Attached is the Bureau of Customs and Bureau of internal Revenue Joint Order No. 1-99, Simplifying, Consolidating and Amending the Rules and Regulations Implementing Tax Incentives on Importations by Accredited and Qualified Jewelry Enterprises as Provided Under Republic Act No. 8502, Otherwise Known as the "Jewelry Industry Development act of 1998."

For your information and guidance.

Adopted: 06 Dec. 1999

(SGD.) JULITA S. MANAHAN
Deputy Commissioner
Internal Administration Group

Bureau of Internal Revenue
Bureau of Customs
Joint Order No. 1-99

Simplifying, Consolidating and Amending the Rules and Regulations Implementing Tax Incentives on Importations by Accredited and Qualified Jewelry Enterprises as Provided Under Republic Act No. 8502, Otherwise Known as the "Jewelry Industry Development act of 1998."

COVERAGE:

This order intends to simplify, consolidate and amend BIR Revenue Regulations No. 1-99 and Joint DOF-BOC Order No. 1-99 covering the grant of tax and duty incentives for importations covered by the "Jewelry Industry Development Act of 1998".

SECTION 1. RULE 3 of Revenue Regulations No. 1-99 (IMPLEMENTATION OF THE EXCISE TAX EXEMPTION OF QUALIFIED JEWELRY ENTERPRISES PURSUANT TO SECTION 3(B) AND (D) OF RA 8502) and RULE 4 of Joint DOF- BOC Order No. 1-99 (CONDITIONS FOR AVAILMENT OF DUTY-FREE AND/OR TAX-FREE IMPORTATION OF RAW MATERIALS, SUPPLIES CAPITAL EQUIPMENT. MACHINERY, TOOLS OR SPARE PARTS) are hereby amended to read as follows:

"RULE(3/4). PROCEDURES FOR AVAILMENT OF FISCAL INCENTIVES BY QUALIFIED JEWELRY ENTERPRISES UNDER SECTION 3 (a), (b), (c) AND OF REPUBLIC ACT NO. 8502

Section 1. PROCEDURE FOR EXEMPTION OF IMPORTED ARTICLES COVERED BY LETTER OF CREDIT (L/C)

"a. The importer need not secure a Permit to Import from the concerned Bureau of Internal Revenue Office where his principal place of business is located/registered; however, the Qualified Jewelry Enterprise shall comply with relevant provisions of Chapter VII, Title II NIRC, such as but not limited to the keeping of records and registration of business premises with the BIR-RDO concerned.

"b. Upon application for L/C, the importer shall present to the bank the following supporting documents, among others:

i) Filled up import Entry Declaration; and

ii) Copy of Accreditation Certificate issued by the BOI that the importer is an Accredited and Qualified Jewelry Enterprise or an Import Consolidator entitled to import raw materials, supplied and capital equipment under RA 8502.

"c. The bank will stamp/validate the IED indicating that the shipment is duty and/or excise tax exempt; provided, that, such indication shall be subject to DOF approval of the request for tax and/or duty exemption under the next paragraphs (d) and (e).

"d. Upon arrival of the shipment, the importer shall apply for exemption from customs duty and/or excise tax with the Revenue Office, Department of Finance. The following documents will be required:

"i) Certified true copy of the BOI Certificate of Accreditation;

"ii) Sworn Statement that the importation shall be for the exclusive use of the qualified jewelry enterprise;

"iii) CRF in the case of capital equipment. Importation of precious stones and precious metals and imitations thereof are exempt from Pre-Shipment Inspection (PSI) pursuant to amended Joint Order 1-91 5(e) and will not require a CRF; and

"iv) Other commercial documents such as Invoice, Bill of Lading and Packing List.

"e. If the importer claims exemption from import duties and taxes under Republic Act No. 7844 (Export Development Act of 1995), Republic Act No. 7916 (Special Economic Zone Act of 1995), Executive Order No. 226 (Omnibus Investment Code) or other special laws granting incentives to exporters, the importer shall, in addition, submit to DOF a certification from the concerned incentive administering agency attesting that:

i) The importer is a registered export-oriented enterprise and the grant of exemption under the invoked special law for exporters shall not result to double availment of the same incentive; and

ii) The articles being imported are entitled to exemption under the special law for exporters.

"f. The DOF shall transmit its original indorsement of exemption to the Tax Exempt Division, Bureau of Customs, either directly or through the importer or his duly authorized representative.

"g. Upon arrival of the shipment, the importer or his duly designated representative shall prepare his Import Entry and Internal Revenue Declaration (IEIRD) and pay import processing fees, if any, and Value-Added Tax (VAT) to the agent bank. The IEIRD will be lodged either thru the Entry Encoding Center (EEC) or electronically thru the Direct Traders Input (DTI) with the following documents:

i) DOF Indorsement;

ii) CRF, if necessary; and

iii) Commercial/Shipping documents.

"h. For articles specifically mentioned as subject to excise tax and/or value-added tax under Sections 150(a) and 107(A), respectively, of the NIRC, the importer shall apply for the issuance of an Authority to Release Imported Goods (ATRIG) with the BIR-National. Office (Excise Tax Service) if the head office or principal place of business of taxpayer is located within Revenue Region Nos. 4 (San Fernando, Pampanga), 5 (Valenzuela, Metro Manila), 6 (Manila), 7 (Quezon City), 8 (Makati City) and 9 (San Pablo City), or with the RDO concerned for taxpayers situated outside of aforementioned Revenue Regions pursuant to Revenue Memorandum Order No. 55-99 dated July 6, 1999. The application for ATRIG shall be accomplished by the following documents:

i) Letter of Credit (L/C);

ii) Commercial Invoice, Bill of Lading, Packing List and other commercial documents; and

iii) Import Entry and Internal Revenue Declaration.

