Philippines finance department reviews de minimis tax rule for low-value imports

Traders Union
All News
Regulators
De minimis tax review Philippines

Highlights

The Philippines Department of Finance requested IMF assistance to estimate forgone revenue from the P10,000 de minimis customs exemption and potential collections if removed.
Finance Undersecretary Adriano cited inaccurate shipment value declarations and concerns about underassessment, explaining that eliminating the exemption requires a legislative amendment and may not be timely.
The review targets the VAT and tariff disparity disadvantaging local sellers versus foreign e-commerce suppliers, and includes possible new excise taxes on online gambling.

Revenue estimates and legal hurdles

As reported by BusinessWorld Online, the Department of Finance has asked the International Monetary Fund to help estimate how much revenue the government may be foregoing if the tax exemption on low-value imports remains in place, or how much it could collect if the rule is removed.

Finance Undersecretary Karlo Fermin S. Adriano said the department is still studying possible changes to the de minimis exemption because inaccurate shipment value declarations make reliable estimates difficult. He said both tariffs and value-added tax are based on declared value, which complicates efforts to calculate potential collections.

The de minimis threshold has been in place since 2016 under the Customs Modernization and Tariff Act. Adriano said goods valued above the P10,000 ceiling may also be declared as de minimis, adding to concerns over underassessment and lost revenue.

He also said removing the exemption would require an amendment to the law, leaving the final decision to Congress. Adriano added that while the review remains active, pursuing the change may not be timely under current conditions and could be taken up by the present or next administration if an opportunity arises.

Pressure on local sellers and broader tax review

The review is also aimed at addressing what the Finance department sees as an uneven playing field between domestic producers and foreign suppliers, especially in e-commerce. Adriano said locally purchased goods may still be subject to VAT even when priced below P10,000, while imported products covered by the exemption can enter without VAT or tariffs.

That difference gives overseas sellers a pricing advantage over local businesses, adding pressure on Philippine merchants competing in digital marketplaces. The issue links tax policy to broader concerns about retail competition, compliance and the treatment of domestic industry.

Separately, Adriano said the Department of Finance is also studying a possible excise tax on online gambling, indicating the agency is examining other potential revenue measures alongside the de minimis review.

Our earlier article on Malaysia’s enforcement review of foreign product entry highlighted how authorities are stepping up inter-ministerial coordination to address competitive pressure on local SMEs as digital trade grows. It also covered planned legal and policy measures—such as work on an e-Commerce Bill and standardised local-product promotion—aimed at strengthening enforcement and creating a fairer marketplace for domestic sellers.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.