ATA Carnet system in the Philippines
By Aziza Hannah Bacay February 23, 2023
As a general rule, importations in the Philippines are subject to duties and taxes. There are instances, however, where the law permits relief from the payment of duties and taxes subject to certain conditions. One of the exceptions involves the “temporary admission” of goods under Section 102 (m) of the Customs Modernization and Tariff Act.
The rules and procedures relevant to the temporary admission of goods are provided for in the World Customs Organization’s (WCO) Customs Convention on Temporary Admission (Istanbul Convention) and also in the WCO’s International Convention on the Simplification and Harmonization of Customs Procedures (Revised Kyoto Convention), to which the Philippines became a contracting party in January 2022 and in June 2010, respectively.
A main point of the Istanbul Convention is the implementation of the ATA Carnet system, which allows the passage (or free movement) of goods temporarily admitted into a customs territory and conditionally free from duties and taxes. The goods are covered by temporary admission papers referred to as the ATA Carnet or “passport for goods.”
In connection with this, the Bureau of Customs (BoC) issued Customs Administrative Order (CAO) 02-2022 dated March 28, 2022, implementing the ATA Carnet system in the Philippines.
Section 11 of CAO 02-2022 enumerates the goods that are eligible for temporary admission in the Philippines: goods for display or use at exhibitions or fairs; professional equipment for the media/press or cinematographic equipment; containers, pallets, packings, samples for commercial operation; goods relevant to manufacturing operations; and goods for educational, scientific, cultural, sports, medical, and humanitarian purposes, among others.
It is important to note that for the enumerated goods to be granted temporary admission in the Philippines, the following conditions must be complied with: the goods must be imported for a specific purpose; the goods must be intended for re-exportation within the minimum period specified under the convention; and the goods shall not undergo any change except normal depreciation due to their use.
As mandated under the Istanbul Convention, the BoC should accept the imported goods with ATA Carnet as the goods declaration, in place of the usual single administrative document submitted by the importers.
For the importation of goods into the Philippines, the issuing and guaranteeing association is authorized to issue temporary admission papers from the country of supply or exportation. Hence, the ATA Carnet application must be filed with the issuing association of the country where the subject goods will come from.
For the exportation of goods from the Philippines, the Philippine Chamber of Commerce and Industry (PCCI) — designated by the BoC as the national issuing and guaranteeing association (NIGA) in the Philippines pursuant to Memo 65-2022 dated May 12, 2022— will issue the ATA Carnet. The PCCI can also co-guarantee the importation of goods for temporary admission to the Philippines.
The PCCI shall have the authority to issue the ATA Carnet, which will be valid for one year. Once the ATA Carnet has been issued, no more extra items can be added to the list of goods enumerated.
In case of non-compliance with the conditions of temporary admission in respect to goods imported to the Philippines using an ATA Carnet, the NIGA will be liable to pay the BoC the amount of import duties and taxes that should have been collected if the goods were not issued the ATA Carnet. The NIGA will be jointly and severally liable with the persons from whom the sums are due and its liability will not be more than 10 percent.
Unless there is fraud involved in the discharge of the papers, the BoC may not claim such liability from the NIGA, particularly if it has already unconditionally discharged the ATA Carnet. There is discharge of the ATA Carnet when the goods listed for temporary exportation to the Philippines have been returned to the Philippines within the period indicated in the ATA Carnet. Furthermore, the BOC may only pursue the claim from the NIGA within one year from the expiration of the ATA Carnet.
In any case, the NIGA, within six months, may claim for a refund of the amount paid upon furnishing proof of re-exportation under conditions provided in the convention or proof of proper discharge of the ATA Carnet. If no such proof is given, the payment will be deemed final after three months from the date of payment.
The ATA Carnet system is helpful to the importers as it allows conditionally duty and tax-free importation of goods covered under the Istanbul Convention. At the same time, it will also help the BoC to rely on the ATA Carnet instead of going through the tedious processing of permits for the temporary admission of goods in the country.
Aziza Hannah A. Bacay is an associate of Mata-Perez, Tamayo & Francisco (MTF Counsel).