Article 105p. 105

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

If the importer does not request that the order of

Sections 704 and 705 of this Act be reversed, the normal

order of the sequence is to be followed. If the importer so

requests but it is impossible to determine the customs

value under Section 705 of this Act, the customs value

shall be determined under Section 704.

When the customs value cannot be determined

under Sections 701 through 705, it may be determined

under Section 706 of this Act.

SECTION 701. Transaction Value System — Method

One. — The transaction value shall be the price actually

paid or payable for the goods when sold for export to the

Philippines adjusted in accordance with the provisions of

this section: Provided , That:

(a) There are no restrictions as to the disposition or

use of the goods by the buyer other than restrictions

which:

(i) Are imposed or required by law or by Philippine

authorities;

(ii) Limit the geographical area in which the goods

may be resold; or

(iii) Do not substantially affect the value of the goods;

(b) The sale or price is not subject to some condition

or consideration for which a value cannot be determined

with respect to the goods being valued; and

(c) The buyer and the seller are not related, or where

the buyer and the seller are related, that the transaction

value is acceptable for customs purposes under the

provisions hereof.

For purposes of this Act, persons shall be deemed

related only if:

(i) They are officers or directors of one another's

business;

(ii) They are legally recognized partners in business;

(iii) There exists an employer-employee relationship

between them;

(iv) Any person directly or indirectly owns, controls or

holds five percent (5%) or more of the outstanding voting

stocks or shares of both seller and buyer;

(v) One of them directly or indirectly controls the

other;

(vi) Both of them are directly or indirectly controlled

by a third person;

(vii) Together they directly or indirectly control a third

person; or

(viii) They are members of the same family, including

those related by affinity or consanguinity up to the fourth

civil degree.

Persons who are associated in business with one

another in that one is the sole agent, sole distributor or

sole concessionaire, however described, of the other shall

be deemed to be related for the purposes of this Act if

they fall within any of the eight (8) cases cited in the

preceding paragraph.

In a sale between related persons, the transaction

value shall be accepted as basis for customs valuation

whenever the importer demonstrates that such value

closely approximates one of the following occurring at or

about the same time:

(a) The transaction value in sales to unrelated buyers

of identical or similar goods for export to the same

country of importation;

(b) The customs value of identical or similar goods as

determined under the provisions of Section 704 of this

Act; or

(c) The customs value of identical or similar goods are

determined under the provisions of Section 705 of this

Act.

In determining the transaction value, the following

shall be added to the price actually paid or payable for the

imported goods:

(1) To the extent that they are incurred by the buyer

but are not included in the price actually paid or payable

for the imported goods:

(a) Commissions and brokerage fees except buying

commissions;

(b) Cost of containers;

(c) Cost of packing, whether for labor or materials;

(d) Value, apportioned as appropriate, of the following

goods and services: materials, components, parts and

similar items incorporated in the imported goods; tools,

dies, moulds and similar items used in the production of

imported goods; materials consumed in the production

of the imported goods; and engineering, development,

artwork, design work and plans and sketches undertaken

elsewhere than in the Philippines and necessary for the

production of imported goods, where such goods and

services are supplied directly or indirectly by the buyer

free of charge or at a reduced cost for use in connection

with the production and sale for export of the imported

goods; and

(e) Amount of royalties and license fees related to the

goods being valued that the buyer must pay either

directly or indirectly, as a condition of sale of the goods to

the buyer.

(2)

Value

of

any

part

of

the

proceeds

of

any

subsequent resale, disposal or use of the imported goods

that accrues directly or indirectly to the seller;

(3) Cost of transport of the imported goods from the

port of exportation to the port of entry in the Philippines;

(4)

Loading,

unloading

and

handling

charges

associated with the transport of the imported goods from

the country of exportation to the port of entry in the

Philippines; and

(5) Cost of insurance.

All additions to the price actually paid or payable shall

be made only on the basis of objective and quantifiable

data.

SECTION 702. Transaction Value of Identical Goods

— Method Two. — Where the dutiable value cannot be

determined under method one, the dutiable value shall

be the transaction value of identical goods sold for export

to the Philippines and exported at or about the same

time as the goods being valued. For purposes of this

section, "Identical goods" refer to goods which are the

same in all respects, including physical characteristics,

quality and reputation. Minor differences in appearances

shall not preclude goods otherwise conforming to the

definition from being regarded as identical.

If, in applying this section, more than one transaction

value of identical goods are found, the lowest value shall

be used to determine the customs value.

SECTION 703. Transaction Value of Similar Goods —

Method Three. — Where the dutiable value cannot be

determined under the preceding method, the dutiable

value shall be the transaction value of similar goods sold

for export to the Philippines and exported at or about the

same time as the goods being valued. For purposes of

this

section,

"Similar

goods"

refer

to

goods

which,

although not alike in all respects, have like characteristics

and similar component materials which enable them to

perform the same functions and to be commercially

interchangeable. The quality of the goods, its reputation

and the existence of a trademark shall be among the

factors to be considered in determining whether goods

are similar.

If, in applying this section, more than one transaction

value of identical goods are found, the lowest such value

shall be used to determine the customs value.

SECTION 704. Deductive Value — Method Four. —

Where the dutiable value cannot be determined under

© Compiled by RGL

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