Retailers warn P57B imports entering tax-free under ‘de minimis’ rule

MANILA, Philippines — Retailers are urging the government to revisit a tax rule that exempts low-value imports from duties and taxes, warning that the country’s P10,000 threshold is now among the highest in Asia.

In its latest position paper, the Philippine Retailers Association (PRA) said the country’s de minimis rule — which allows imported goods worth P10,000 or less to enter the country duty- and tax-free — has become outdated amid the e-commerce boom.

READ: Sticky de minimis rule

Citing data from the Philippine Statistics Authority, the PRA noted that the country’s digital economy had reached about P2.05 trillion in 2023, with e-commerce accounting for roughly 14 percent or about P287 billion.

If even 20 percent of these transactions involve purchases from foreign marketplaces, the PRA estimates around P57.4 billion worth of goods could be entering the country annually under the de minimis threshold.

READ: Remove de minimis in e-commerce, retailers push

“While trade openness can bring consumer benefits, it also has the potential to displace local industries that lack the technological, financial, and policy support needed to compete,” the retailer group warned.

“Historically, when imported goods are cheaper and encouraged, their local counterparts suffer,” it added.

Several Asian economies have already tightened their policies to prevent foreign online sellers from gaining tax advantages over domestic retailers, the group said.

Behind Asian peers

“Countries such as China, India, Indonesia, Vietnam, and Thailand have either removed or significantly reduced their de minimis privileges,” the PRA said.

“The direction across the region is consistent: foreign e-commerce sellers should not enjoy tax advantages that domestic businesses do not.”

Vietnam and Thailand have already shifted to policies with no de minimis threshold, while Malaysia and Singapore now collect taxes on low-value imports through dedicated digital tax systems, the PRA said.

Japan and South Korea are also tightening their rules, with the former set to abolish its small-value import exemption entirely by 2026.

READ: BOC urged to scrap de minimis rule

Lower threshold

In contrast, the Philippines continues to allow imports valued at up to P10,000 to enter duty- and tax-free. This is a level that the PRA said exposes the country to “undervaluation, shipment splitting, and unfair competition against local MSMEs.”

To address these concerns, the retailers’ group proposed several policy options, including lowering the current P10,000 threshold instead of abolishing it outright.

The PRA also suggested limiting how often consumers can avail of the de minimis exemption and imposing taxes on imported goods intended for commercial resale rather than personal use.

“The national government must now adopt a policy shift towards 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,” it added. /dda