While this was a boon for book importers (i.e. bookstores), that doesn't mean import books here didn't get taxed. Individuals whose books went through the post office still got taxed.
As I mentioned in an old essay, I'm not against book taxes per se--I just want transparency and consistency. If we're going to break the Florence Agreement, that's fine. Let's not just pretend to uphold it while practicing the opposite. Various countries like Australia do have taxes on import books and it's been a continuous debate whether this is positive or not (I'm leaning towards the latter but that's besides the point).
Anyway, here's the latest announcement from the Bureau of Customs. Italicized text is my interpretation of their statements (the editorial comes after the quote):
SUBJECT : BoC Rationalizes Tax-Free Importation of Books
1. The Bureau of Customs has issued new guidelines for duty and tax-free entry of imported books into the country. (We have new rules.)
2. Customs Commissioner Angelito A. Alvarez issued Customs Memorandum Order No. 25-2011 for uniformity in the treatment of book importations. (Credit goes to Customs Commissioner Angelito A. Alvarez.)
3. Alvarez said the order covered the following importations: (There are three exceptions to taxes on import books and our latest policy acknowledges them.)
- Educational, scientific and cultural materials under the Florence Agreement;
- Books or raw materials to be used for book under RA 8047 or the “Book Publishing Industry Development Act:” and,
- Importations of books by non-stock, non-profit educational institutions under Section 4 (3), Article XIV of the 1987 Constitution.
4. Under the new guidelines, importers must apply with the Revenue Office, Department of Finance for duty-free and/or tax-free importation of books/materials stating the legal basis for the request for exemption and appending the pertinent certifications issued by the concerned agency or office. (If you want a tax exemption, you first need to talk to the Revenue Office of the Department of Finance.)Now, what I like about this announcement is that the Bureau of Customs is transparent. They have a policy and it is going to be universally applied. (It's even announced ahead of time.) Now my praise ends there.
5. Applicants for importations under the Florence Agreement must first secure a certification from the UNESCO Office in the Philippines attesting that the importations of educational, scientific and cultural materials are among those included in Annexes A to E of the Florence Agreement. (If you're filing for an exemption due to the Florence Agreement, get your papers from UNESCO.)
6. The Florence Agreement, signed in 1952 in Florence, Italy by 17 countries, waved tariffs on books and other printed materials in order to facilitate the free flow of educational, scientific and cultural materials.The Philippines became a signatory to the Florence Agreement on August 7, 1979. (We signed the Florence Agreement.)
7. The certification to be issued by UNESCO must be addressed to the DOF and must be attached as one of the supporting documents to the application for duty tax and exemption submitted by the importer/applicant with the Revenue Office of the DOF. (When you file for the exemption, make sure you bring your UNESCO papers with you.)
8. For importations of books or raw materials to be used in book publishing, the importer/applicant must attach to the application for duty tax exemption his registration with the National Book Development Board (NBDB) as a book publisher. (For those seeking an exemption due to the Book Publishing Industry Development Act, get your papers from the NBDB.)
9. Also required is a certificate to be issued by the concerned local domestic producer/supplier of non-availability of the raw materials to be imported. (We want proof that the raw materials is actually out of stock, hence justification for the import.)
10. Applications for the duty-free importation of books by non-stock, non-profit educational institutions must be accompanied by a certification from the Department of Education (DepEd) or the Commission on Higher Education (CHED) attesting that the importations are economic, technical, vocational, scientific, philosophical or historical books. (If you're filing for an exemption due to Section 4 (3), Article XIV of the 1987 Constitution, get your papers from the DepEd or CHED.)
11. Importations of books and any newspaper, magazine, review or bulletin which appear at regular intervals with fixed prices for subscription and sale are exempt from the value-added tax (VAT). Importers however are still required to secure an exemption from the DOF for purposes of VAT-exemption. (Import books and magazines that come out regularly are exempted from VAT but you need your papers from the DOF.)
12. Importations of books/materials otherwise not falling under any of the above-cited instances and without the DOF endorsement shall be levied the corresponding rate of duty provided under Executive Order No. 855 series of 2010. (Everything else will be taxed.)
13. Alvarez said examples of books/materials subject to duties and taxes of at least 5% included dictionaries and encyclopedias, maps and hydrographic or similar charts as well as plans and drawings for architectural, engineering, industrial, commercial, topographical or similar purposes. (These are examples of books we will tax.)
The first problem are the fees. On paper, a 5% tax on import books seems reasonable. However, it's not because, well, what the Bureau of Customs is actually charging you isn't just import duties. For example, here's what I was charged for a book package earlier this year:
There's Import Duties; BIR Taxes; VAT; Customs Duty; Import Processing Fees. We're not talking about just one fee but several.
The second is the process of filing for an exemption. It's time (and money) lost to travel and red tape. It has its own set of fees (arguably cheaper than what the Bureau of Customs is charging, but it's hardly free).
Now the first two problems aren't that significant if you're an institution (although it's still cutting into your bottomline). If you're an individual, however, filing for those exemptions is going to be tricky due to the required paperwork.
There's also lots of room for debate on the significance of this change. What kind of culture are we nurturing when we tax books? (Again, some countries have made it work and some have honestly suffered for it.) What are the unintended consequences for such actions? (Do we encourage the black market? The secondhand book market? The eBook market? The wealthy over the poor?) Is this optimal usage of taxation? (Why not tax other commodities instead like cigarettes or alcohol?)
I'll admit, the process in which the Bureau of Custom's latest guideline is worded is clever. You can't really blame them for breaking the Florence Agreement for example: that's determined by UNESCO. (Same goes for the two other exemptions.) It just adds red tape to the entire process, discouraging automatic exemptions. I also wonder how this new practice will affect local businesses (bookstores are just one industry which will be affected).