EXECUTIVE ORDER NO. 244
EXECUTIVE ORDER NO. 244 - MODIFYING
THE RATES OF DUTY ON MOTOR VEHICLES, AS PROVIDED FOR UNDER THE TARIFF
AND CUSTOMS CODE OF 1978 (PRESIDENTIAL DECREE NO. 1464, AS AMENDED), IN
ORDER TO IMPLEMENT PREFERENTIAL RATES THEREON UNDER THE AUTOMOTIVE
EXPORT PROGRAM
WHEREAS,
the automotive industry is an important contributor to sustainable
national economic development;
WHEREAS, the government issued E.O. 156, series of 2002 establishing a
Comprehensive Industrial Policy and Directions for the Motor Vehicle
Development Program to develop the Philippines as the manufacturing hub
in ASEAN for certain motor vehicles, parts and components;
WHEREAS, an integral component of the Comprehensive Motor Vehicle
Development Program under E.O. 156 is the provision of special export
incentives to the automotive sector;
WHEREAS, temporary export incentives will compensate for certain
structural deficiencies that inhibit the automotive industry’s
attainment of global competitiveness;
WHEREAS, the benefits from the development of the automotive industry’s
global competitiveness will outweigh the tariff revenues to be foregone
from the grant of preferential tariffs on imports;
WHEREAS, Section s 401 and 402 of the Tariff and Customs Code of 1978
(Presidential Decree 1464), as amended, empower the President of the
Republic of the Philippines to increase, reduce, or remove existing
rates of import duty, as well as to modify the tariff
nomenclature;
NOW, THEREFORE, I, GLORIA MACAPAGAL ARROYO, President of the Republic
of the Philippines, by virtue of the powers vested in me by law, do
hereby order:
Section 1. The articles specifically listed in Annex
“A” hereof, as classified under Section 104 of the Tariff and Customs
Code of 1978, as amended, shall be subject to the Most Favored Nation
(MFN) rate of import duty in accordance with the schedule indicated
under the “MFN” column;
Sec. 2. The articles specifically listed in Annex
“A” hereof, as classified under Section 104 of the Tariff and Customs
Code of 1978, as amended, shall be subject to the ASEAN CEPT rate of
import duty in accordance with the schedule indicated under the “CEPT”
column. The ASEAN CEPT rate so indicated shall be accorded to imports
coming from ASEAN Member States applying CEPT concession to the same
product pursuant to Article 4 of the CEPT Agreement and its
interpretative Notes;
Sec. 3. Upon the effectivity of this Executive
Order, the articles specifically listed in the aforesaid Annex “A”,
which are entered and withdrawn from warehouses in the Philippines for
consumption, shall be levied the MFN rate of duty herein prescribed;
Sec. 4. Upon the effectivity of this Executive
Order, the articles specifically listed in the aforesaid Annex “A”,
which are entered and withdrawn from warehouses in the Philippines for
consumption, shall be levied the CEPT rate herein prescribed, subject
to qualification under the Rules of Origin as provided for in the
Agreement on the CEPT scheme for the AFTA signed on 28 January
1992;
Sec. 5. All Presidential issuances, administrative
rules and regulations, or parts thereof, which are inconsistent with
this Executive Order are hereby revoked or modified accordingly;
Sec. 6. The Department of Trade and Industry, in
consultation with the National Economic Development Authority and the
Department of Finance, shall issue appropriate guidelines to implement
the preferential tariff privilege herein granted in accordance with the
conditions of the Program shown in Annex “B”;
Sec. 7. This Executive Order shall be effective
for a period of five (5) years, from 1 January 2004 until 31 December
2008, following its complete publication in two (2) newspapers of
general circulation in the Philippines.
Done in the City of Manila,
Philippines, this 3rd day of October, in the year of Our Lord, Two
Thousand and Three.
Annex A
Completely Built-Up (CBU) Motor Vehicles Eligible for
Special Export Incentives Under the Automotive Export Program
Pursuant to Executive Order No. 156
RATE OF DUTY (%)
HDG. H.S.
DESCRIPTION 01 January 2004 to
CODE 31 December 2008
MFN CEPT
87.02 Motor vehicles for the
transport of ten or more persons,
including the driver.
8702.10 - With compression-ignition internal
combustion piston engine
(diesel or semi-diesel):
8702.10
20 - - - Buses with g.v.w. of 6 tonnes to 18
tonnes 10 1
8702.10 90 - - -
Other 10 1
8702.90 - Other:
8702.90 90 - - -
Other 10 1
87.03 Motor cars and other motor
vehicles principally designed for
the transport of persons (other
than those of heading 87.02 ),
including station wagons and
racing cars.
- Other vehicles, with
spark-ignition internal combustion
reciprocating piston engine:
8703.21 00 - - Of a cylinder
capacity not exceeding 1,000 cc 10 1
8703.22 00 - - Of a cylinder
capacity exceeding 1,000 cc but not exceeding
1,500 cc
10 1
8703.23 00 - - Of a cylinder
capacity exceeding 1,500 cc but not exceeding
3,000 cc
10 1
8703.24 00 - - Of a cylinder
capacity exceeding 3,000 cc 10 1
- Other vehicles, with
compression-ignition internal combustion
piston engine (diesel or
semi-diesel):
8703.31 00 - - Of a cylinder
capacity not exceeding 1,500 cc 10 1
8703.32 00 - - Of a cylinder
capacity exceeding 1,500 cc but not exceeding
2,500 cc
10 1
8703.33 00 - - Of a cylinder
capacity exceeding 2,500 cc 10 1
8703.90 - Other:
8703.90 90 - - -
Other 10 1
87.04 - Motor vehicles for the
transport of goods.
