2 BOC Administrative Guidelines and Local Taxation Study Guide

Guidelines on the Imposition and Collection of Local Taxes, Fees, and Charges on Professionals

  • Legal Basis for Professional Tax Imposition:
    • Section 139 of the Local Government Code (LGC): Authorizes provinces to impose and collect a professional tax on every person engaged in the practice of his or her profession.
    • Section 151 of the LGC: Extends this authority to Cities.
    • Section 236(b): Authorizes the lone municipality within the Metropolitan Manila Area (MMA) to impose and collect this tax.
  • Taxability of Professionals:
    • Who is Liable: Any individual legally authorized to practice his or her profession is required to pay local taxes annually.
    • Who May Impose: Provinces, cities, and the lone municipality within the MMA.
    • Amount of Tax: The amount shall not exceed Php300.00Php300.00, or the rate provided under a duly enacted local ordinance. This rate is subject to adjustment not exceeding 10%10\% every 55 years.
    • Location of Payment: Payment must be made to the province, city, or lone municipality within the MMA where the individual practices the profession or where the principal office is maintained.
    • Reciprocity and Practice Rights: A person who has paid the corresponding professional tax is entitled to practice their profession in any part of the Philippines without being subjected to any other national or local tax, license, or fee for that practice.
  • Conditions for Multiple Practice of Profession:
    • A line of profession does not become exempt even if conducted alongside another profession for which tax has been paid.
    • Example: A lawyer who is also a Certified Public Accountant (CPA) must pay the professional tax imposed for each profession (Law and Accountancy) if they intend to practice both.
  • Section 6: Exemption from Business Permit Fees:
    • Purpose of Permits: Business permits are primarily for regulating business or trade conduct.
    • Regulatory Limits: A Local Government Unit (LGU) cannot use a business permit to regulate a profession, as this falls under the exclusive domain of specific government agencies empowered by law to supervise professions.
    • Exemption Rule: Professionals who have paid their professional tax are exempt from business permit fees for operating their clinic or office, unless they fall under Section 7.
    • Administrative Requirement: Professionals are still required to secure a business permit at no cost during the registration or renewal of their office or clinic, subject to local ordinances.
  • Section 7: Local Business Tax (LBT) Applicability:
    • Professionals are liable for LBT (pursuant to Sections 143 and 146 of the LGC) if they engage in:
      • Selling, trading, or distributing articles of commerce.
      • Functions of trade.
      • Any business activity not constituting the practice of the profession.
    • Professionals in these categories must also pay business permit fees and maintain separate records for these transactions.
  • Section 8: Service Fees and Charges:
    • LGUs may collect applicable fees such as garbage fees, sanitary inspection fees, and occupancy permit fees.
    • The amount must be reasonably commensurate to the cost of regulation or service provision.
    • Constraint: No service charge shall be based on capital investments or gross sales/receipts.

Comparison of Taxing Power: LGUs, BOC, and BIR

  • Local Government Units (LGUs):
    • Legal Basis: 1987 Constitution, RA 7160 (Local Government Code).
    • Nature of Power: Inherent power granted via Constitution and statute.
    • Scope of Taxation: Local taxes, fees, and charges within their specific territorial jurisdiction.
    • Types of Taxes/Duties: Real Property Tax (RPT), Business Tax, Franchise Tax, Community Tax, and various Local Fees.
  • Bureau of Customs (BOC):
    • Legal Basis: Customs Modernization and Tariff Act (CMTA), and other laws related to importation/exportation.
    • Nature of Power: Delegated by Congress.
    • Scope of Taxation: Importation and exportation, border taxation, and post-entry control.
    • Types of Taxes/Duties: Customs Duties, Special Duties, etc.
  • Bureau of Internal Revenue (BIR):
    • Legal Basis: National Internal Revenue Code (NIRC), as amended.
    • Nature of Power: Delegated by Congress.
    • Scope of Taxation: Internal revenue taxation nationwide.
    • Types of Taxes/Duties: Income Tax, VAT, Excise Tax, Documentary Stamp Tax (DST), Withholding Tax, Estate Tax, etc.

The Bureau of Customs (BOC): Identity and core Functions

  • Mission: To enhance trade facilitation, strengthen border control, and improve the collection of lawful revenues.
  • Vision: A modernized and credible Customs administration that upholds good governance and is among the world’s best.
  • Core Values: Professionalism, Excellence, Integrity, Accountability.
  • Statutory Functions (Sec. 202, CMTA):
    • Assessment and Collection (a): Assessing and collecting customs revenues from imported goods, dues, fees, charges, fines, and penalties under CMTA.
    • Simplification and Harmonization (b): Simplifying and harmonizing procedures to facilitate international movement of goods.
    • Border Control (c): Preventing the entry of smuggled goods.
    • Prevention of Fraud (d): Prevention and suppression of smuggling and other customs fraud.
    • Trade Security (e): Facilitating and securing international trade through an informed compliance program.
    • Vessel/Aircraft Supervision (f & g): Supervision and control over the entrance and clearance of vessels/aircraft in foreign commerce and overseeing foreign mails to prevent contraband entry.
    • Cargo Supervision (h): Controlling all import and export cargoes, whether landed or stored, to protect revenue.
    • Compensation Study (i): Recommending a competitive compensation system to the President.
    • Forfeiture Jurisdiction (j): The Bureau possesses exclusive original jurisdiction over forfeiture cases.
    • Enforcement (k): Enforcement of the CMTA and all other laws/rules related to customs administration.

