The Philippines, as a member of the World Trade Organization (WTO) and the Association of Southeast Asian Nations (ASEAN), adheres to a structured tariff system that applies to imports and exports. This tariff system is governed by the Philippine Tariff and Customs Code (PTCC), which regulates the duty and tax rates applicable to goods entering the country. Custom tariff rates differ depending on the type of product, with some goods subject to special import duties due to trade agreements or specific country relationships.
General Customs Tariff Structure in the Philippines
The Philippines uses the Harmonized System (HS) to classify goods, which is a globally recognized system for tariff classification. The country’s customs tariff structure consists of several key categories:
- Ad Valorem Duties
These duties are based on the value of the goods being imported. The tariff rate is typically a percentage of the customs value of the product. - Specific Duties
Specific duties are fixed amounts applied to the importation of certain goods, irrespective of their value. - Compound Duties
Some products may be subject to a combination of both ad valorem and specific duties. - Exemptions
Certain goods may be exempt from duties based on trade agreements or government policies aimed at encouraging specific industries or technologies.
Categories of Products and Their Tariff Rates
The tariff rates for products entering the Philippines vary depending on the product’s classification under the HS code. Below is an outline of the tariff structure for some common categories of imported products.
1. Agricultural Products
Agricultural imports to the Philippines are heavily regulated, and tariff rates for these products are often subject to adjustments to protect local farmers. Below are the general customs tariff rates for agricultural products:
- Rice
- Tariff Rate: 35%
- Imports from ASEAN countries may benefit from lower tariffs under the ASEAN Free Trade Area (AFTA) agreement.
- Meat (Beef, Pork, Poultry)
- Tariff Rate:
- Beef: 20-25%
- Pork: 20-25%
- Poultry: 5-20%
- Imports from the United States, Canada, and Australia may benefit from special trade agreements.
- Tariff Rate:
- Fruits and Vegetables
- Tariff Rate: 10-15%
- Specific products like bananas, pineapples, and mangoes may have lower rates under ASEAN agreements.
- Dairy Products
- Tariff Rate: 5-30%
- There are tariff reductions under trade agreements with New Zealand and Australia for dairy imports.
2. Manufactured Goods
Manufactured goods are some of the most common products imported into the Philippines, and the tariff rates are more diverse due to the wide variety of products in this category.
- Electronics
- Tariff Rate: 0-10%
- Products such as smartphones, laptops, and televisions typically fall within this range, with some exemptions under ASEAN or AFTA agreements.
- Clothing and Textiles
- Tariff Rate: 10-30%
- Importers from ASEAN countries may benefit from tariff reductions on clothing products.
- Automobiles
- Tariff Rate: 30-60%
- The Philippines has a policy to protect its local automobile industry, so higher tariffs apply to cars and car parts.
- Furniture
- Tariff Rate: 5-10%
- Some furniture items may qualify for exemptions or reduced duties if they are produced with certain materials.
3. Chemicals and Pharmaceuticals
The Philippines imports a large number of chemicals and pharmaceutical products for both industrial and healthcare purposes. These products often enjoy relatively low tariff rates to ensure a steady supply.
- Pharmaceuticals
- Tariff Rate: 0-10%
- Essential medicines are often exempt from duties to make healthcare more affordable.
- Industrial Chemicals
- Tariff Rate: 3-15%
- Some chemicals used in the manufacturing process may be subject to lower rates.
4. Fuel and Energy Products
Fuel and energy products such as crude oil, liquefied natural gas (LNG), and refined petroleum products are subject to the following tariffs:
- Crude Oil
- Tariff Rate: 0%
- The Philippines imposes no duties on crude oil to ensure stable energy supplies.
- Refined Petroleum Products
- Tariff Rate: 3-10%
- These products include gasoline, diesel, and kerosene, which are essential for the country’s transportation and industrial sectors.
5. Consumer Goods
Consumer goods such as food, beverages, and household items are imported into the Philippines in large quantities, and they are subject to varying tariff rates.
