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Sep 23

What the??

On a purchase of books costing Php 216.50 and shipped by the bookseller to Manila, the Post Office, upon receipt, then issued the following:

Tentative Assesment Sheet

Customs Duty 49.01 Tariff Heading

$396.95 x 46.66 Exchange Rate

Php 18,522 Dutiable Value in peso x 5% Rate of Duty

Php 926 Total Customs Duty

Value Added Tax

Php 18,522 Dutiable Value in peso

Php 926 Customs Duty

Php 250 Customs Documentary Stamp

Php 250 Import Processing Fee

Php 15 BIR Documentary Stamp

___________________________

Php 19,963 Total Taxable Cost x 12% EVAT Rate

___________________________

Php 2,400 Total Payable VAT

XXXXXXXXXXXXXXXXXXXXXXX

SUMMARY

Customs Duty: Php 926

VAT: Php 2,400

IPF: Php 250

Customs Stamp: Php 250

BIR Stamp: Php 15

__________________________

TOTAL Php 3,841.00

Now I have no problem with paying appropriate taxes but are these the proper taxes, in the right amounts? Books are non-VATable items, I thought (see The Unlawyer and despite House proposals to impose VAt on books; and even this). So what gives? This has long been a sore point among purchasers of books and no one seems to be able to give a definitive answer!

__________________________
Update 9/30/08

The relevant legislation appears to be as follows:

1. Republic Act 9337, amending Section 109 of the National Internal Revenue Code, the importation of books and any newspapers, magazines or journals are exempt from value-added tax. To wit:

“Section 109. Exempt Transactions. — Subject to the provisions of subsection (2) hereof, the following transactions shall be exempt from value-added tax:
xxx
(R) Sale, importation, printing or publication of books and any newspaper, magazine, review or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of paid advertisements;”

2. Tariff and Customs Code of the Philippines, Section 105:

“Section 105. Conditionally Free Importations. —
xxx
s. Philosophical, historical, economic, scientific, technical and vocational books specially imported for the bona fide use and by the order of any society or institution, incorporated or established solely for the philosophical, educational, scientific, charitable and literary purposes, or for the encouragement of the fine arts, or for the bona fide use of and by the order of any institution of learning in the Philippines: Provided that the provisions of this subsection shall apply to books not exceeding two (2) copies of any one work when imported by any individual for his own use, and not for barter, sale or hire.;”

3. Republic Act No. 8047, otherwise known as the Book Publishing Industry Development Act:

“Section 12. Incentives for Book Development. —
xxx
In the case of tax and duty-free importation of books or raw materials to be used in book publishing, the Board and its duly authorized representatives shall strictly monitor the quality and volume of imported books and materials as well as their distribution and the utilization of the said imported materials.

Books, magazines, periodicals, newspapers, including book publishing and printing, as well as its distribution and circulation, shall be exempt from the coverage of the expanded value added tax law.”

The opinion of the BIR is that that the importation of books for personal use is exempt from value added tax as well as from the payment of import duties. The Post Office was informed accordingly and you may want to inform the Post Office of these provisions if you face a similar problem. A small handling fee, is, however, legitimate on the part of the Post Office.

106 comments

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  1. nash

    that’s just horrible! i hope you contest it. i think one time my mother refused to collect a parcel from the post office due to the seemingly high and arbitrary charges. eventually, the postal people made a ‘recomputation’ then said ‘ay sorry, mali pala’.

  2. markmomukhamo

    raket…when I was there I tried sending something from Manila to the US via the post office there – it costs more than what I was trying to send. My dad sent over something much heavier and it cost him *less*. This was at a different branch of the post office.

    Anyway, next time try Johnny Air or a service which accepts a foreign address as the delivery address. The carrier usually foots the tax and bills you when you pick it up/gets delivered to you.

  3. markmomukhamo

    oh and some countries would even give you a discount if you’re sending books and publications via mail. Dyan kasi iniisip pa rin nila na ‘bisyo’ ang magbasa.

  4. BrianB

    Kaya hindi na ako bumibili sa eBay. Pati single-purchase electronics nilalagyan nang duty nang customs.

  5. BrianB

    But where do i go to get informed and discuss the most pressing issues of the day?

  6. Jen

    i used to order books online and i used to claim them at the makati post office. i never experienced any problems. sa qc post office yung hassle. they tried to charge me vat dati pero i told them how come in makati pag books tax free.

    i think arbitrary na yung charging nila. kung makakalusot sila, swerte. apparently post office people don’t know which items are taxable and which aren’t. olats

  7. number cruncher

    Yup, I think this is an ongoing racket in the post office; a friend once picked up a package from the post office and when charged with “VAT”, she raised such a ruckus that they released the package without her paying the “VAT!”

