Traditional retailers are raising concerns about what they describe as an uneven playing field as online marketplaces continue to reshape consumer behavior; one where cheap imported goods enter the country with minimal tax exposure, undercutting local businesses and distorting competition.
The Department of Trade and Industry (DTI) and the Department of Finance (DOF) are now reviewing tax rules governing low‑value imports, responding to complaints that foreign sellers enjoy cost advantages unavailable to domestic retailers.
Digital marketplaces have far outpaced existing tax frameworks, creating loopholes that allow foreign sellers to bypass duties, undervalue shipments, and flood the market with ultra‑cheap goods.
With inflation pressures persisting and local businesses struggling to compete, policymakers are reassessing how tax policy can support fair competition without stifling consumer access to affordable products.
Possibility of Tax on Low-Value Imports?
The DTI is evaluating whether current tax rules for low‑value imports, particularly those entering through e‑commerce platforms, need to be tightened to address concerns raised by local retailers.
Many imported items priced below the de minimis threshold of ₱10,000 enter the country without duties, allowing foreign sellers to offer products at significantly lower prices than local stores.
Retail groups argue that this loophole has become a structural disadvantage, especially for micro‑retailers and mall‑based merchants who must comply with value-added tax (VAT), income tax, and regulatory costs that foreign sellers effectively avoid.
The DTI confirmed that it is coordinating with the DOF and the Bureau of Customs (BOC) to review the tax treatment of low‑value imports, including potential adjustments to the de minimis threshold and stricter enforcement against undervaluation.
The review also considers the role of e‑commerce platforms, which facilitate cross‑border shipments and often serve as intermediaries between foreign sellers and Filipino consumers.
Countries such as the United States, European Union members, and Singapore have already tightened tax rules for low‑value imports to protect domestic retailers and ensure tax fairness. The Philippines is now exploring similar reforms.
Cheap Online Imports are One Tap Away
The surge in cheap online imports is not accidental; it is the result of structural changes in global commerce.
Cross‑border e‑commerce platforms such as Shopee, Lazada, Temu, and Shein have built logistics networks that allow foreign sellers to ship small parcels directly to consumers at extremely low cost. These platforms leverage economies of scale, optimized shipping routes, and tax thresholds to offer products at prices local retailers cannot match.
The ₱10,000 de minimis threshold plays a central role as under current rules, imported goods valued below this threshold are exempt from duties and taxes.
While originally designed to reduce administrative burden for small shipments, the threshold has become a gateway for mass importation of low‑value goods. Sellers abroad can ship thousands of parcels daily, each individually priced below the threshold, effectively bypassing duties that local retailers must pay.
Retailers argue that this creates a structural imbalance. Local businesses must comply with VAT, income tax, labor regulations, and overhead costs, while foreign sellers can operate with minimal tax exposure.
The imbalance has intensified competition, especially in categories such as apparel, accessories, electronics accessories, home goods, and beauty products.
Small Businesses, Entrepreneurs Cry Foul
Retail groups have argued that cheap imports distort competition by allowing foreign sellers to offer prices below cost structures faced by local businesses. They highlight the issue of undervaluation, where sellers declare artificially low prices to stay under the de minimis threshold.
Moreover, these small entrepreneurs and businesses point to the lack of accountability for foreign sellers, who often operate without business registration, tax identification, or compliance with consumer protection laws.
The Philippine Retailers Association (PRA) has repeatedly warned that unchecked cross‑border imports could erode the viability of local retail, especially for micro‑entrepreneurs and mall‑based stores. The group argues that tax fairness is essential to maintaining a healthy retail ecosystem, where domestic businesses can compete on equal footing.
Retailers also emphasize that cheap imports often lack quality control, safety certification, and warranty coverage, exposing consumers to risks. They argue that tax reform should be paired with stronger product standards enforcement.
Government Response is a Multi‑Agency Review of Tax Rules
The DTI is coordinating with the DOF and BOC to assess whether the de minimis threshold should be lowered, whether duties should apply to more categories of imports, and whether enforcement against undervaluation should be strengthened.
The DOF has previously showed interest in revisiting tax rules for low‑value imports. In 2023, the department proposed lowering the de minimis threshold to ₱5,000, citing revenue leakage and unfair competition. The proposal did not advance at the time, but the surge in cheap imports has revived the debate.
The BOC has also acknowledged challenges in monitoring cross‑border shipments, especially given the volume of parcels entering through express couriers and postal services. The agency is exploring digital tools to improve valuation, tracking, and compliance.
How Do Other Countries Address Low‑Value Imports?
The Philippines is not alone in confronting the challenges of low‑value imports.
The United States eliminated its de minimis threshold for certain categories of imports from China, citing concerns about unfair competition and revenue leakage. The European Union implemented the Import One‑Stop Shop (IOSS) system, requiring VAT on all imported goods regardless of value.
Singapore tightened GST rules for low‑value imports in 2023, requiring overseas sellers and platforms to collect GST at the point of sale.
Global reforms show mutual recognition towards tax fairness in digital commerce. Countries recognize that traditional tax frameworks are inadequate for modern cross‑border e‑commerce, where millions of small parcels can enter markets daily.
The Philippines’ review aligns with these global developments, suggesting that tax reform may be necessary to maintain competitiveness and protect domestic industries.
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