De Minimis Rate in the Philippines

Amanda Lim

What is the Philippines' de minimis rate

If you’re planning to expand your eCommerce footprint into a new destination country, it’s best to know about the local customs regulations so that your eCommerce experience is smooth and effective in your new market. For starters, you should be looking out for the country’s import duties and taxes, and the country’s de minimis rate.

With a young and tech-savvy population, the Philippines is one of the fastest growing eCommerce markets to look out for in Southeast Asia. eMarketer’s study in 2018 pegs the Philippines’ growth at 31% for the year of 2019,1 whereas PPRO Group’s study in 2018 has a more optimistic growth percentage of 51%.2

This market currently has 73 million internet users, which is a 67% internet penetration rate. Among this group of internet users, 76% of them have bought a product online.3 Not only that, the Philippines also has a high de minimis rate to encourage trade between countries.

But first, it helps to know what de minimis means, and the import duties and taxes of the Philippines.

What is the De Minimis Rate in the Philippines?

The Philippines has a de minimis rate of PHP 10,000, or roughly USD 197 as of the time of this writing. De minimis rate is the price threshold in which fewer or no taxes are charged on shipments entering the country if the CIF value, meaning the goods, shipping fees, and insurance, is below the threshold.

‘De minimis’ comes from a longer phrase in Latin which means ‘the law does not concern itself with trifles’.4 The de minimis threshold only applies to B2C international shipments that enter the archipelago via air freight. This means that B2B shipments and goods that enter via sea freight are not exempt from import duties and taxes.

With a high de minimis rate, eCommerce merchants would be able to make full use of this regulation to sell their items directly to consumers. Merchants who sell via B2C eCommerce wouldn’t have to pay for extra duties and taxes if the value of the goods and shipping fees are below PHP 10,000.

The Philippines' de minimis rate for imports is PHP 10000

Worried about customs clearance when shipping to Southeast Asia? Janio’s customs clearance solutions will ensure that your goods are able to arrive at your destination country without any hang-ups! Contact us to find out more:

Ship with Us

How Much are the Taxes if my Goods Surpass the De Minimis Rate in the Philippines?

Import duties range from 0% to 20%, and the goods and services tax (GST) is 12% if your CIF value, which means the value of your goods, shipping fees, and insurance fees, exceeds the Philippines’ de minimis rate.

Import duty is a type of tax collected on imports into the country, which can help the local government to raise income and provide a market advantage for locally produced goods from global competition.5

The duties calculated for your goods depend on your product category identified by the Harmonised Systems Code (HS Code). This code is a classification system developed by the World Customs Organization to classify over 5,000 product categories. To find out the rate of your specific product category, you may do so at the Philippines Tariff Finder page.6

Infographic showing what a Harmonised Commodity Description and Coding System is and how it should be read

How can I Ensure Smooth Customs Clearance into the Philippines?

Aside from learning about the Philippines de minimis rate and import duties & taxes for your goods, you’ll need to ensure that your shipments have the necessary documentation and shipping labels to clear customs effectively. If you’re not familiar with the B2C customs clearance process, we’ve covered that topic in a previous article and in our customs clearance resources.

Having a reliable shipping partner who provides you with accurate and complete customs documents can help you take the burden of filing every single document for your shipments. That way, all you need to do is to ensure that your shipping labels are accurate and visible to customs officers. We have a B2C shipping guide which covers topics like labelling your shipments and the importance of data accuracy in these shipping labels for you to check out.

If your goods and shipping fees exceed the de minimis rate, you can choose to settle the payment of import duties and taxes from these two incoterms, DDU and DDP. These incoterms help determine how you will settle the payment for import duties and taxes. Our recommendation is to opt for DDP and seek out a shipping partner who can arrange to pay for your import duties and taxes prior to the shipment arriving in the Philippines.

Knowing about the Philippines’ de minimis rate, import duties and GST is one step closer to ensuring that your international shipments can be shipped to your Philippine customers easily. Not only that, having a trusted shipping partner with customs clearance expertise can help to ensure your deliveries reach your customers in a timely manner. Seamless international eCommerce deliveries are one way to impress your customers in the Philippines, and by having this base covered, you’re on your way to having your slice of the Philippines’ eCommerce pie.

 

Want more insights like this? Sign up for our newsletter to get our latest scoop and insights to Southeast Asian e-commerce and the latest logistics tips.

Looking to ship internationally throughout Southeast Asia? Contact us to find out how.

Ship with Us

 

You may also want to check out our other articles on customs clearance in Southeast Asia:

References:

  1. eMarketer: Global eCommerce 2019
  2. PPRO Group: High Growth Markets 
  3. Hootsuite/We are social: Digital 2020 – The Philippines
  4. Practical Law: De Minimis 
  5. Investopedia: Import Duty Definition 
  6. Philippines Tariff Commission
22544 views

You might also be interested in

Shipping with Air Freight from Singapore to The Philippines
Benedict Leong
Shipping with Air Freight from Singapore to The Philippines

The Philippines' economic potential has been noticed by Singapore businesses, but when should you use air freight over sea freight? Find out here!

864
Shipping With Sea Freight from Singapore to the Philippines
Benedict Leong
Shipping With Sea Freight from Singapore to the Philippines

Can sea freight compete in speed and price with air freight? In some cases for sea freight from Singapore to the Philippines, yes! Find out why here

1589
Shipping from Malaysia to the Philippines: an eCommerce Guide
Amanda Lim
Shipping from Malaysia to the Philippines: an eCommerce Guide

hbspt.cta.load(4410524, '38859c90-2f0a-4c14-9354-3c5e4ba604c8', {}); Merchants based in Malaysia can always use its geographic advantage in Southeast Asia to tap on to some of the world’s up-and-coming economies. Amo ...

2299
Data Integrity in eCommerce: How it Affects Cross-border Shipping
Data Integrity in eCommerce: How it Affects Cross-border Shipping

Getting accurate data on the shipping label is crucial in the cross-border shipping process. Find out how you can ensure data integrity for a smooth eCommerce delivery.

Learn More
How DDP Can Help You With Import Duties and Taxes in Southeast Asia
How DDP Can Help You With Import Duties and Taxes in Southeast Asia

With different import duty and tax rates for every country and every type of item, customs payments may appear daunting. Read on to find out how customs clearance can be made smoother with delivered-duties paid (DDP) so that you can expand into the Southeast Asian market with a peace of mind!

Learn More
How does Customs Clearance work for B2C Fulfilment?
How does Customs Clearance work for B2C Fulfilment?

Customs Clearance requires your shipment to gain official permission to enter a country and for the required duties and taxes to be paid. That's the gist of it, but there's more, click here to find out more!

Learn More

訂閱 電子報

訂閱我們的週報,隨時掌握亞太地區電商與物流領域的最新發展。

 
關注我們