    If it were the real VAT, the post office clerks wouldn’t have released the book, since the clerks would have to answer to upper management if there was a shortage in official collections. Since the clerks were willing to let her go, it probably was an “unofficial” collection.

    I had a similar experience with the MMDA, but I’ll just post that in my blog another time… Hehehe! 😉

  8. number cruncher

    Hmm, were you issued an OR to release the book? If there was an OR issued, you have an official documentation as basis to contest the VAT application.

  9. AdB

    Not surprised. Happened to my sis when I sent her 2nd hand books to give to Mom who was then in hospital.

    The Philippine post office has always been in the racket business. One would like to think that with millions of Filipinos abroad, this is one agency that should be making a killing very legitmately. But heck, no, because it’s still one of the most distrusted service agencies in the Philippines. In the end, what happens? They have to make money through official racketeering.

  10. Paul

    The statutory authority granting the VAT-exempt status of books imported into the Philippines may be found in Section 109(y) of the National Internal Revenue Code.

  11. nash

    It’s definitely a racket manolo as I checked my diary and received a book from Australia Amazon to Baguio via the post and was not VAT taxed for it.

    And I sent an entire balikbayan box of nothing but books but only paid for the cost of shipping. There was no tax tax eklat.

    Niloloko tayo ng post office!

  12. nash

    @aDB

    tama ka. I worked for Royal Mail during the Christmas rush season and although kumonti na ang traditional mail (cards, sulat) because people send emails now the business has moved to shifting Amazon and Ebay items. Without it, hindi kikita and Royal Mail.

    The Philpost has a really bad PR dahil na rin sa kagaguhan ng iba (hindi lahat) nilang empleyado kaya ayan, the business is going to Aboitiz or LBC. Kahit na nga Fedex and DHL are sometimes cheaper, and for the extra premium you get more security with your parcels.

    They really should shake up that agency. It’s a disgrace.

  13. jcc

    so philpost employees have metamorphosed from direct pilfering of boxes and mail to “legalize” banditry by unofficial taxation. 🙂

  14. Carl

    Books are non-VATable. But it’s not exempt from other import duties.

    Post office assessors would often assume all packages as VAT-able as they are wont to read through every package description that come their way. So always challenge the tax assessment if you’ve bought books from abroad.

    I’ve shipped some of my old clothes from Manila to London and got slapped with import duties when the package arrived. So these import duties may seem highway robbery but it’s not something the Philippines has monopoly of.

  15. supremo

    You should have ship it yourself and declared a value of zero.

  16. UP n grad

    Hindi ba common saying — duruan lang iyan. If you argue with self-confidence against an uninformed, the odds are that you will win.

  17. nash

    @supremo

    eh di kung sinabi mong Zero eh di binabato bato nalang ng mail sorter ‘tutal zero value’ naman eh

    😀

  18. supremo

    nash,

    I got the tip from a guy who works at USPS.

  19. Amadeo

    What, no Fil balikbayan box freight forwarders in UK or the entire Europe? If not, how quaint.

    For $75 dollars here (including far-flung provinces), one gets the following: a 20x20x20 box free (big enough to fit an adult), weight unlimited, picked up from your house, delivered to your addressee door-to-door. And in your eager hands in 30 days or so. No post office, no customs, no insurance costs, etc. HiHiHi.

  20. supremo

    ‘What, no Fil balikbayan box freight forwarders in UK or the entire Europe?’

    It’s balikbayan box season again. It’s time to hit the outlet malls and fill in those boxes.

  21. akosistella

    Manolo: importation of books are exempt from E-VAT. Here’s the relevant provision of R.A. 9337 (EVAT law)

    “SEC. 109. Exempt Transactions. – (1) Subject to the provisions of subsection (2) hereof, the following transactions shall be exempt from the value-added tax:

    “(R) Sale, importation, printing or publication of books and any newspaper, magazine, review or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of paid advertisements;

    Source: http://lawphil.net/statutes/repacts/ra2005/ra_9337_2005.html

    Hope this clarifies.

  22. Pedestrian Observer GB

    Looks like you’ve been had or the “genius” you dealt with interpreted the “taxation” based on his/her “understanding” of how much you can afford, lol.

    The Philippine is really a strange place with strange tax laws, they even tax calendars sent by foreign firms to their representatives there so I am not surprised if they charge taxes and duties on your books even though it is not in the books, hehehe.

