Bringing goods into the Philippines always comes with costs on top of the invoice price. The Bureau of Customs (BOC) collects duties, VAT, and sometimes excise tax on nearly everything that crosses the border.
Whether you’re importing for distribution or bringing in raw materials and equipment, understanding how these charges are calculated lets you plan your cost accurately. Together with import tax exemptions, thresholds, and documentation, you can plan your total cost accurately before your shipment leaves the origin point.
This guide covers import and tax duties for companies in the Philippines. We will talk about customs regulations in the Philippines, how import tax is calculated, and free trade agreements to lower down your customs duties.
What Counts as Importation Under Philippine Law
Under the Customs Modernization and Tariff Act (CMTA, or Republic Act 10863), every good brought into the Philippines is subject to duties and taxes unless a specific law says otherwise. This applies even to goods that were originally exported from the Philippines and are coming back in.
Importation has a legal start and end point. It begins the moment the carrying vessel or aircraft enters Philippine territory with the intention of unloading. It is considered finished once one of two things happens:
- If duties, taxes, and charges have been paid (or secured) and a permit for withdrawal has been issued.
- If the goods are legally free of charges, once they have left the jurisdiction of the Bureau of Customs.
Your shipment is technically "in customs custody," with all the rules that come with it, for the entire stretch in between. As the importer, knowing this timeline helps you understand when your goods can legally move.
Four Categories of Import in the Philippines
The BOCsorts imports into four categories:
- Free importation: Goods that can move in and out without special permits.
- Regulated importation: Goods that need a clearance, license, or declaration before they are allowed to enter, submitted before release from customs custody.
- Prohibited importation: Goods banned outright, including seditious materials, obscene content, counterfeit or IP-infringing goods, adulterated food or drugs, and items that misrepresent precious metal content.
- Restricted importation: Goods allowed only with specific authorization, such as firearms and explosives, gambling equipment, narcotics (except for authorized medical use), and lottery materials.
If you are unsure which category your product falls under, it is worth checking with Emerhub’s compliance experts before shipment.
HS Codes and the AHTN Classification
Every imported product gets classified using a Harmonized System (HS) code. This code is an internationally standardized numbering system that determines the applicable duty rate and any regulatory requirements. The Philippines, like other ASEAN members, uses the ASEAN Harmonized Tariff Nomenclature (AHTN). It extends the standard six-digit HS code into an eight-digit code with more granular product categories.
Misclassifying the HS codes for your goods can lead to underpaying or overpaying duty, unexpected penalties, or your shipment getting flagged and delayed at the port.
Our team helps you look up the correct classification, especially if your goods are ambiguous or regulated.
The Taxes and Fees on an Import
Several charges can stack on top of each other depending on what you are importing. The exact combination you owe, and how much each one costs, is tied directly to your product's classification. This means two shipments with the same value can end up with very different final bills if they fall under different categories.
In the Philippines, here are customs tax and duties you should be aware of before importing:
| Tax or Fee | What It Is | Typically Applies To |
|---|---|---|
| Value Added Tax (VAT) | 12% of the total landed cost of the goods | Practically every import |
| Customs Duty | Ranges roughly from 0% to 65% depending on classification, though most consumer goods fall between 3% and 15% | Determined by HS/AHTN code |
| Excise Tax | A separate tax on specific categories, charged per unit (specific) or as a percentage of value (ad valorem) | Alcohol, tobacco, petroleum, automobiles, minerals, jewelry, perfume, yachts |
| Import Processing Charge (IPC) | A BOC processing charge on formal entries; couriers add their own handling fees | Most courier and postal shipments |
| Customs Documentary Stamp (CDS) + BIR Documentary Stamp Tax (DST) | Fixed government stamp fees, commonly around PHP 100 and PHP 30 respectively | Nearly all formal entries |
| Warehouse Processing Charges | Storage and handling fees for goods sitting in a bonded warehouse | Heavier or delayed shipments |
What is the De Minimis Rule?
