25/08/2026
Are royalty payments part of dutiable value of imported goods?
𝗠𝗨𝗟𝗧𝗜-𝗠𝗜𝗟𝗟𝗜𝗢𝗡 𝗥𝗢𝗬𝗔𝗟𝗧𝗬 𝗕𝗥𝗨𝗧𝗔𝗟 𝗧𝗔𝗫 𝗧𝗥𝗔𝗣
𝘙𝘰𝘺𝘢𝘭𝘵𝘺 𝘱𝘢𝘺𝘮𝘦𝘯𝘵𝘴 𝘧𝘰𝘳𝘮 𝘱𝘢𝘳𝘵 𝘰𝘧 𝘵𝘩𝘦 𝘥𝘶𝘵𝘪𝘢𝘣𝘭𝘦 𝘷𝘢𝘭𝘶𝘦 𝘶𝘯𝘥𝘦𝘳 𝘚𝘦𝘤𝘵𝘪𝘰𝘯 201(𝘈)(1)(𝘦) 𝘰𝘧 𝘵𝘩𝘦 𝘛𝘊𝘊𝘗 (𝘢𝘭𝘪𝘨𝘯𝘦𝘥 𝘸𝘪𝘵𝘩 𝘈𝘳𝘵𝘪𝘤𝘭𝘦 8(1)(𝘤) 𝘰𝘧 𝘵𝘩𝘦 𝘞𝘛𝘖 𝘝𝘢𝘭𝘶𝘢𝘵𝘪𝘰𝘯 𝘈𝘨𝘳𝘦𝘦𝘮𝘦𝘯𝘵) 𝘹𝘹𝘹
𝘈𝘥𝘥𝘪𝘵𝘪𝘰𝘯𝘴 𝘵𝘰 𝘵𝘢𝘹 𝘢𝘯𝘥 𝘥𝘦𝘧𝘪𝘤𝘪𝘦𝘯𝘤𝘺 𝘪𝘯𝘵𝘦𝘳𝘦𝘴𝘵 𝘶𝘯𝘥𝘦𝘳 𝘚𝘦𝘤𝘵𝘪𝘰𝘯 249(𝘉) 𝘳𝘦𝘢𝘥 𝘵𝘰𝘨𝘦𝘵𝘩𝘦𝘳 𝘸𝘪𝘵𝘩 𝘚𝘦𝘤𝘵𝘪𝘰𝘯 247(𝘢) 𝘢𝘱𝘱𝘭𝘺 𝘢𝘤𝘳𝘰𝘴𝘴 𝘢𝘭𝘭 𝘪𝘯𝘵𝘦𝘳𝘯𝘢𝘭 𝘳𝘦𝘷𝘦𝘯𝘶𝘦 𝘵𝘢𝘹𝘦𝘴 𝘪𝘮𝘱𝘰𝘴𝘦𝘥 𝘶𝘯𝘥𝘦𝘳 𝘵𝘩𝘦 𝘛𝘢𝘹 𝘊𝘰𝘥𝘦, 𝘪𝘯𝘤𝘭𝘶𝘥𝘪𝘯𝘨 𝘝𝘈𝘛, 𝘢𝘯𝘥 𝘢𝘳𝘦 𝘯𝘰𝘵 𝘴𝘵𝘳𝘪𝘤𝘵𝘭𝘺 𝘭𝘪𝘮𝘪𝘵𝘦𝘥 𝘵𝘰 𝘪𝘯𝘤𝘰𝘮𝘦, 𝘦𝘴𝘵𝘢𝘵𝘦, 𝘢𝘯𝘥 𝘥𝘰𝘯𝘰𝘳'𝘴 𝘵𝘢𝘹𝘦𝘴.
𝗖𝗢𝗟𝗚𝗔𝗧𝗘-𝗣𝗔𝗟𝗠𝗢𝗟𝗜𝗩𝗘 𝗣𝗛𝗜𝗟𝗜𝗣𝗣𝗜𝗡𝗘𝗦, 𝗜𝗡𝗖 𝘃𝘀. 𝗖𝗢𝗠𝗠𝗜𝗦𝗦𝗜𝗢𝗡𝗘𝗥 𝗖𝗨𝗦𝗧𝗢𝗠𝗦
𝗚.𝗥. 𝗡𝗼. 𝟮𝟰𝟬𝟮𝟲𝟯-𝟲𝟰, 𝗔𝗽𝗿𝗶𝗹 𝟯𝟬, 𝟮𝟬𝟮𝟲
𝐅𝐀𝐂𝐓𝐒:
The Commissioner of Customs (COC) assessed Colgate-Palmolive Philippines, Inc. (CPPI) for deficiency customs duties and VAT on royalty fees paid to its parent company (CPC), as well as deficiency VAT on arrastre and wharfage fees.
