Overseas Filipinos get parting gift from Aquino | Global News

Overseas Filipinos get parting gift from Aquino

/ 12:42 AM June 01, 2016



OVERSEAS Filipino workers (OFWs) got a parting gift from President Aquino on Tuesday—a tax exemption of up to P150,000 for their balikbayan boxes—those packages of happiness sent to loved ones back home.

A month before stepping down at the end of his term, Mr. Aquino signed the Customs Modernization and Tariff Act (CMTA).


The law increases the tax exemption ceiling for gift packages from OFWs  from P10,000 to P150,000, provided the items are not of commercial quantities.


Sen. Juan Edgardo Angara thanked the President for signing the measure—long pending in Congress until Customs Commissioner Alberto Lina sparked public outrage when he directed in August last year that the balikbayan boxes be subjected to stringent scrutiny in a purported move to crack down on smuggling.

The backlash prompted lawmakers to pass the bill posthaste.


Given the higher tax-exemption ceiling, there would also be fewer opportunities for corruption or extortion activities in the handling of the balikbayan boxes, said Angara, one of the authors of the bill.

“They can bring home more things to their families. This would bring comfort to their families because they could send home items that they were able to buy at a lower price abroad,” Angara told reporters.

“With the increase in the values, we lessen the discretion of the customs officials to inspect goods and collect taxes, thus minimizing cases of corruption and smuggling,” he said.

“Let us not punish the OFWs by imposing higher taxes and by supposedly rifling through and stealing the items in balikbayan boxes,” he said.

Tax exemption

The law also provides that Filipinos who have stayed in a foreign country for at least 10 years and are returning to the Philippines will be granted tax exemption for personal and household effects not exceeding P350,000 that they will be bringing with them when they go back to the country.

Those who have lived abroad for at least five years, on the other hand, will be entitled to tax and duty free personal and household effects amounting to P250,000. Those who have stayed abroad for less than five years can enjoy a P150,000 tax-free ceiling.

The law requires online customs processing of exports and imports to speed up transactions as well as make them more transparent. The law likewise slaps heftier penalties against violators.

The minimum cost of goods required to undergo formal customs processing has been raised from P10 to P10,000.

This would be beneficial to entrepreneurs who want to send product samples to customers abroad, as they would not be taxed as long as the value of the items is below P10,000, said Angara. “It will facilitate commerce and help small and medium businessmen,” he said.

Drop in the bucket

He also said the law sought to ensure that the tax exemption ceilings would be updated regularly, as it provided for automatic indexation of the amounts every three years to account for inflation.

In directing close scrutiny of the OFW gifts last year, the Bureau of Customs (BOC) said that the government was losing P50 million a month, or P600 million a year, from tax collections due from 1,000 containers that arrived each month in Philippine ports.

Lawmakers noted that this was just a drop in the bucket compared with the $20 million to $24 million worth of smuggled goods a year based on the disparity between the official data of exports to the country against recorded imports.

“It’s a small piece of happiness for our hardworking OFWs,” said Gabriela Rep. Luz Ilagan, who noted that huge containers and luxury cars “glide like invisible phantoms under the noses” of customs people.

OFWs, who number 2.5 million at any given time in a year, prop up the Philippine economy. Last year, their remittances totaled $29.7 billion. That was why the Lina directive last year generated so much indignation.

An Inquirer survey in 2014 showed that the top 10 items Filipinos get through balikbayan boxes were chocolates and candies, clothes, shoes, food and canned goods, toiletries, bags, toys, watches, appliances and gadgets.

Nonintrusive inspection

Angara said balikbayan boxes could still be opened, but customs officials now had less discretion as there would be higher tax exemptions for the goods brought in.

He said he hoped that computerization and better equipment could also lead to the faster release of the items to their consignees.

The law states that the BOC may adopt non-intrusive examination of goods, such as through the use of X-ray machines.

But it could still conduct physical examination of goods in certain conditions.

“The CMTA aims to overhaul and modernize the bureau which has long been perceived as one of the most corrupt and underperforming government agencies in the country,” Angara said, noting that President-elect Rodrigo Duterte has threatened to dismantle the customs bureau.

Another milestone

“President Aquino signing CMTA into law has set the BOC on an even faster pace of reform. Embracing technology and updating regulatory frameworks reduces opportunities for corruption and streamlines client experience with the BOC,” Finance Secretary Cesar V. Purisima said in a statement.

“Better institutions deliver better outcomes. We look forward to a stronger, more efficient BOC aiding our bid for trade liberalization and competitiveness,” Purisima said.

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The signing of the CMTA into law is “truly another milestone for his administration and the continuing reforms we continue to institutionalize in the bureau,” said Commissioner Lina. With a report from Ben O. de Vera

TAGS: Features, Global Nation, ofws, tax exemption

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