Under Customs Administrative Order (CAO) No. 02-2025, effective May 7, 2025, any shipment with a Free on Board (FOB) or Free Carrier (FCA) value of PHP 10,000 or less is completely exempt from customs duty and VAT. This is commonly called the de minimis threshold. This is important if your business regularly sends in low-value samples, spare parts, or small trial orders ahead of a larger commercial shipment.
However, if multiple parcels are addressed to the same recipient and delivery address and they arrive on the same day, the BOC adds up their combined value. If that combined total goes over PHP 10,000, the exemption disappears entirely and the full shipment gets taxed, not just the portion above the threshold. This is to prevent splitting orders into smaller parcels to keep each one within the limit and bypass custom duties.
Even when a shipment qualifies as de minimis, it is rarely completely free. Couriers typically still collect a small import processing charge and documentary stamp fees. These fees can range between PHP 130 to PHP 250 total, before releasing the package.
Formal vs. Informal Entry
Once a shipment exceeds the de minimis threshold, it is processed as either an informal or a formal entry. Informal entry covers commercial shipments below PHP 50,000 (FOB/FCA) and personal or household goods not in commercial quantity. On the other hand, Formal entry covers commercial shipments of PHP 50,000 or more, which means every serious commercial flow runs on formal entries.
All imports, regardless of entry type, require a goods declaration lodged with the BOC. This must happen within 15 days from the date the goods were discharged from the vessel or aircraft. You can request a 15-day extension if you have valid grounds, but you need to file that request before the original deadline expires.
If you miss the window, your goods will be treated as abandoned. This is the single most expensive paperwork failure in Philippine importing.
Emerhub can lodge your goods declaration and manage the formal or informal entry process on your behalf, so shipments do not sit in customs limbo while paperwork gets sorted out. Talk to our import specialists about setting this up before your next shipment arrives.
How to Calculate Your Import Duty and VAT
To calculate Import Duty and VAT, you need to determine the Cost, Insurance, and Freight (CIF) value of your goods. CIF is essentially the total price of the goods, shipping, and insurance taken out on the shipment.
For example, your goods cost a total of USD 18,000. To ship to the Philippines, it cost USD 1,500 and USD 500 for insurance. This brings the CIF value of your goods to USD 20,000. This value will be used to calculate your import duty and VAT.
The basic formula for calculating import duty and VAT is:
- Import Duty = Duty Rate × CIF Value
- VAT = 12% × (CIF Value + Import Duty + Excise Tax, if applicable)
- Total Import Duty and Tax = Import Duty + VAT
To put this in perspective, say you are importing a general manufactured product with a USD 20,000 CIF value. Based on its HS code, the applicable duty rate for this product is 5%. Here is how you calculate your good’s import duty:
- Import Duty = 5% × USD 20,000 = USD 1,000
- VAT = 12% × (USD 20,000 + USD 1,000) = USD 2,520
- Total Import Duty and Tax = USD 1,000 + USD 2,520 = USD 3,520
For a more complete picture of your true landed cost, especially for commercial shipments, factor in brokerage fees, the import processing charge, and documentary stamp taxes as well:
Total Landed Cost = Dutiable Value + Customs Duty + Excise Tax (if any) + Brokerage Fee + Import Processing Charge + Documentary Stamps
This fuller formula is what determines your actual out-of-pocket cost, and it is the number you should use when pricing goods for resale or budgeting a shipment.
Free Trade Agreements That Can Lower Your Duty Rate
The Philippines has multiple trade agreements in force that reduce or eliminate duty on qualifying goods. The most relevant ones include:
- ASEAN Trade in Goods Agreement (ATIGA), which has eliminated tariffs on close to 99% of goods traded among ASEAN member states.
- Philippines-Korea Free Trade Agreement, in force since December 2024, reducing duties on qualifying goods traded between the two countries.
- ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), progressively eliminating tariffs on at least 90% of tariff lines.
- ASEAN-China Free Trade Agreement (ACFTA), which has already eliminated tariffs on most Normal Track goods.
- ASEAN-Hong Kong, China Free Trade Agreement (AHKFTA), covering categories like jewelry, apparel, watches, and toys.
