Import Business in the Philippines for Foreign Entrepreneurs: How to Start

Starting an import business in the Philippines as a foreign entrepreneur means two things: you must first set up a legal vehicle that Philippine law allows you to own, and then you must clear every shipment through the Bureau of Customs. Under the Customs Modernization and Tariff Act (CMTA), most goods may be freely imported without special permits, but regulated and prohibited goods need prior clearances. Your company must be registered with the Securities and Exchange Commission, and every import must be covered by a goods declaration lodged with the Bureau.

Step 1: Choose and register your business vehicle

A foreign entrepreneur cannot import in a personal capacity for commercial resale. You need a Philippine-registered entity. Under the Revised Corporation Code of the Philippines, a corporation is an artificial being created by operation of law, and it may be organized by not more than fifteen (15) incorporators, who must be of legal age. Stock corporations are not required to have a minimum capital stock, except as otherwise provided by special law — but foreign ownership limits in retail and importation are governed by separate investment laws, so confirm your activity is open to foreign equity before filing.

Once the Securities and Exchange Commission issues the certificate of incorporation, the corporation commences its corporate existence and juridical personality. The corporation must then elect a president (who must be a director), a treasurer (who must be a resident), and a secretary (who must be a citizen and resident of the Philippines). A corporation that does not formally organize and commence business within five (5) years from incorporation has its certificate deemed revoked, so move promptly.

Step 2: Understand how importation is defined and when duties attach

Under the CMTA, importation is the act of bringing goods from a foreign territory into Philippine territory, whether for consumption, warehousing, or admission. Importation begins when the carrying vessel or aircraft enters Philippine territory with the intention to unload therein, and it is deemed terminated only when duties, taxes, and other charges are paid or secured, or, if the goods are duty-free, when they legally leave the Bureau's jurisdiction.

All goods imported into the Philippines are subject to duty upon importation, except as otherwise provided by law. Unpaid duties and taxes incur legal interest of twenty percent (20%) per annum computed from the date of final assessment. The applicable duty rate is the rate in effect at the date of importation or upon withdrawal from the warehouse for consumption.

Step 3: Know which goods are free, regulated, or prohibited

This is where many first-time importers get caught. The CMTA classifies importations into three buckets:

• Free importation. Unless otherwise provided by law or regulation, all goods may be freely imported into the Philippines without need for import permits, clearances, or licenses.
• Regulated importation. Goods subject to regulation may be imported only after securing the necessary goods declaration, clearances, licenses, and other requirements prior to importation. In some cases allowed by governing laws or regulations, requirements may be submitted after arrival but before release from customs custody.
• Prohibited importation. The CMTA lists goods that cannot be imported at all, including infringing goods under the Intellectual Property Code and adulterated or misbranded food or drugs. It also lists restricted goods — such as explosives, firearms, gambling devices, and narcotics — which are prohibited except when authorized by law or regulation.

Check your product against these lists before you place your first order.

Step 4: Lodge the goods declaration and pay duties

Imported goods are deemed "entered" for consumption when the goods declaration is electronically lodged, together with any required supporting documents, with the pertinent customs office. The declarant may be the importer (the holder of the bill of lading), a customs broker acting under the importer's authority, or a person duly empowered to act as agent or attorney-in-fact. If the consignee is a juridical person, it may authorize a responsible officer to sign the goods declaration on its behalf.

The declarant is responsible for the accuracy of the goods declaration and for payment of all duties, taxes, and other charges. A licensed customs broker who assists is likewise responsible for accuracy, but not for payment. The Bureau is directed to use information and communications technology toward a paperless customs environment, and electronic documents, permits, and licenses have the same legal effect as paper documents.

If you disagree with a Bureau decision, the CMTA gives any party adversely affected by a decision or omission of the Bureau pertaining to an importation, exportation, or other legal claim the right to appeal within fifteen (15) days from receipt of the questioned decision or order.

Frequently asked questions

Can a foreigner own an import business in the Philippines? A foreigner may organize a corporation under the Revised Corporation Code, but foreign ownership limits for specific business activities are set by separate investment laws. Confirm your intended activity is open to foreign equity before incorporating.

Do I need a customs broker to import? A customs broker may act as declarant under the authority of the importer. The declarant — whether the importer or a broker — signs the goods declaration, and the importer remains responsible for paying duties and taxes.

What happens if I do not pay customs duties? Unpaid duties, taxes, and other charges incur legal interest of twenty percent (20%) per annum computed from the date of final assessment, as provided in the CMTA.

Practical takeaways

• Register a Philippine corporation with the Securities and Exchange Commission before importing commercially; a corporation must elect a resident treasurer and a Philippine citizen-resident secretary.
• Importation is not complete until duties and taxes are paid or secured, or the goods legally leave the Bureau's jurisdiction.
• Most goods are freely importable without permits, but regulated goods need prior clearances and prohibited goods cannot be imported at all.
• Lodge the goods declaration electronically; the declarant is responsible for its accuracy and for paying duties.
• File any appeal against a Bureau decision within fifteen (15) days from receipt.

Primary sources

The rules discussed above are drawn from the following primary sources, as published in the Official Gazette and the national statute book.

• REPUBLIC ACT NO. 10863 - AN ACT MODERNIZING THE CUSTOMS AND TARIFF ADMINISTRATION

• REPUBLIC ACT NO. 11232 - AN ACT PROVIDING FOR THE REVISED CORPORATION CODE OF THE PHILIPPINES

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.