40,000.00 to PHP 50,000.00 PHP 3,600.00

Over PHP 50,000.00 to PHP 60,000.00 PHP 4,000.00

Over PHP 60,000.00 to PHP 100,000.00 PHP 4,700.00

Over PHP 100,000.00 to PHP 200,000.00 PHP 5,300.00

Over PHP 200,000.00 As per formula

Formula: Brokerage Fee (if the Dutiable Value exceeds PHP 200,000.00)

Long Method Short Method

Dutiable Value PHP Dutiable Value PHP

Minus: Fixed ̶ 200,000.00 Multiply: Fixed x 0.00125

Excess Amount PHP Additional Amount PHP

Multiply: Fixed x 0.00125 Plus: Fixed + 5,050.00

Additional Amount PHP Brokerage Fee PHP

Plus: Fixed + 5,300.00

Brokerage Fee PHP

Other Rates of Brokerage Fees

 Services Brokerage Fee

Informal Entry PHP 700.00

Obtaining Shipside Permit PHP 1,300.00

Obtaining Transfer Permit PHP 1,300.00

Withdrawal Entry (Warehousing Articles)

 Complete Withdrawal PHP 2,000.00

 Partial Withdrawal (for every withdrawal) PHP 1,500.00

MAJOR SEAPORTS

Port of Manila (POM) and Manila International Container Port (MICP)

Full Container Load (FCL)

General Cargo

Container Size Arrastre Charges Wharfage Dues

1 x 20’ ₱ 4,307.00 / container ₱ 519.35 / container

1 x 40’ ₱ 779.05 / container

₱ 9,881.00 / container
1 x 45’ ₱ 916.50 / container

Dangerous Cargo

Container Size Class Basis (Multiplier) Arrastre Charges

1, 6, 8 150% ₱ 6,460.50 / container

1 x 20’ 2, 3, 4, 7 125% ₱ 5,383.75 / container

5, 9 110% ₱ 4,737.70 / container

1, 6, 8 150% ₱ 14,821.50 / container

1 x 40’ & 1 x 45’

2, 3, 4, 7 125% ₱ 12,351.25 / container
 5, 9 110% ₱ 10,869.10 / container

F
Class 4: Flammable Solids Class 7: Radioactive Substances

Class 1: Explosives

Class 2: Gases Class 5: Oxidizing Agents, Organic Class 8: Corrosives

Peroxides

Class 3: Flammable Class 6: Poisonous (Toxic) and Infectious Class 9: Miscellaneous Dangerous Substances
Liquids Substances (Irritants)

Less Container Load (LCL) / Break Bulk Cargoes (pg.1)

Arrastre Charges

Basis Import Export

General Cargo

 Bagged or sacked Cargoes /RT ₱ 305.00 ₱ 216.00

 Palletized /RT ₱ 135.00 ₱ 96.00

 Others (crates, box, etc.) /RT ₱ 172.00

 Frozen Cargoes

Unpacked Fish /RT ₱ 1,149.00 ₱ 812.00

Fish in Cartons /RT ₱ 767.00 ₱ 542.00

Steel Products /MT ₱ 202.00 ₱ 143.00

Logs 1000 Bd. Ft. ₱ 263.00 ₱ 186.00

Lumber 1000 Bd. Ft. ₱ 263.00 ₱ 186.00

Less Container Load (LCL) / Break Bulk Cargoes (pg.2)

Arrastre Charges

Basis Import Export

Heavy Lifts

 5 – 15 tons /MT ₱ 415.00 ₱ 293.00

 Over 15 – 20 tons /MT ₱ 685.00 ₱ 464.00

  Over 20 tons /MT ₱ 965.00 ₱ 682.00

Bulk Cargoes /MT ₱ 172.00

Checking Services

Shipside Delivery /RT ₱ 19.00 ₱ 17.00

Wharfage Dues (whichever is higher)

Basis Import Export

Revenue Ton (RT) ₱ 30.55 ₱ 15.25

Metric Ton (MT) ₱ 36.65 ₱ 18.35

OUTPORTS (Seaports outside Metro-Manila)