- ASEAN-India Free Trade Agreement (AIFTA), progressively cutting duties on roughly three-quarters of covered goods.
- RCEP (Regional Comprehensive Economic Partnership), in force for the Philippines since June 2023, covering China, Japan, Korea, Australia, and New Zealand alongside ASEAN
- The Philippines-Korea FTA, in force since December 2024, deepening the Korea cuts beyond RCEP
To actually claim a preferential rate under any of these agreements, you generally need a valid Certificate of Origin (CO) proving your goods originate from a qualifying country.
Before shipment, consult with Emerhub experts to see which FTAs are applicable to your goods.
Who is Allowed to Act as the Importer
Before any of these calculations apply, you need the legal right to import. The consignee on a Philippine import entry must be a registered Philippine entity that holds importer accreditation from the BOC.
Accreditation is obtained through the Accounts Management Office once the company's SEC and BIR registrations are in place.
A foreign company without a Philippine entity has two options. You can set up your own entity and accredit it as an importer, which fits businesses building a long-term local operation. Alternatively, you can import through an Importer of Record (IOR), a licensed local company that acts as the consignee on your behalf using its own accreditation and takes on the compliance responsibility for the shipment.
Most companies choose the IOR route when they need shipments moving sooner than an entity could be set up and accredited.
Importing Goods in the Philippines Through Emerhub
Emerhub's Importer of Record service in the Philippines acts as your consignee. We classify your goods, calculate the duties and taxes, and secure any permits your products need. We then lodge the goods declaration and clear the shipment through the BOC. Your goods move under our accreditation, and you keep full ownership of the commercial side.
To get started, send our Philippines team your product list and shipment plan. We will come back with the correct classification, a duty and tax estimate, and the permits your goods need. And if you would rather set up your own entity and importer accreditation, we handle that too.
Frequently asked questions
What are import taxes and duties in the Philippines?
Import taxes and duties are fees paid on goods imported into the Philippines, and they are managed by the Philippine Bureau of Customs.
What types of taxes are applied to imports?
Taxes include Value-Added Tax (VAT), Excise Tax, Payment-Ad Valorem Tax, Warehouse Processing Charges (WPC), and Bulk and Break-Bulk Cargo fees.
How are import duties and taxes calculated?
Calculations are based on the Cost, Insurance, and Freight (CIF) value, with VAT at 12% and duty rates between 0-65%.
What factors are essential for tax calculation?
Important factors include the tariff classification code and any applicable preferential trade agreements.
What is the de minimis value for imports into the Philippines?
Shipments valued at PHP 10,000 or less (FOB/FCA) are exempt from customs duty and VAT under CAO No. 02-2025, effective May 7, 2025. Multiple parcels to the same recipient and address arriving the same day are combined for this calculation.
Do I still pay fees if my shipment qualifies as de minimis?
Couriers typically still collect a small import processing charge along with customs and BIR documentary stamp fees, often totaling under PHP 250.
How long do I have to file a goods declaration after my shipment arrives?
You have 15 days from the date the goods are discharged from the vessel or aircraft, with a possible 15-day extension if requested before the original deadline expires. Missing this window can result in your goods being treated as abandoned.
What is the difference between formal and informal entry?
Informal entry covers commercial shipments under PHP 50,000 and most personal or household goods. Formal entry applies to commercial shipments worth PHP 50,000 or more. Both require a lodged goods declaration.
Can I reduce my duty rate through a free trade agreement?
If your goods originate from a country covered by an agreement like ATIGA, AANZFTA, ACFTA, AHKFTA, AIFTA, or the Philippines-Korea FTA, you can reduce your customs duty rate. You will need a valid Certificate of Origin to claim the preferential rate.
What items are prohibited or restricted from being imported into the Philippines?
Prohibited items include seditious materials, obscene content, counterfeit goods, and adulterated food or drugs. Restricted items, allowed only with specific authorization, include firearms, explosives, gambling equipment, and narcotics outside of authorized medical use.