BOC Organizational Structure and Primary Groups

  • Internal Administration Group (IAG):
    • Includes the Financial Management Office (Budget and Accounting Divisions).
    • Includes the External Affairs Office, Learning and Dev’t Management Office, and the Administration Office.
    • Note on PIAD Re-alignment (CMO 5-2025): The Public Information and Assistance Division (PIAD) and the BOG Customer Assistance and Response Services (BOGCARES) were realigned from IAG to the Office of the Commissioner (OCOM) to ensure direct control and timely information dissemination.
  • Assessment and Operations Coordinating Group (AOCG):
    • Key Divisions: Import and Assessment Service (Valuation and Classification; Assessment Coordination; Warehouse Coordination) and Port Operations Service (Auction and Cargo Disposal; Export Coordination; Port Operations Coordination).
    • General Functions: Publish commodity values (bases for duties); monitor assessment and warehousing rules; monitor auction/disposal activities.
  • Revenue Collection Monitoring Group (RCMG):
    • Key Divisions: Legal Service (Ruling and Research; Prosecution and Litigation; Appellate; Tax Exempt), Financial Service (Revenue Accounting; Statistical Analysis), and Collection Service.
    • General Functions: Accounting for revenue collections; administering legal requirements/litigation; providing collection statistics/analysis; auditing liquidated entries and bonds.
  • Intelligence Group (IG):
    • Key Units: Customs Intelligence and Investigation Service (CIIS), Accounts Management Office, and the Risk Management Office.
    • Cyber Intelligence Section (CIS) - CMO 1-2025: Formulates policies and conducts cyber intelligence operations against cyber-enabled smuggling.
  • Enforcement Group (EG):
    • Key Units: Enforcement and Security Service (ESS), which includes the Customs Police, Radio Communication, Water Patrol, Environmental Protection and Compliance (CMO 38-2019), and the X-Ray Inspection Project (CMO 4-2025).
  • Intelligence and Enforcement Group Functions (E.O. 292): Gathering intelligence on economic activities; conducting internal inquiries for prosecution; exercising police authority (seizures/forfeitures); performing delegated tasks.
  • Management Information System and Technology Group (MISTG):
    • Mandated to upgrade IT systems to provide a functional structure for modern trade facilitation and global competitiveness (E.O. 463).
  • Post Clearance Audit Group (PCAG):
    • Mandate: Conduct audit examinations within 33 years from the date of final payment or clearance to verify the correctness of goods declarations and determine importer liability.

Leadership and Powers of the Commissioner

  • Chief Official (Sec. 200, CMTA): The Bureau is headed by one Commissioner and assisted by 44 to 66 Deputy Commissioners.
  • Appointment: Both the Commissioner and Deputy Commissioners are appointed by the President. As per Sarmiento v. Mison, the Commissioner's appointment does not require confirmation by the Commission on Appointments.
  • Jurisdiction (Sec. 201, CMTA):
    • Exclusive and original jurisdiction to interpret the CMTA, subject to review by the Secretary of Finance.
    • Review authority over any action or decision of customs officers.
    • Review of disputed assessments, subject to Secretary of Finance review and the appellate jurisdiction of the Court of Tax Appeals (CTA).
  • Delegation of Powers: The Commissioner may delegate powers to officers with a rank of Division Chief or higher.
    • Non-delegable Powers: Promulgation of rules/regulations; issuance, revocation, or modification of rulings; compromise or abatement of customs obligations.
  • Assignment Limitation: District Collectors and assessment-function officers cannot remain in the same area of assignment for more than 33 years.
  • Commissioner’s Strategic Advisory Office (CSAO) - CMO 1-2026:
    • A strategic arm and decision-support unit under OCOM.
    • Collects and integrates data for threat/trend assessment.
    • Analytical Role: It analyzes data but does not perform field enforcement or intelligence gathering.

