Retailers push for de minimis removal, gradual reforms

MANILA, Philippines — The Philippine Retailers Association (PRA), which is pushing for the removal of the de minimis rule on low value goods, is proposing gradual reforms including lowering the threshold or limiting its usage to ensure the government is prepared for policy changes.

In a May 6 letter to Customs Commissioner Bienvenido Rubio, PRA president Roberto Claudio said the country’s retailers are calling for the removal of the de minimis value threshold currently applied to imported goods entering the Philippines.

To facilitate trade, the de minimis rule exempts imported goods valued at P10,000 or lower from duties and taxes.

“We believe that revisiting this policy is crucial to restoring fair competition, protecting local industries and improving government revenue,” Claudio said.

He said the rule puts local retailers at a disadvantage as it creates a tax imbalance with foreign retailers with increased e-commerce activity leading to more goods entering the country without taxes and duties.

“This exemption not only leads to substantial revenue loss for the government but also compromises the principle of fair taxation,” he said.

He also cited concerns on the entry of counterfeit and low quality goods as imports classified as small-value items under the de minimis rule bypass rigorous checks and only go through random, non-intrusive inspection.

Considering the current importation climate in the Philippines, the PRA is proposing alternative gradual reforms that may be pursued.

Among the proposals is to reduce the de minimis threshold.

The PRA also proposed limiting the de minimis use per consumer per month, as well as applying the tax if the goods are for commercial resale and not personal use.

“The government may provide a certain limitation or threshold as it imposes tax on goods for commercial resale,” Claudio said.

Despite being effective in the past, he said there is a need to revisit the de minimis rule to keep pace with current retail and e-commerce developments.

Both the European Union and United States have made efforts to remove or adjust the application of the de minimis rule.

Claudio said it is crucial to reassess and update trade policies, especially concerning marketplace orders from China noting that “these transactions, though small individually, collectively resemble bulk smuggling, gradually harming local businesses—much like the effect of a thousand small cuts.”

In considering the removal of the de minimis rule, he said the Bureau of Customs must be ready to assess and inspect all shipments entering the country.

This will involve addressing increased storage space and manpower requirements.

“All considered, the National Government must now adopt a policy shift toward removing a rule that not only diminishes its ability to collect taxes, but also poses an unfair taxation regime and allows an influx of goods that is ultimately unsafe and non-beneficial to the buying public,” he said.