  23. supersepoy

    Hahaha. What’s funny is they even tax their own charges.

  24. jhay

    Had a similar problem way back in high school about my copy of Darwin’s On the Origin of Species which was bought by my grandpa in Italy as a gift. I was almost unable to leave the Post Office because with the book because it almost cost as much as a whole set of Encyclopedia Britannica by the time they gave me an invoice!

    Thank goodness a teacher was there to help me wrangle, I mean reason out with the clerk and yes, they ran the numbers again and the fees were cut in half.

  25. Karlo

    That things like this happen is really sad. Did you really pay the inappropriate additional charges in the end?

  26. hvrds

    Off topic but related to the power of blogs that have linkages to mainstream media.

    The Chairman of the Board of CITIGROUP is Sir Win Bishoff.

    The Chief Executive Officer of CITIGROUP is Vikram Pandit.

    It is sad that mainstream media simply prints goverment handouts without fact checking.

    William Rhodes does have an honorary title but not of Citigroup. Citibank merged with other institutions to become Citigroup. There is actually no more Citibank..Rhodes ia a respected commercial banker who had participated in the bail out of countries during the volatile 80’s. Then Citibank had lent loans to contries and had become seriously impaired due to those soured loans. The IMF -WB bailed out Citibank then to the detriment of the Philippines and other emerging markets. Rafael Buenaventura then was Citi’s man in the Philippines. He eventually became CB governor and before that participated in the bankruptcy of PCI Bank which was bailed out by the infamous Equitable-SSS rescue/buyout under Erap.

    How little things have changed..

    http://newsinfo.inquirer.net/inquirerheadlines/nation/view/20080924-162508/Citibank-head-briefs-Arroyo-on-US-crisis-fallout-on-RP

    By Fe Zamora
    Philippine Daily Inquirer
    First Posted 01:42:00 09/24/2008
    NEW YORK—President Gloria Macapagal-Arroyo received “insights and inside stories” about the US economic crisis during a 45-minute meeting on Monday with Bill Rhodes, chief executive officer of CITI group that includes Citibank, one of the largest foreign banks operating in the Philippines

  27. Rodolfo

    Send the BIR tax-question to : [email protected]

  28. Rob' Ramos

    A friend suffered the same fate, MLQ, and we were both surprised that the Post Office (this was in Makati, too) charged her for them.

    In her case, it wasn’t even purchased from a bookseller abroad. She’s a member of this org of readers who exchange books. Basically, it was as if your relative abroad snail mailed you books you wanted. Yet she was being charged for customs duties for them.

    Even worse, a bit of harassment and intimidation happened, courtesy of the Post Office employees.

  29. marck

    manolo: book sale. 🙂

    but that much on thinks like stamps? something’s amiss.

  30. Nonoy Oplas

    Multiple taxation is a standard racket by a number of government agencies, especially the BIR and BOC.

    Slapping a VAT on other taxes — a tax on a tax — is definitely a racket. Big taxes for a big and bloated government.

  31. BrianB

    Nonoy is a diehard republican. Bloated government? It’s corrupt but I wouldn’t say it’s bloated.

  32. ange

    Right! I think it’s a Philpost racket. As a member of an international academic organization, I am supposed to receive copies of academic journals on a regular basis, which I did in the early years, when they coursed the parcel through Royal Mail. When they changed the process around two years back, I did not receive most of my journals! Not only that, when I wrote and got extra copies from the publisher which they sent via Philpost, I had to pay P35 for them, and then the girl at the claims counter dared to ask the value of the 3 issues of the journal! She claimed that they are taxable, when I told her they were academic journals and are exempted, she denied this to be so then waved me away in a condescending fashion! That happened November 2007 at the QC Philpost, the one near the National Printing Office. Till now, i still am getting these on an irregular basis–around 1-2 issues annually, when they should be arriving monthly! I guess brazen corruption is a staple in Philippine life

  33. tiara

    hi! I had the same problem last year, now, I opt to wait for friends bring the books and cds here for me, or if may balikbayan box pinapasali ko na lang.

  34. Carl

    Off topic, but on to the question in a previous thread regarding exposure of local insurance companies to US companies that got into trouble last week.

    The comment was that PhilAm is coy when asked about its asset holdings. Yes, but you just have to do your research.

    All Phil insurance companies are required by the Insurance Commission to submit Annual Statements every 15th of April. One of the Schedules require full disclosure of assets held by the company. These annual statements are public documents and a copy can be requested from the Research and Statistics Division of the Insurance Commission in UN Ave.

