Duterte orders temporary modification of rates of import duty on petroleum; proceeds to fund COVID-19 response

May 5, 2020

President Rodrigo Duterte has issued an executive order temporarily modifying the rates of import duty on crude petroleum oil and refined petroleum products under Republic Act No. 10863, otherwise known as the Customs Modernization and Tariff Act.

The proceeds would be used to finance the government's measures to address issues related to coronavirus disease pandemic.

Section 1 of EO No. 113, which Duterte signed on May 2, provides for a temporary additional import duty of 10 percent on articles listed in Annex A as classified under Section 1611 of RA 10863.

This is on top of their existing Most Favored Nation and preferential import duties.

"Upon the effectivity of the Order, all articles specifically listed in Annex A hereof,  which are entered and withdrawn from warehouses in the Philippines for consumption, shall be levied the temporary additional import duty pursuant to the foregoing," the EO read.

Among the articles listed on Annex A are petroleum oils and oils obtained from bituminous minerals, crude; petroleum oil and oils obtained from bituminous minerals, other than crude; preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations; waste oils; and petroleum gases and other gaseous hydrocarbons.

The EO also stated the modified rates of import duty under Section 1 shall immediately revert to zero percent as international oil prices increase, based on trigger prices indexed to oil prices in the world market, upon a certification by the Department of Energy that a trigger price has been reached, and the Department of Finance has been notified of the same.

The Bureau of Customs shall then issue the corresponding Customs Memorandum Order to effect thereversion.

The DOE, in coordination with the DOF, Department of Trade and Industry, National Economic and Development Authority and BOC, shall promulgate the guidelines for the effective implementation of the reversion and trigger price.

Duterte directed the Department of Budget and Management to study, propose and/or take such measures as may be appropriate, to ensure that the proceeds derived from the temporary additional import duty shall be used to fund measures that address and respond to the effects of the COVID-19 situation, including social amelioration programs and such other forms of assistance for all those affected.

The Order shall take effect immediately after its publication in the Official Gazette or a newspaper of general circulation, and shall remain enforceable until such time that RA 11469 or the Bayanihan to Heal as One Act ceases to take effect, or upon the reversion of the modified rates of import duty to 0 percent, whichever is earlier. Celerina Monte/DMS