Implementing the rationalization of duty free stores/outlets and their operations in the philippines pursuant to Executive Order No. 140 and for other purposes

Case Overview and Summary

Summary of Executive Order No. 250

Allowable Areas for Duty Free Shop Operation (Sec. 1):
- Duty free stores/outlets can be established within international ports of entry.
- Duty free stores/outlets can be established within secured and fenced-in areas of special economic zones/freeports under RA 7227, RA 7922, and RA 7903.

Phase Out of Certain Duty-free Shops (Sec. 2):
- Duty free stores/outlets located outside international ports of entry and special economic zones/freeports shall be phased out by December 31, 1995.

Purchase Limits (Sec. 3):
- Tourists and Filipinos traveling to or returning from foreign destinations: US$1,000 but not exceeding US$10,000 in any given year.
- Overseas Contract Workers and Balikbayans (as defined under RA 6768): US$2,000.
- Residents of special economic zones and/or freeports, aged 18 and above: US$100 per month per person.
- Non-Residents of special economic zones and/or freeports: US$200 per person per year (privilege to be determined on December 31, 1995).

Acceptable Currency (Sec. 4):
- Purchases in all duty free shops shall be made only in U.S. Dollars or other acceptable foreign currencies.

Allowable Items in Duty Free Shops (Sec. 5):
- Duty Free Philippines outside special economic zones/freeports: limited to consumables, light durables, TV sets not manufactured in the Philippines, and locally manufactured heavy durables.
- Duty free stores/outlets within special economic zones/freeports: imported heavy durables can only be sold to residents of the secured area.
- Sale of locally manufactured goods in duty free shops/outlets shall be encouraged.

Oversight Committee (Sec. 6):
- Chaired by the Executive Secretary with representatives from NEDA, DTI, DOF, DOJ, DOT, BCDA, and 3 private sector representatives.
- Recommend policies for efficient administration of duty free shop operations.
- Submit quarterly reports to the President on duty free shop operations.

Secretariat (Sec. 7):
- The Presidential Management Staff shall be the secretariat of the Oversight Committee.

Control System (Sec. 8):
- Duty Free Philippines and operators of duty free stores/outlets in special economic zones/freeports shall implement control systems to detect and prevent abuses.
- Control system must be available for audit by the Bureau of Customs.
- Violations must be acted upon within 72 hours after report/discovery and reported to Bureau of Customs.

Reporting (Sec. 9):
- Duty Free Philippines and operators of duty free stores/outlets shall submit quarterly information to the Department of Finance as required.

Export Promotion (Sec. 10):
- Under DTI's direction, Duty Free Philippines shall undertake export promotion activities not exceeding 1% of its annual net sales.

Other Provisions (Sec. 11):
- Duty Free Philippines shall remit 1.5% of its net sales to the National Government (from E.O. No. 140).