- Beverages
- Tariff Rate: 5-30%
- Alcoholic beverages, particularly spirits, attract higher duties.
- Cosmetics and Personal Care Products
- Tariff Rate: 0-10%
- Certain health and wellness products may be exempt from duties.
- Household Appliances
- Tariff Rate: 10-20%
- Tariffs on electronics like air conditioners, refrigerators, and washing machines are generally lower.
Special Import Duties for Certain Products from Special Countries
The Philippines has entered into various trade agreements that influence the tariff rates for products imported from specific countries or regions. Some products benefit from reduced or zero tariffs when imported from these countries under special trade arrangements.
1. ASEAN Free Trade Area (AFTA)
As a member of AFTA, the Philippines enjoys preferential tariffs with other ASEAN countries. A significant number of agricultural and industrial goods imported from ASEAN member states (such as Thailand, Vietnam, Malaysia, Indonesia, Singapore, and Brunei) benefit from reduced tariffs under the ASEAN Trade in Goods Agreement (ATIGA). For example:
- Rice: ASEAN countries such as Thailand and Vietnam are among the major rice exporters to the Philippines, and these exports are subject to lower tariffs under AFTA.
- Automobiles: Cars and car parts imported from ASEAN countries have reduced tariffs.
2. Free Trade Agreements (FTAs) with Other Countries
The Philippines has also signed free trade agreements with countries outside of ASEAN, which provide special tariff reductions:
- United States: Products like beef, poultry, and pork are subject to reduced tariffs due to the U.S.-Philippines trade agreements.
- Japan: Under the Japan-Philippines Economic Partnership Agreement (JPEPA), certain agricultural products, including fish and vegetables, may benefit from reduced tariffs.
- Australia and New Zealand: These countries enjoy reduced tariffs for dairy and agricultural products under the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA).
3. Most Favored Nation (MFN) Status
Under WTO rules, the Philippines applies the Most Favored Nation (MFN) treatment to most of its trading partners, meaning that they are entitled to the same tariff rates as the country’s most favored trade partners. However, MFN rates can be modified under bilateral trade agreements or other arrangements.
Country Facts
- Official Name: Republic of the Philippines
- Capital: Manila
- Largest Cities:
- Quezon City
- Manila
- Davao City
- Per Capita Income: USD 3,500 (approx.)
- Population: Approximately 114 million (2023)
- Official Language: Filipino (based on Tagalog) and English
- Currency: Philippine Peso (PHP)
- Location: Southeast Asia, in the western Pacific Ocean, comprising over 7,000 islands
Geography, Economy, and Major Industries
Geography
The Philippines is an archipelago consisting of more than 7,000 islands, situated between the South China Sea and the Pacific Ocean. The country is divided into three main geographical divisions: Luzon, Visayas, and Mindanao. The terrain is primarily mountainous, with rich mineral resources, dense forests, and fertile plains. The Philippines is also prone to natural disasters, such as typhoons, earthquakes, and volcanic eruptions, due to its location along the Pacific Ring of Fire.
Economy
The Philippines has a mixed economy with a robust service sector, significant manufacturing industries, and a growing agricultural base. The country is one of the fastest-growing economies in Asia, with a strong emphasis on the business process outsourcing (BPO) industry, which contributes significantly to GDP. The Philippine economy also benefits from remittances sent by Overseas Filipino Workers (OFWs), which are a major source of income for many households.
Major Industries
- Electronics and Semiconductor Manufacturing: The Philippines is a key player in the global electronics supply chain, particularly in the production of semiconductors and electronic components.
- Business Process Outsourcing (BPO): The Philippines is one of the largest outsourcing destinations in the world, particularly for customer service, IT, and finance-related services.
- Agriculture: Rice, coconut, sugar, and tropical fruits are some of the country’s major agricultural products.
- Mining: The Philippines is rich in mineral resources, including nickel, copper, gold, and silver.
- Tourism: The country is a popular tourist destination, with its pristine beaches, natural wonders, and historical sites attracting millions of visitors each year.
