Goods Exported for Repair, Processing or Reconditioning and Subsequently Re-Imported

Under Section 800(Y) of the Customs Modernization and Tariff Act (CMTA), goods that are exported from the Philippines for repair, processing, or reconditioning may qualify for conditional tax and duty exemption once they are brought back into the country. This privilege helps importers, manufacturers, and business owners reduce costs when sending products abroad for fixing, improvement, or restoration. Instead of paying full duties and taxes again upon return, only the added value from the repair or processing may become subject to customs duties when applicable.

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Conditions for the Exemption

Three important conditions must be met to qualify:

1. The goods must be exported from the Philippines for repair, processing, or reconditioning.
2. The goods must not be substantially advanced in value.
3. The goods must return to the Philippines in their original form and in the same state.

This means the item sent abroad should remain basically the same product when it comes back. If the foreign repair or processing only restored or improved the item without creating a completely different product, the importer may apply for the privilege. However, if the goods gained additional value during the foreign repair or processing, the added value may still become subject to duties and taxes based on the tariff classification of the returned goods.

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Common Goods Covered

• Industrial machines and manufacturing equipment
• Electronic devices
• Aircraft parts and vessel equipment
• Medical equipment
• Tools, instruments, and commercial machinery

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Documents Required

• Export declaration or export documents
• Bill of lading or airway bill; commercial invoice and packing list
• Repair invoice or processing invoice and proof of payment for repair or processing
• Certificate or statement describing the repair work done
• Previous importation records, if available
• Serial number verification or identification documents
• Customs import declaration for re-importation

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Why the Importation Is Conditionally Tax and Duty-Exempt

The exemption exists because the goods were already part of Philippine commerce before exportation. The export only happened to allow repair, processing, or reconditioning abroad. Still, the exemption remains conditional because Customs must confirm that the goods returned are the same goods exported, the goods were only repaired or reconditioned, the goods did not become a completely new product, and the declared values and documents are accurate. Engaging a licensed customs broker familiar with re-importation procedures is strongly recommended.

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Step-by-Step Import Process

1. The exporter sends the goods abroad for repair, processing, or reconditioning and keeps complete export records.
2. The foreign service provider performs the repair or processing and issues invoices and supporting documents.
3. Before the goods return to the Philippines, the importer prepares the import documents and gathers proof that the goods are the same items previously exported.
4. The importer lodges the import declaration with the Bureau of Customs and claims the conditional tax and duty exemption under Section 800(Y) of the CMTA.
5. Customs officers review the documents, inspect the shipment when needed, and verify the repair or processing details.
6. Once Customs approves the claim, the goods may enter the Philippines with duty exemption, subject to duties only on the added value when applicable.