    Unlike banks, the local insurance industry is stringently regulated, thanks to the outmoded and protectionist Insurance Code which has not been updated since Marcos era. Off-shore investments are expressly forbidden or capped to a very small amount that no company ever bothers.

    Hence it is highly unlikely that local PhilAm policyholders will ever be affected by AIG Inc’s liquidity problem. Overly stringent rules in measurement of policyholder liabilities, coupled with a risk-based approach to meeting capital, will hardly create any excess assets to repatriate back to the mother company.

  35. cvj

    Carl, that’s useful info, thanks. Does the Insurance Code apply to the Government Service Insurance System (GSIS)?

  36. Carl

    Consider this:

    When a taxpayer
    – declares zero value for a shipping item to avoid import duty
    – declares less income when paying for CEDULA
    – declares less property value when paying real estate tax

    why aren’t we as rabid in destroying them as we do with lowly post office employees? When for all we know, they are charging those VAT just simply out of incompetence and laziness to scrutinize the package contents? They remit those taxes to the government anyway unless you’re stupid enough not to ask for a receipt.

    The next time you get an unfair assessment of VAT or other duties, challenge it. Don’t huff and puff like the whole system is rotten.

  37. Master Yoda

    It will be good to know how BookSale and other used books stores bring in the second-hand books they sell all over the country. I suppose most of the books are from the United States and shipped via balikbayan cargo. There’s no VAT at the point of sale.

    BookSale is quite popular not only to students but also to professionals. If you look hard enough you’ll find a good buy. National and PowerBooks have complained, I believe.

  38. Carl

    cvj – unfortunately not. SSS & GSIS have separate charters.

    But being public institutions and their being under the President, Congress should have oversight powers on them. Hence if the public wants certain disclosures like say the nature of their assets and off-shore investments, Congress can compel these institutions to do so.

  39. cvj

    Thanks Carl. I hope such oversight powers will not be trumped by Executive Privilege again.

  40. anthony scalia

    Carl,

    i don’t think the SSS and the GSIS are under the President. they’re (supposed to be) independent. their presidents have fixed terms, and actually they’re tenured for the term. for practical purposes na din, at para di masabing kapit sa puwesto, their presidents resign at the ‘slightest suggestion’

    so they cannot claim executive privilege if Congress wants to investigate their investment portfolios. the presidents of SSS and GSIS are not part of the President’s family (not her alter egos), unlike Neri when he was still with NEDA

  41. UP n grad

    side-topic (sorry): McCain versus Obama

    I am really getting to distrust the ability of McCain to understand the priorities. He now says he wants to skip the Friday presidential debate because he claims he is needed in Washington DC to help Bush get the $700B bail-out package.

    McCain’s key job right now is to see through this process of the November-2008 US presidential elections. This means the debate must go on.

    “It has become clear that no consensus has developed to support the administration’s proposal,” McCain said. “I do not believe that the plan on the table will pass as it currently stands, and we are running out of time.”

    McCain said he has spoken to Obama about his plans and asked the Democratic presidential nominee to join him.


    Senate Democratic Leader Harry Reid issued a statement saying the debate should go on because “we need leadership, not a campaign photo op.”

    The University of Mississippi said it was going forward with preparation for the debate in Oxford. “We are ready to host the debate, and we expect the debate to occur as planned,” the school said, adding that it had received no notification of any change in the timing or venue.

  42. mlq3

    Word is, but not yet on paper so haven’t updated my entry, is that books are exempt from EVAT and that customs duties on books were abolished as part of the provisions of the National Book Development Board Act.

    But it seems a combination of not having received the appropriate memo and BIR having to meet quotas means people who get books are getting illegally taxed.

  43. mlq3

    Carl, the package was opened and as with all the packages mailed by the bookstores for their customers, it includes a copy of the receipt.

  44. BrianB

    Even notebooks are being taxed, geez!

  45. hvrds

    “Hence it is highly unlikely that local PhilAm policyholders will ever be affected by AIG Inc’s liquidity problem. Overly stringent rules in measurement of policyholder liabilities, coupled with a risk-based approach to meeting capital, will hardly create any excess assets to repatriate back to the mother company.”

    Partly true. Life insurance companies are required to meet contingencies in normal times. Profits from the operations of Philam Life are remitted normally to the mother company. Probably an offhshore based company owned by AIG. Assets are not remitted..

    Actuarial estimates are used to determine the size of the liquid reserves. Hence investments must in highly liquid low risk form of simple derivatives. Please note that currency, bonds, shares of stock are all simple derivatives.