"i. The BIR Official concerned shall assign a Revenue Officer to verify the imported goods and compute the taxes due thereon. Upon finding payment of the proper amount of taxes and/or exemption therefrom, the concerned BIR Official shall issue and transmit the ATRIG to the Port Collector concerned. Where, appropriate, the ATRIG issued pursuant hereto shall be stamped "EXCISE TAX EXEMPT".

"j. If the transaction is profiled to be of low risk (Green Lane) by the Customs Selectivity System, the entry will be forwarded to the Collection Division for matching of VAT payable against actual payment and subsequent order for the release of the shipment. If the transaction is profiled to be of high risk, it will be coursed thru the Red Lane where physical examination of the goods will be undertaken prior to assessment. If selected under the Yellow Lane, processing will involve only document check.

"k. The entry together with the , ATRIG, DOF indorsement and other supporting documents, will be forwarded to the Customs Cash Division for eventual release of the shipment. Processing of exemptions by DOF, BOC, and BIR under this provision shall be completed within 30 days from filing of request for exemption with DOF, subject to receipt by the concerned agencies of complete and correct documents.

"Section 2. PROCEDURE FOR SELF-FUNDED OR DIRECTLY PAID IMPORTATION AND OTHERS

"If the importation is under Direct Payment or Self-Funded, or hand-carried or accompanied thru an international port of entry other than the Ninoy Aquino International Airport (NAIA), the procedure shall be the same as prescribed in Section 1 hereof insofar as they may be applicable to each case."

Section 3. PROCEDURE FOR RELEASE OF HAND-CARRIED ARTICLES AT THE ARRIVAL AREA, NINOY AQUINO INTERNATIONAL AIRPORT (NAIA)

In the case of exempt articles brought in via international flight by duly authorized personnel or agents of Qualified Jewelry Enterprises thru the NAIA, the following procedures shall be observed:

"a. Importation without prior DOF approval under Section 1 (e) and (f) hereof of raw materials, supplies and equipment covered by RA 8502 shall be allowed only as hand-carried or accompanied baggage of incoming passengers, who are either duly authorized personnel or agent of Qualified Jewelry Enterprises, at the NAIA. No tax- and duty-exempt processing without prior DOF approval shall be done in other port of entry, except upon recommendation by BIR and BOC and approval by DOF.

Accreditation Certificate and the appropriate proof of authority to import articles on behalf of the Qualified Jewelry Enterprise under R.A. No. 8502.

"c. Gemstone and other precious or semi-precious articles shall immediately be wrapped and sealed in the presence of the Customs Examiner, the passenger and one representative from the CIIS and ESS. After sealing, it shall be put inside the designated vault for security purposes.

"d. It shall be examined and appraised by the Customs and BIR Examiners trained for the purpose, the in the presence of the Customs Agent and the industry expert at the designated time to be set by the Collector for examination and appraisal of such items.

"e.) After examination and verification, the BIR Revenue Officer shall compute the taxable value as basis for VAT assessment and/or excise tax. The concerned BIR Official per RMO No. 55-99 shall issue ATRIG for shipments subject to excise tax and VAT under Sections 105(a) and 107(A), respectively, of the NIRC, upon payment of taxes and/or upon recommendation of the verifying Revenue Officer. The concerned BIR Official shall forward the ATRIG to lie Port Collector concerned.

"f. The Customs Examiner shall also compute the taxable value as basis for payment of duties and, in appropriate cases, recommend exemption from payment of duties. For articles covered by Section 3(a) and (c) of R.A. 8502, the Port Collector concerned shall stamp the corresponding portion of the Baggage Declaration Form as 'DUTY EXEMPT UNDER R.A. 8502'.

"g. The articles will be released only upon presentation of Official Receipt/proof of taxes and duties paid, duly processed Baggage Declaration Form and ATRIG, as the case may be.

"h. Should there be misdeclaration, non-declaration and/or undervaluation of articles, imposition of penalties, surcharges, seizure and other remedies shall be done by the BOC or the BIR, as the case may be. The Port Collector and BIR Official concerned shall submit to their respective Commissioners a monthly report of importations made under R.A. 8502, for monitoring and post-audit of transactions.

"i. BIR and BOC shall undertake the necessary preparations and capacity-building measures that will permit smooth implementation of this procedure in major international airports, especially at the Mactan-Cebu

"j. BIR and BOC shall undertake the necessary preparations and capacity-building measures that will permit smooth implementation of this procedure in major international airports, especially at the Mactan-Cebu International Airport."

SECTION 2. All administrative orders, rules and regulations, or part thereof which are inconsistent with the provisions of this Joint Order are hereby repealed, amended or modified accordingly.

SECTION 3. This order shall take effect fifteen (15) days after its publication in the Official Gazette or in any newspaper of general circulation, provided, however, that the right of a Qualified Jewelry Enterprise to the fiscal incentives herein provided shall commence on the date of its accreditation, but not earlier than July 9, 1998 (date of effectivity of R.A. 8502), as a Qualified Jewelry Enterprises pursuant to RA. 8502 and its implementing Rule s and Regulations.

Recommending Approval:

(SGD.) NELSON A. TAN
Commissioner of Customs

(SGD.) BEETHOVEN L. RUALO
Commissioner of Internal Revenue

Approved By:

(SGD.) EDGARDO B. ESPIRITU
Secretary of Finance