- Other, with
compression-ignition internal combustion
piston engine (diesel or
semi-diesel):
8704.21 - - g.v.w. not exceeding 5
tonnes:
8704.21 90 - - -
Other 10 1
8704.22 - - g.v.w. exceeding 5
tonnes but not exceeding 20 tonnes:
8704.22 10 - - - Up to 6 tonnes:
8704.22 19 - - - -
Other 10 1
8704.22 90 - - - Other:
8704.22 99 - - - -
Other 10 1
8704.23 - - g.v.w. exceeding 20
tonnes:
8704.23 90 - - -
Other 10 1
- Other, with spark-ignition
internal combustion piston engine:
8704.31 - - g.v.w. not exceeding 5
tonnes:
8704.31 90 - - -
Other 10 1
8704.32 - - g.v.w exceeding 5
tonnes:
8704.32 10 - - - Up to 6 tonnes:
8704.32 19 - - - -
Other 10 1
8704.32 90 - - - Other:
8704.32 99 - - - -
Other 10 1
8704.90 - Other:
8704.90 90 - -
-Other 10 1
“Annex B”
CONDITIONS FOR THE AUTOMOTIVE EXPORT PROGRAM
General
1. The Program is open to all participants of the
Motor Vehicle Development Program.
2. The Program calls for the availment of
preferential tariff rates by participants in their importation of CBUs
on the basis of equivalent foreign exchange earnings from their exports
of CBUs.
3. The imported CBUs must not be locally assembled
(model importations are less than 1,000 units per year in Year 2003)
and the participating company owns the brands.
4. The availment of preferential tariff rates is
contingent upon export performance on a yearly basis, i.e., minimum
10,000 units at minimum FOB value of US$5,000 per unit.
5. A qualified participant will be allowed import
CBUs under the Program a maximum of 1,000 units per model annually. The
net foreign exchange earning (NFEE) chargeable against imports (CIF
basis) on a per unit basis shall continue until the credit is exhausted
after which the participant to the Program shall pay the normal tariff
rates on their import.
6. The NFEE per unit is phased down over a period of
5 years as shown below.
Qualified Export Products
1. Direct CBU exports at minimum total yearly volume
of 10,000 units at minimum FOB value of US$5,000 per unit.
2. The Department of Trade and Industry (DTI)/Board
of Investments (BOI) during the effectivity of the Program may modify
the minimum volume and FOB value per unit as the need arises upon
consultation with industry and concerned government agencies.
Net Foreign Exchange Earnings (NFEE) Schedule
Years 1-2 Year 3
Year 4 Year 5 Year 6
(2004-05) (2006)
(2007) (2008) (2009)
CBU Export/Unit US$400
US$300 US$200
US$100 US$0
Mechanism
1. The program will be made available to qualified
MVDP participants on an annualized basis for a period of 5 years. It
starts in January 2004 and ends in December 2008.
2. Qualified MVDP may register with the Program any
time within the Program period and be entitled to equivalent NFEE of
US$400 for their first two years, after which the succeeding NFEE
schedule as shown above will be followed.
Example:
Date of AEP NFEE Schedule (US$ x
100)
Firm Registration
2004 2005 2006
2007 2008
Company A 1Q 2004
400 400 300
200 100
Company B 2Q 2005
400 400 200 100
Company C 3Q 2006
400 400 100
3. An equivalent NFEE (shown in the schedule above)
will be credited to the Program participant for every unit of CBU
exported at a minimum FOB Value of US$5,000. For CBU export with FOB
value of less than US$5,000, no NFEE will be credited.
4. Importation at preferential tariff rate under
Program will require the following corresponding NFEE.
NFEE Requirement
For HS Heading with regular MFN rate Equivalent to
20% of the CIF
of 30% value of importation
For HS Heading with regular MFN rate Equivalent to
10% of the CIF
of 20% value of importation
For HS Heading with regular MFN rate Equivalent to 4%
of the CIF
of 5% value of importation
5. Import Authority will be issued to Program
participant by BOI. Once the NFEE is exhausted, no import Authority
will be issued to the participant, hence, should the participant
decides to import the same, the corresponding regular tariff rate is
applied to such importation.
Other Conditions
1. The NFEE per CBU unit exported is independent of
the FOB value if higher that the minimum FOB value of US$5,000 per unit.
2. No NFEE is given to unit exported at less than FOB
value of US$5,000.
3. The NFEE shall only be used against import duties.
4. Failure to meet the minimum yearly export volumes
and value per CBU unit on any given year shall subject the participant
to payment of normal MFN and/or CEPT tariff rates including adjustments
in VAT plus penalties under existing Customs and Revenue rules and
regulations from time of entry into Customs territories for that
particular year.
5. Unutilized NFEE may be carried forward until the
end of the Program. At the end of the Program (end of year 5),
participants shall be given 6 months to use the unutilized net foreign
exchange earning, after which the NFEE would be invalidated (no
monetary value). No unutilized NFEE can be converted to cash or to be
used for other payments to government.
6. Once the NFEE is exhausted at any time within the
year, the participant shall pay the normal MFN and/or CEPT tariff rates.
7. The NFEE of the participant may only be
transferred only to an affiliate/subsidiary company duly designated by
the participating company to undertake the importation. Provided the
affiliate/subsidiary company must be accredited by the BOI and is
majority owned (at least 50%+ 1 share) by the Program participant.
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