|Research by Country/Region
January 17, 2018
|PHILIPPINES: CUSTOMS, TAXES and DOCUMENTATION REQUIREMENTS for IT PRODUCTS and SERVICES IMPORTS |
A. Is this country a member of the Information Technology Agreement?
B. Customs documentation requirements for IT products
C. Software: duties and taxes, updates, licenses, electronically delivered
D. IT services: tax treatment and other regulations
E. Refurbished, used, or repaired computer equipment imports
A. IS THIS COUNTRY A MEMBER OF THE INFORMATION TECHNOLOGY AGREEMENT?
Signatories to the Information Technology Agreement (ITA) have eliminated their import duties on a wide range of information technology products, including software and computer hardware. For more information on the ITA, and exact tariff elimination schedules of signatories, click here.
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B. CUSTOMS DOCUMENTATION REQUIREMENTS FOR IT PRODUCTS
What are the documentation requirements for the physical import of software? For other information technology products?
The documents required for importing software and related products are invoice, bill of lading and packing list.
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C. SOFTWARE: DUTIES and TAXES, UPDATES, LICENSES, ELECTRONICALLY DELIVERED
DUTIES AND TAXES ON SOFTWARE IMPORTS
Are duties assessed on the intellectual property of the software or on the medium on which is it presented?
The Philippines became a member of the Information Technology Agreement (ITA) under the aegis of the World Trade Organization (WTO) on April 1, 1997. The ITA has eliminated tariff and some non-tariff barriers to trade in IT products since 2000 (see above for information on the ITA). Hence, the Philippines' tariff duties for computer hardware, peripherals and software imports are 0% since January 2000 pursuant to Executive Order (EO) No. 163 (Modifying the Nomenclature and the Rates of Import Duty on IT Products). EO 163 was signed by former Philippine President Joseph Estrada on Oct. 18, 1999 to implement the commitments made by the Philippines in the ITA.
Are taxes assessed on the intellectual property of the software or on the medium on which is it presented?
Computer and related accessories including software are subject to 10% Value Added TAX (VAT), computed based on the landed cost of the medium.
Is customized software treated differently than packaged software?
Customized and packaged software are treated the same when they come into the Philippines.
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IMPORTS OF SOFTWARE UPDATES
What are the customs duties and tax implications for software sold with updates when the full sales price, including cost of updates, is shown on the original commercial invoice? Are duties and taxes paid on that amount? What happens when the updates are sent at a later date? Are duties/taxes applied again? If so, based on what value? How should information presented on the commercial invoice for the original and subsequent shipments to avoid paying duties/taxes more than once on a single sale?
As the VAT is computed based on the medium, and software updates have no bearing to the computation. The commercial invoice should bear the type of medium used.
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SOFTWARE LICENSES: CUSTOMS CLASSIFICATION, IMPORT DUTIES, TAXES, OTHER
Are software licenses classified in Harmonized System 4907?
No. Software licenses are in 8524.
Are import duties/taxes applied? If so, on what cost/price base are they levied?
Are withholding or other additional taxes applied on software licenses? If yes, how?
If a U.S. license agreement is included in the packaging or is part of the installation/registration of shrink-wrapped software imported from the United States, would that agreement be binding on consumers in your market? If so, would U.S. or local laws pertain?
The agreement is now between the buyer and the seller. It is an independent contract that can be enforced and be referred to when disputes arises and are brought to court. If the software or electronic goods can be protected under Philippine IPR and E-Commerce Law, the agreement should state the applicable laws of the Philippines.
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SOFTWARE DELIVERED OVER THE INTERNET/ELECTRONICALLY DELIVERED SOFTWARE
Are taxes applied to software delivered to the end-user over the Internet? If so, on what value?
The Philippines has no monitoring capability or set of rules for software purchased and downloaded online. The Philippine E-Commerce and IPR laws do not have provisions for purchases over the Internet. The buyer, however, might have some problems in declaring said software as an expense. Thus, the industry encourages not buying software on-line and instead purchasing the software locally from an accredited reseller in order to get the proper documentation and warranties.
Would the situation be different if this software were instead delivered to a distributor who has a license to produce (replicate) and sell the software?
What are the documentation requirements for the electronically delivered import of digitized products (i.e. software, movie downloads) over the Internet or other networks?
None, as the Philippine government has no access to electronically imported software.
Must an electronically delivered software import be accompanied by a physical shipment of the same product?
As indicated in previous questions, the Philippine government does not have specific law for electronically delivered products. However, the government is studying on how this could be part of the existing IPR or the E-Commerce Law. For additional information on the Philippine Bureau of Customs, please refer to http://ww.customs.gov.ph or http://www.apectariff.org
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D. IT SERVICES: TAX TREATMENT AND OTHER REGULATIONS
Are services (i.e. training, set-up, etc) relating to the sale of software taxed? If so, at what rate and based on what value?