whether containerized or not

Arrastre Charges Wharfage Dues

Pier Side ₱ 110.00 / MT ₱ 34.00 / MT

Ship Side ₱ 8.00 / MT ₱ 17.00 / MT

PRIVATELY OWNED PORTS/PIERS

whether containerized or not

Arrastre Charges Wharfage Dues

Pier Side ₱ 110.00 / MT ₱ 36.65 / MT

Ship Side ₱ 8.00 / MT ₱ 18.325 / MT

Arrastre Charges Wharfage Dues

Pier Side ₱ 110.00 / MT ₱ 36.65 / MT

Ship Side ₱ 8.00 / MT ₱ 18.325 / MT

f

Container Security Fee – Containerized Shipments Only

Container Size Container Security Fee

Twenty Footer Container (1 x 20’) USD 5.00/container

Forty Footer Container (1 x 40’) USD 10.00/container

Formula: Container Security Fee

Container Security Fee Rate/container USD

Multiply: Total Containers x

Total Container Security Fee USD

Multiply: Applicable Exchange Rate x

Total Container Security Fee PHP

IMPORTANT NOTES/EXPLANATIONS:
CHAPTER TWO
 =Method one: Price actually paid solve for export all charges (pamasahe paeroplano and insurance) must be
included in PPAP (importing charges/vessel unloading charges/terminal handling charges, brokerage fees are
not included,)

 =method 123 used in hierarchical order

 =deductive value si method 4, deduct the vat duty property wholesale allowances etc.
 =5 is exporting country (method 4 &5 may be reverse)

 =if Method 1-5 fail to use method 6

 =method 1: sold for export all charges incurred in the exporting country shall be included or shall be added for
the customs value (customs value should always be at FOB level)
 =transaction value adjustments is deduction (all import charges are permissible deduction)

 ADDITION:
 brokerage fees (binabayad natin sa selling or buying agents except buying commission di dapat isali)
 royalties (it is price for license or intellectual property rights example: disney characters)
 proceeds (condition ng sales exporter limited na product walang distributor etc. gusto nyo ibenta yung
producto ni sir dante pero maniningil ng proceeds kada 4% proceeds kada 100 product
 Example: lumang stereo bibenta si sir dante pero pag bebenta mo sisingil si sir dante ng 10% proceeds)
 bago idagdag sa ppap dapat mameet ang 3 requirements
 -does not refer to customs brokerage fees not dutiable
 -commission brokerage fees
 -selling commission is dutiable must be paid by the seller to his agent for promotion in selling his product.
 -buying commission ( si buyer hahanap ng agent si agent hahanap ng supplier negotiate incoterms > then
magbabayad si buyer ) note: di kasama si seller

 =for example importer ng jacket sa china, ang gusto ko ginto zipper walang available si china non mag import
sa free of charge si china ikakabit lang niya zipper ipapadala sa pilipinas di kasama presyo ng zipper

 =gusto ko mag import ng flower vase, gusto kakaiba vase import sa thailand yung mold is import galing india
para kakaiba ang halaga ng mold idagdagdag ni customs sa but pag mold
 =galing sa pilipinas is not dutiable is because it is imported
 =bisiklita specific na engineer nag assemble binayaran ang serbisyo para iassemble, pag sa pilipinas
inassemble it is not considered as condition to dutiable dapat ginastos outside sa pilipinas
 =pag local not subject to duty and tax pag general rule all articles aslongas import article are subject for duties
and taxes.

 =gusto ko sa pilipinas gawin imported articles dito manufactured pero it not is adjustment because it is
incurred in philippines
 incurred in importing countries are not subject to duties and taxes

 =insurance refers to either marine insurance or cargo insurance. port of loading to port of destination

 =mga deduction dapat tanggalin nag import ng machinery kalas kalas pag dating sa pilipinas ang gastos hindi
na dutiable

 =transaction value of identical:

 =identical
 =example: pag ferrari dapat ferrari din icompare
 =another example: pilot white board marker pointed black in color dapat identical goods is the same
magkamuka dapat parang identical twins
 =dapat pag nag compare nanggaling sa parehong bansa bakit? mag kaiba ang cost of production pag ibang
country
 =dapat iisang manufacturer

 =Similar: example pilot white board blah bah similar na blue in color pointed pag wala ka makita non pwede
ka kumkuha ng ibang manufacter dapat produce in the same country pwede artline black in pointed.

 =45 day rule = 90 days : before arrival and after arrival total of 90 days
 example: lahat ng value of goods titignan para determine kung ano dapat gagamitin na value
 VRIS naka store ... sa lahat ng value na lalabas ang gagamitin ni customs para sa transaction value ay
pinakamababa dahil the lowest shall always prevail para sa identical or similar transaction value..

 =Method 4: deductive (the same identical and similar 45 day rule )

 example bibili ng isang piraso sa bawat major na pamilihan lugar such divisoria, baclaran etc. tatanungin kung
magkano karami ibebenta nila. pag nalaman na determine ang value. hahanapin ang lowest value.. hahanapin
mo greatest aggregate quantity sold pinakaraming benta...

 method 5: pupunta ka ng exporting country para idetermine ang value

 walang fixed formula susundin ang procedure para madetermine ang value