PRA: Counterfeits booming in PH due to ‘de minimis’ rule

The Philippine Retailers Association (PRA) is advocating for the removal of the “de minimis” rule exempting imports valued at P10,000 or below from duties and taxes, citing its detrimental impact on local businesses, consumers and the government.

In a position paper sent to the Inquirer on Friday, the business group argued this customs regulation undermined the local retail industry by encouraging an uneven tax landscape particularly in light of foreign e-commerce transactions.

“This disparity not only distorts the competitive playing field but also poses risks such as the proliferation of counterfeit items and substandard products, thus necessitating a reassessment of the de minimis policy,” the PRA said in the paper.

The said regulation is outlined in the Bureau of Customs Administrative Order No. 2-2016, which implements the provisions of Republic Act No. 10863, or the Customs Modernization and Tariff Act.

PRA explained the emergence of foreign merchants conducting business through e-commerce platforms presented a challenge for the local retail industry.

“These merchants often evade or pay lower taxes compared to local retailers, enabling them to offer products at reduced prices,” the PRA said, emphasizing that the huge volume of transactions where there are no invoices, sales tax, or value-added taxes aggravates the issue.

“While we welcome competition and technological advancements, achieving a level playing field in the industry where all market players pay their fair share of taxes is essential,” the group added.

It said the government was also being deprived of substantial revenue sources.

Citing data from the Philippine Statistics Authority, the PRA pointed out e-commerce contributed to 20 percent of the country’s total digital economy in 2022, marking a 26.5-percent annual growth and an annual transaction value of P328.84 billion.

The PRA also said scrapping the “de minimis” policy would serve as a crucial measure to address the influx of counterfeit and substandard products into the country.

“Due to their classification as small-value items, these imported goods often bypass rigorous inspection procedures to ensure compliance with quality standards,” it said. INQ