Rules, Regulations, and Reporting

  • Rule-making (Sec. 204, CMTA): The Commissioner promulgates rules to enforce the CMTA, but these require the approval of the Secretary of Finance.
  • Publication: The Bureau must regularly publish an updated customs manual and all Bureau decisions/rules.
  • RA 12145 (DEPDev): The National Economic and Development Authority (NEDA) is reorganized into the Department of Economy, Planning, and Development (DEPDev). All CMTA references to NEDA or the NEDA Board now refer to DEPDev and the Economy and Development Council (E-Council) respectively.
  • Goods Declaration Copies (Sec. 205): Electronic copies of processed declarations must be furnished to DEPDev, the Philippine Statistics Authority (PSA), the Bureau of Internal Revenue (BIR), and the Tariff Commission (TC).
  • Annual Report (Sec. 203): The Commissioner must submit an annual performance report to the President, Congress, and DEPDev on or before March 3131 of each year.

Customs Districts and Ports of Entry

  • Supervision: Each District is supervised by a District Collector. All ports of entry, including private ports and airports, must provide suitable examination areas to the BOC without charge.
  • List of Collection Districts:
    • I: Port of San Fernando (Sub-ports: PEZA Baguio, Sual, Salomague).
    • II-A: Port of Manila (Sub-ports: Harbor Center, Masinloc, Customs Postal Office, PEZA Cavite, EPZA Laguna).
    • II-B: Manila International Container Port (Sub-port: North Harbor).
    • III: Ninoy Aquino International Airport (Manila Domestic Airport, CMEC).
    • IV: Port of Batangas (Sub-ports: Siain, Puerto Princesa).
    • V: Port of Legaspi (Sub-ports: Tabaco, Jose Panganiban).
    • VI: Port of Iloilo (Sub-ports: Pulupandan, Kalibo Int’l Airport).
    • VII: Port of Cebu (Sub-ports: Mactan, Dumaguete).
    • VIII: Port of Tacloban (Sub-ports: Isabel, San Jose, Catbalogan).
    • IX: Port of Surigao (Sub-ports: Bislig, Nasipit).
    • X: Port of Cagayan De Oro (Sub-ports: Iligan, Ozamis, Mindanao Container Terminal).
    • XI: Port of Zamboanga (Zamboanga Int’l Airport, Sub-ports: Jolo, Tawi-Tawi, Basilan).
    • XII: Port of Davao (Sub-ports: General Santos, Mati, Parang).
    • XIII: Port of Subic.
    • XIV: Port of Clark.
    • XV: Port of Aparri (Sub-ports: Irene, Currimao, Laoag Int’l Airport, Claveria).
    • XVI: Port of Limay (Sub-port: Mariveles).
  • Authority to Open/Close Ports (Sec. 208): The President, upon recommendation of the Secretary of Finance, may open or close any port of entry.

Personnel Actions: Assignments, Reassignments, and Designations (CAO 6 2022)

  • Definitions:
    • Designation: Temporary imposition of additional/higher duties; terminable at any time; can be concurrent or full-time.
    • Reassignment: Movement across the structure without reduction in rank, status, or salary; does not require a new appointment.
    • Acting Capacity: Designated to a higher position or ad hoc unit; may discharge all powers/functions including discretion.
    • Officer-in-Charge (OIC): Mere caretaker while an incumbent is absent; possesses only ministerial powers; cannot appoint or exercise discretion unless explicitly authorized.
  • Customs Personnel Order (CPO): Required for assignments/reassignments to regular core/admin positions. Must be issued by the Commissioner and approved by the Secretary of Finance to be valid.
  • Customs Special Order (CSO): Used for designations to committees or technical working groups; does not require Secretary of Finance approval.
  • Seniority Hierarchical Order (Sec. 4.17.8):
    1. Higher Plantilla position.
    2. Earlier appointment date (if Plantilla is same).
    3. Longer length of service in the BOC.
    4. Longer length of service in the Government.
    5. Seniority in age.
  • Rules on Nepotism (CAO 4 2017):
    • Prohibits appointment of relatives within the 3rd3^{rd} civil degree of consanguinity or affinity to the Appointing Authority, Recommending Authority, Chief of Office, or immediate supervisor.
    • Exemptions: Persons in confidential capacities; individuals who marry within the BOC after their appointment.

Duties and Obligations of the District Collector

  • Core Duties (Sec. 210):
    • Ensure entry of all imported goods.
    • Prevent importation/exportation of prohibited goods.
    • Examine, classify, and value imported goods.
    • Assess and collect duties and taxes.
    • Prevent smuggling and customs fraud.
  • Temporary Succession (Sec. 211):
    • If a District Collector is absent, the Deputy District Collector assumes the role.
    • If no Deputy exists, the Collector designates a Senior Ranking Customs Officer in writing as OIC.
    • If multiple senior officers have equal service, a drawing of lots is held.
    • Designations must be reported to the Commissioner within 2424 hours.
  • Records and Reporting (Sec. 212 & 213):
    • Must maintain permanent records of official transactions and turnover papers to successors.
    • Must affix the official dry seal to documents requiring authentication.
    • Must submit regular monthly reports on all district transactions and reports on any initiated litigation.