Philippine retailers renew push to scrap de minimis rule

MANILA, Philippines — Ahead of the peak holiday sales season, a leading group of Philippine retailers is renewing its push for the government to scrap the longstanding de minimis rule, which allows imported goods valued below P10,000 to enter the country free of duties and taxes. Philippine Retailers Association (PRA) chair Roberto Claudio Sr. said the group had already raised its concerns with government agencies, including the Department of Finance (DOF) and Department of Trade and Industry (DTI), as well as Congress, but has yet to secure a firm commitment to review the rule. READ: Retailers warn P57B imports entering tax-free under ‘de minimis’ rule Claudio, founder of sporting goods giant Toby’s Sports, warned that some traditional retailers have closed or lost sales amid what he described as an uneven playing field that favors foreign online merchants over their domestic counterparts. Even the government stands to lose tax revenues under the de minimis rule, he added. In its position paper submitted to the DOF in March, the PRA estimated that of Philippine e-commerce’s P287 billion value in 2023, about P57.4 billion worth of goods could be entering the country annually under the de minimis threshold. “For so long as this situation exists, we are losing business to the online foreign merchants. So in the coming years, the government will suffer reduced taxes and duties revenue from the traditional retail players for so long as the de minimis rule exists,” Claudio said in a message to the Inquirer. PRA president Alice Liu said the impact of the rule could become more pronounced during the holiday season, a crucial sales period for retailers that are already grappling with mounting cost pressures. As such, Liu and Claudio said the PRA now wants the de minimis rule abolished for commercial shipments. This marks a shift from the group’s earlier position that the government should first lower the threshold because removing it completely would be “too aggressive of a step.” “Lowering the threshold amount will not solve the problem of fake and counterfeit products sold in almost all the marketplaces in the Philippines. We are proposing the complete abolition of the de minimis rule,” Claudio said. While Liu acknowledged that removing the exemption may be “unpopular” with Filipino consumers because it could make some imported goods more expensive, she argued that the trade-off would be worth it if it helps protect jobs across the Philippine retail industry. According to the PRA, the retail industry accounts for an estimated 16 percent to 18 percent of gross domestic product, employs 10 million to 12 million Filipinos and pays P780 billion in taxes. READ: Sticky de minimis rule “We have to look beyond the immediate cost of an individual transaction and consider the broader economic impact,” Liu told the Inquirer. “Government sometimes has to make policy decisions that balance immediate consumer benefits against the country’s longer-term economic interests. We believe this is one of those instances.” INQ