Date 01/14/2014

Import Tax Deductions; Samples or Promotional Items; Temporary Imports.

  1. Discounts.  No  deduction  of  any  kind  shall  be  allowed  from  the  FOB  amount
    because  of  any  special  or  sample  discount  or  on  account  of  any  other
    consideration by which a special reduction in price has been or might be obtained
    to evade taxation.
  2. Samples or promotional items.  Samples or promotional items, whether offered
    for  sale,  or  as  “give-away”  items  shall  be  valued  on  a  FOB  basis,  or  in  the
    absence of adequate documentation establishing a reasonable value be valued in
    the same manner as identical or similar items offered for sale.
  3. Temporary imports.  The following will apply to temporary imports which will
    later be re-exported in a same or similar condition to the original shipper upon
    conclusion of the item’s use in Palau:
    • Where an item is imported into Palau on a temporary basis, such as
      tools  used  for  installation,  repair,  construction,  equipment,
      Page 18 of 18 machinery for processing and are to be re-exported upon completion
      of the activity for which such item was imported, but in any case, no
      more than six months from date of first entry into Palau, the Chief of
      Customs may provide for the deferment of any applicable import tax
      for  such  period  of  time.    If  the  item  is  re-exported  to  the  original
      shipper within that time period, the tax assessment on such item shall
      be  cancelled  pursuant  to  40  PNC  Sec.  1302.    Failure  to  re-export
      within  the  time  specified  shall  result  in  the  full  amount  of  the  tax
      assessment coming due and payable.
    • For items imported into Palau on a temporary basis for installation,
      repair,  construction,  or  other  activity  which  requires  presence  of
      more than six (6) months from date of import but which will be re-
      exported to the original shipper upon conclusion of the activity for
      which it was originally imported, the applicable import tax shall be
      based on the reasonable rental value of such item while in Palau, or
      such  other  evidence  of  valuation  as  may  be  determined  by  the
      Director.  Import tax in this instance shall not be deferred but shall
      be collected and shall be non-refundable to the consignee or shipper
      on the basis that value was received and consumed in Palau during
      the period of use.  If the item or items subject to this regulation are
      not in-fact re-exported at the conclusion of rental period declared at
      time of import, import tax shall be paid based on the full value of the
      item at the time of import minus a deduction for actual import tax
      previously paid based on the rental value of such item.
    • At  the  time  of re-export of items temporarily imported, a Customs
      inspection and verification must be carried out.
  4. Questionable  Valuation  of  Goods.  Where  a  Customs  Officer  believes  that  the
    declared  value  of  the  item(s)  is  lower  than  the  actual  transaction  value  in  the
    Customs  valuation  database  the  consignee  may  be  required  by  Customs  to
    provide  reasonable  proof  that  a  reduction  in  the  price  paid  or  payable  for  the
    goods has not occurred.
    • To demonstrate the acceptability of the price paid or payable for the
      goods, the consignee shall supply to Customs details of:
      • The way in which the buyer and seller organize their
        commercial relationship.
      • The way in which the price in question was arrived at;
        and
      •  The  price  of  identical  merchandise,  or  similar
        merchandise,  in  sales  to  unrelated  buyers  in  the
        Republic. This applies to all commercial and personal
        imports.
  5.  Currency. The basis of the import tax of such goods shall be calculated in U.S.
    Dollars  according  to  the  current  rate  of  exchange  at  the  date  of  import  of  the
    Page 19 of 19 goods  into  Palau.  It  shall  be  the  burden  of  the  consignee  to  provide  such
    information acceptable to Customs officials.
  6. Time of import. The date on which the incoming vessel or aircraft was granted
    clearance by the Division of Customs to unload cargo will be treated as the time
    of  imports  for  the  imposition  of  tax  rates  and  exchange  rates  and  other  levies
    applicable for imports.