Services related to software are not taxed.
Are U.S. IT solution providers permitted to send personnel into the country to set up hardware/software-related systems?
US Nationals are allowed to enter the Philippines without visas for a stay not exceeding twenty-one (21) days, provided they hold valid tickets for their return journey to port of origin or next port of destination. The Philippine Department of Foreign Affairs (DFA) requires that passports are valid for a period of not less than six (6) months beyond the contemplated period of stay. However, Immigration Officers at ports of entry may exercise their discretion to admit holders of passports valid for at least sixty (60) days beyond the intended period of stay.
Are special visa, work permits, and/or professional certification by an accredited body required?
All foreign nationals seeking admission to the Philippines for purposes of employment must secure an alien employment permit (AEP) from the Department of Labor and Employment (DOLE). The DOLE issued Department Order No. 12, series of 2001 or the "Omnibus Guidelines for the Issuance of Employment Permits to Foreign Nationals" streamlining the processes and simplifying the requirements for applications for permits.
Foreign professionals who are allowed to practice their profession in the Philippines under reciprocity and other international agreements and in consultancy services pursuant to Section 7 (j) of the PRC Modernization Act of 2000 must also secure an AEP.
Holders of Special Investors Resident Visa (SIRV), Special Retirees Resident Visa (SRRV), Treaty Visa (9d) or Non-Immigrant Visa (47(a)2) who occupy any executive, advisory, supervisory or technical position in any establishment are also required to secure AEPs.
Those exempted from securing permits are: (1) members of the diplomatic services and foreign government officials accredited by the Philippine government; (2) officers and staff of international organizations of which the Philippine government is a cooperating member, and their legitimate spouses desiring to work in the Philippines; (3) foreign nationals elected as members of the Governing Board who do not occupy any other position, but have only voting rights in the corporation; (4) all foreign nations granted exemption by special laws and all other laws that may be promulgated by the Congress; and (5) owners and representatives of foreign principals, whose companies are accredited by the Philippine Overseas Employment Administration (POEA) who come to the Philippines for a limited period solely for the purpose of interviewing Filipino applicants for employment abroad.
An application for AEP shall be filed personally or through their respective employer with the DOLE-Regional Office who has jurisdiction over the intended place of work of the foreign national. In case the foreign nationals will be assigned in subsidiaries, branch offices and joint ventures, or assigned in the headquarters with oversight functions in any of the branch offices, operations or projects in the country, they may file their application at the DOLE Regional Office nearest their place of work.
For additional information please refer to http://www.dole.gov.ph and http://www.dfa.gov.ph
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E. REFURBISHED, USED, OR REPAIRED COMPUTER EQUIPMENT IMPORTS
1. REFURBISHED COMPUTER EQUIPMENT
Is the import of refurbished computer hardware, parts, and accessories (including toner cartridges) permitted?Import of refurbished and used computer hardware, parts and accessories are freely importable.
If so, what are the documentation requirements?
These have the same required documentation as brand new items. However, importers of used and refurbished items should secure an environmental clearance from the Department of Environment and Natural Resources (DENR) in accordance with Republic Act 6969 or the Toxic Substances and Hazardous and Nuclear Wastes Control Act. Importers should obtain the application forms from the DENR. For additional information, please visit http://www.denr.gov.ph
Is special labeling required?
What value should be shown on the invoice?
The process of invoicing is the same as the new units where you indicate the actual cost of the unit.
How are duties and taxes assessed?
The tariff duty is 0% and is subject to 10% VAT.
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2. USED COMPUTER EQUIPMENT
Is the import of used computer hardware, parts, and accessories (including toner cartridges) permitted?
Same as answers regarding refurbished equipment. See answers above.
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3. REPAIRED COMPUTER EQUIPMENT
Are duties and taxes assessed on the re-import of repaired computer equipment?
Same as answers regarding used and refurbished equipment. See answers above.
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This response was prepared by the U.S. Department of Commerce/Commercial Service in Manila in February 2003. For further clarification please contact:
U.S. Embassy, Manila
Special Notes: The above information is intended to serve only as unofficial guidance. In seeking to obtain government rulings in specific cases, it will often be necessary to refer to special laws, separate regulations and announcements, and case-by-case decisions by the government. Beyond the general guidelines shown above, legal counsel should be retained at an early stage of consummation of a major procurement contract, and before entering into any legal commitments.
This page was last updated on 06/18/2009. This site is operated by the Office of Technology and Electronic Commerce (OTEC) division of the International Trade Administration, U.S. Department of Commerce.