As a car buyer, what are the ideal specs that one is looking for in a car? Is it a car that's big? A small car? A vehicle that can drive through mountains? or just that typical city car that the owner can peruse around the city? Most people who buy cars usually check on the interior design or the car's exterior look.

These buyers do not often care about the tax laws or the regulations in customs; they usually care about how affable the car's demeanor would be, but did you know about safeguard duty?

Import Duty of Vehicles

Source: PxFuel

Safeguard duty is about the import duty of certain imported vehicles imposed by the Bureau of Customs. With the pandemic creating a distinctive brand of new normal, specific laws and provisions were designed to fit the unique atmosphere or the new realities that the Philippines has.

The safeguard duty was officially effective on February 1, 2021, as per the Department of Trade and Industry administration's order or DAO Number 20-11.

Importation in the Philippines

The Safeguard duty refers to the discouragement of the importation of wholly built vehicles into the country. This provision takes advantage of varying free trade agreements that allow car dealerships to sell cars competitively.

With the condition, it would affect the buyer's preference or taste, making them buy more imported products than Filipino-built or vehicles that were assembled in the Philippines. In the provision, the Safeguard Duty entails that there should be a Php 70,000 cash bond on imported passenger cars and Php 110,000 cash bond on pickup trucks or SUVs.

The Use of Cash Bonds

Source: The Blue Diamond Gallery

Few vehicles are included in the exemptions to this provision, like the Toyota Vios and Innova, but most of the imported cars that enter the country are affected by the Safeguard duty. Since it was imposed on February 1, 2021, the provision will be foisted until August due to it being required for 200 days.

According to Section 8 of RA 8800, "in critical circumstances where a delay would cause damage which would be difficult to repair, and under a preliminary determination that increased imports are the substantial cause of serious injury to the domestic industry," this led to the measures of using cash bonds.

Tariff Commission and Their Decision

The Safeguard Duty is "provisional" because this may or may not be returned by BOC depending on the Tariff Commission's outcome. Even if this provision were made to tariff the car brands or importers rather than the buyer, brands would make sure that they will pass these expenses on to the buyers rather than shouldering it.

Source: PxFuel 

Safeguard duty would disrupt the car sales and would add unexpected costs to the buyers. Imagine a buyer having already allocated their budget to a particular car and being surprised that there are additional tariffs to their purchase. Even if buyers are willing to pay the safeguard duty, brands ask consumers to pay the total amount of the provision. The payment ranges from 7,000 pesos to as high as 60 thousand pesos.

Optimism of Car Brands

Some consumers are intrigued by the provision since there is a possibility of a refund. Sure, this would be a tedious process wherein the Safeguard Duty would be placed under the Tariff Commission while conducting a formal investigation that would prove if there was a causal link in the importation and severe injuries to the domestic industry created.

If the Tariff Commission found any anomalies in the domestic sector, the safeguard would be permanent and implemented in under three years. Some brands are starting to be optimistic that the provision might be lifted.

Source: Wikipedia Commons 

Brands like Isuzu and Toyota are issuing their customers separate receipts for the condition. If ever the Tariff commission deemed fit that there were no casualties in the domestic industry, they would be refunded.

Filipino’s Choice

Even if brands can sell their cars and serve the Filipino people with their car needs, buyers should be wary, especially with this provision. Car sales are going stagnant, and buyers should be vigilant in knowing where their cars are coming from. Philippine laws are created to protect the Filipinos and not make their lives stressful.

Importance of Security Deposit

Even if the provisional safeguard duty does not cause any increase in the suggested retail price, car brands started collecting deposits last March 1, 2021, under the DAO 20-11. What if the Tariff Commission found anomalies in the domestic industry? This means that the security deposit would stay with the car brands.

If anything, this provision teaches buyers to really think if this is the right time to buy a car and if it is feasible. One should know that there are cars created in the country that will convince the buyer that this is a good deal and would not pay for the safeguard duty provision.