CPPI argued that royalties were paid solely for the right to use intellectual property in the Philippines (not as a condition of importation), that arrastre/wharfage fees are not "other charges" under Section 107 of the NIRC, and that deficiency interest under Section 249(B) cannot apply to VAT.
𝐈𝐒𝐒𝐔𝐄/𝐒:
Are royalty payments made to a foreign licensor part of the dutiable value of imported goods?
Are arrastre and wharfage fees subject to VAT under Section 107 of the NIRC as "other charges"?
Does deficiency interest under Section 249(B) of the NIRC apply to Value-Added Tax (VAT)?
VAT TAX https://s.shopee.ph/80C7FGmBMm
𝐑𝐔𝐋𝐈𝐍𝐆:
Yes. Royalty payments form part of the dutiable transaction value if they satisfy the three-pronged test: relationship test, payment test, and condition test (i.e., failure to pay royalties allows termination of the licensing agreement, making payment inseparable from the sale/importation).
Yes. Following verba legis, arrastre and wharfage charges are necessary costs to release imported goods from customs custody, making them part of "other charges" under Section 107(A).
Yes. Section 247(a) in relation to Section 249 demonstrates legislative intent that interest applies to all internal revenue taxes imposed in the NIRC, including VAT.
𝘼𝘾𝘾𝙊𝙍𝘿𝙄𝙉𝙂𝙇𝙔, 𝘾𝙤𝙡𝙜𝙖𝙩𝙚-𝙋𝙖𝙡𝙢𝙤𝙡𝙞𝙫𝙚 𝙋𝙝𝙞𝙡𝙞𝙥𝙥𝙞𝙣𝙚𝙨, 𝙄𝙣𝙘.'𝙨 𝙋𝙚𝙩𝙞𝙩𝙞𝙤𝙣 𝙛𝙤𝙧 𝙍𝙚𝙫𝙞𝙚𝙬 𝙤𝙣 𝘾𝙚𝙧𝙩𝙞𝙤𝙧𝙖𝙧𝙞 𝙞𝙨 𝘿𝙀𝙉𝙄𝙀𝘿. 𝙏𝙝𝙚 𝘿𝙚𝙘𝙞𝙨𝙞𝙤𝙣, 𝙙𝙖𝙩𝙚𝙙 𝙅𝙖𝙣𝙪𝙖𝙧𝙮 4, 2018 𝙖𝙣𝙙 𝙩𝙝𝙚 𝙍𝙚𝙨𝙤𝙡𝙪𝙩𝙞𝙤𝙣, 𝙙𝙖𝙩𝙚𝙙 𝙅𝙪𝙣𝙚 4, 2018 𝙤𝙛 𝙩𝙝𝙚 𝘾𝙤𝙪𝙧𝙩 𝙤𝙛 𝙏𝙖𝙭 𝘼𝙥𝙥𝙚𝙖𝙡𝙨 𝙀𝙣 𝘽𝙖𝙣𝙘, 𝙞𝙣 𝘾𝙏𝘼 𝙀𝘽 𝘾𝙖𝙨𝙚 𝙉𝙤𝙨. 1471 𝙖𝙣𝙙 1475 𝙖𝙧𝙚 𝘼𝙁𝙁𝙄𝙍𝙈𝙀𝘿 𝙒𝙄𝙏𝙃 𝙈𝙊𝘿𝙄𝙁𝙄𝘾𝘼𝙏𝙄𝙊𝙉. 𝙭𝙭𝙭
FULL:
https://sc.judiciary.gov.ph/wp-content/uploads/2026/08/260811-003-Third-Div-GR-NOS-240263-64-Decision.pdf
𝙉𝙀𝙀𝘿 𝙪𝙩𝙢𝙤𝙨𝙩 𝙃𝙚𝙡𝙥 𝙞𝙣 𝙎𝙚𝙥𝙩𝙚𝙢𝙗𝙖𝙧?
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