    AIG’s life insurance business in the U.S. is also secure. In a bankruptcy procedure the good assets will be spun off while the bad will be the subject of apportioning the residual value amongst claimants together with the proceeds of the sale of the good assets after the main creditor , the U.S. government is paid.

    AIG’s still profitable business models will be absorbed by some other company or a new one will be created.

    The same thing is going on with Lehman..
    However in Lehmans case we now know that the so called SPAV program to allow new investments to come in to buy distressed assets of banks was nothing but a scam.

    Once again these so called white knights came in with limited capital and borrowed money from the same banking sector that they were supposed to recapitalize.

    The BSP governor should change his name from Rey ‘magician’ Tetangco to Rey ‘tulisan’Tetangco.

  46. Carl

    Ok here we go again arguing about small things that don’t matter…

    When I say “assets are remitted to the mother company”, I mean cash which is an asset. It’s cash from operating and investment profit.

    AIG’s case at least initially is different from Lehman’s, as AIG’s problem is liquidity, not solvency. Claims from its CDO guarantees cannot be funded fast enough because of the unravelling credit situation.

    “AIG’s still profitable business models will be absorbed by some other company or a new one will be created. ”

    Highly unlikely. The $85bn revolving credit facility will enable the company to ride out its liquidity problem. The AIG brand will still be there.

  47. Carl

    i don’t think the SSS and the GSIS are under the President. they’re (supposed to be) independent. — Anthony Scalia

    They are. SSS contributions are a form of taxation. That’s why the SSS board has to secure President’s approval when contributions and benefits are increased. But unlike any other forms of taxes, SSS contributions do not need to be enacted by Congress.

    The fact that public pension systems are affected by politics is not unique to the Philippines. The US has the same problem when politicians routinely increase benefits without increasing contributions to gain public support especially in times when politicians need it most.

  48. broker

    by the way na aliw ako sa topic eto. Pero para maging malinaw po ang lahat at upang maunawaan ng nakakarami at nang sa gayon ay magkaroon narin kayo ng idea patungkol sa pag-aangkat ng ng libro.
    Una ako po’y magpakilala muna ngunit hndi ko na ilalagay aking pngalan baka mapag-initan pa hmm… ako’y isang licensed customs broker at nag practice as profession at ng trabaho narin sa maraming forwarding / logistics company for more than two years.
    Sa kahit anong importation / pagaangkat mahalaga na kumuha tayo ng isang broker upang mapagaan, mapadali at maiwasto ang assesment para sa pagbabayad ng buwis.

    Ayon sa assesment na iyong ibinigay dito wala akong nakikitang mali sa panig gobyerno dahil nasa batas naman ang pagpapataw ng gugulin at buwis sa bawat at lahat at kalakal ng ating ina-angkat yan ang general rule ng tariff & customs laws.

    Exemption ay mababasa mo TCCP Vol.1 Sec. 105 – conditionally free importation ( sub-section (s). Philosophical, historical, economic, scientific, technical and vocational books specially imported for the bona fide use and by the order of any society or institution, incorporated or established solely for philosophical, educational, scientific, charitable or literary purposes, or for the encouragement of the fine arts, or for the bona fide use of and by the order of any institution of learning in the Philippines: Provided, That the provisions of this subsection shall apply to books not exceeding two copies of any one work when imported by any individual for his own use, and not for barter, sale or hire.

    Bibles, missals, prayerbooks, koran, ahadith and other religious books of similar nature and extracts therefrom, hymnal and hymns for religious uses, specially prepared books, music and other instrumental aids for the deaf, mute or blind, and textbooks prescribed for use in any school in the Philippines: Provided, That complete books published in parts in periodical form shall not be classified herein.

    Ang sa BIR naman ay ibang batas naman para sa doon. kong meron kang itatanong o anu man maaring ma email ka. Sanay makatulong ang aking minsahe sa lahat at ng sa sunod kao ay mag-angkat muli wala ng doubt. mabuhay

  49. supremo

    mlq3,

    What is the best of way of sending you books from your Amazon wishlist?

  50. anthony scalia

    Carl,

    “They are.”

    no they aren’t

    “SSS contributions are a form of taxation.”

    no they aren’t

    “That’s why the SSS board has to secure President’s approval when contributions and benefits are increased.”

    that is because the SSS charter gave the president the power to do that, but that in itself does not make the SSS President the Malacañang resident’s alter ego

    “But unlike any other forms of taxes, SSS contributions do not need to be enacted by Congress.”

    no, Congress can. it has plenary powers in law-making

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