Exempted goods are goods imported into Papua New Guinea and which, because of various Acts or decisions of Parliament, are not subject to Customs Duty. The owner must still report the import of such goods to Customs in the same way every other person is required to report imports, but where the goods would normally have attracted duty, Customs instead applies a zero rate.
The power to exempt goods from duty lies with the Head of State who applies his powers, acting on advice, as stated in legislation such as the Diplomatic and Consular Privileges and Immunities Act, the Aid Status (Privileges and Immunities) Act and the Customs Tariff Act 1990.
Goods imported under any of these exemption laws are relieved from taxes and duties, irrespective of their normal classification or normal liability, provided that they are imported in specified circumstances and for specific purpose. Legislations relevant to duty exemptions are generally issued under provisions of Section 9 (1) (a) of the Customs Tariff Act 1990. Those legislations relevant to Goods and Services Tax (GST) are issued in accordance with the provisions of Section 25 (8) of the Goods and Services Tax Act 2003.
Diplomatic and Consular Privileges
Papua New Guinea is a signatory to the international agreement that governs the diplomatic relations between countries. This is known as the Vienna Convention. The privileges and immunities offered to foreign diplomats based in this country, including an exemption to paying Customs duties and other taxes, is exactly the same as those enjoyed by by Papua New Guinea's diplomats based in overseas missions.
Aid Status Privileges
An organisation and personnel attached to those organisations may be granted by the Head of State, acting on advice, designated aid status. Such status frees the organisation or individual from the requirement to pay Customs duties or other taxes under certain conditions but imposes an end use obligation where such duties or taxes must be paid if those conditions are not met.
The privileges and immunities offered to designated aid status organisations ensures aid being provided to Papua New Guinea by foreign aid organisations is not impeded or restricted by Papua New Guinea's domestic laws.
Contractors or Subcontractors to designated aid agencies may not be exempt from import duty and other taxes unless the contract with the aid agency specifically provides for it as per the provisions of section 8 of the Loans and Assistance Act. Further advice can be obtained by contacting the Tariff and Trade Branch of Customs.
Customs Tariff Act
Section 9 of this Act allows the Head of State, acting on advice, to either exempt from duty any goods provided that they are not being imported in relation to a commercial project or to substitute a reduced rate of duty for imported goods that would otherwise have attracted duty.
The Head of State has advised that the following exemptions apply with respect to:
- goods which are imported by a community organisation, certified by the Secretary of the Department of Prime Minister as an organisation that is not engaged in any commercial activity but exclusively devoted to the public interest and relating to-
- the advancement of education and vocational training; or
- the provision of medical services; and
- goods for educational or training purposes-
- to be used by the education institutions or training institutions officially recognised by the Secretary for Education or the Commissioner for Higher Education; and
- not for sale, exchange or trade within 5 years; and
- which are imported on a firm and specific order; and
- which in the opinion of the Commissioner-General cannot be locally produced or manufactured; and
- certified by the Secretary for Education or the Commissioner for Higher Education to be necessary for the purposes of approved curriculum or of education or training institutions themselves; and
- if such exempt goods be disposed of within 5 years from the date of import without prior written approval of the Commissioner-General the duty apportioned in relation to the remaining unused period shall be payable; and
- when purchased on the basis of duty free quotation/tender, the sale price shall not exceed 120% of the C.I.F. value and is supported by import documents,
Other Exemptions under the Tariff Act
The Head of State has also reduced the tariff rates of duty in respect of specified goods originating from certain countries in the Pacific region and on other goods the importation of which assists local industry. For further details of these exempted goods importers are asked to contact the Tariff and Trade Branch of Customs.
Bi-lateral Treaties and Agreements
Papua New Guinea has Bilateral Trade Agreement/ Multilateral Agreements with countries and international organisations. Clauses or Articles included in the content of these agreements as per the provisions of section 8 of the Loans and Assistance Act provide for an exemption to pay Customs duties and other Tax under certain conditions. Such agreements usually impose an end use obligation where exempt duties or taxes become liable if those conditions are not met certain conditions are met.
Processing Your Exemption
Unless special arrangements have been made with PNG Customs, importers must apply in writing to the Tariff and Trade section for granting of the exemption for each consignment. Customs will make sure the goods being imported are in line with the terms and conditions of the exemption.
So that exemption requests can be considered and a reply given within a suitable time period applicants are advised to submit their written applications together with supporting documentation well before the intended arrival date of the goods.
The applicant must clearly state in writing the nature of activity his organization is engaged with and specify the grounds for which exemption for duty and/or tax should be granted. The trader should also state the appropriate legislation under which his organization qualify for exemption and state whether the commodity imported are qualifying goods.
In addition, it is very important that the applicant must provide together with the letter to Customs all the import documents relative to the each import. The import documents include the following;
- Airway Bill or Bill of Lading
- Commercial Invoice
- Packing List
- Purchase Order
- Credit Note
- Telegraphic Transfer
- Manifest/Consignment Note
- Any e-mail/correspondences
Applications should be submitted to Customs marked for the attention of the Director- Tariff and Trade Branch. Customs will confirm receipt of your application and will process it as quickly as possible, this may take longer if Customs asks for further documentation in respect of the application.
If your application is successful you will be advised in writing and this advice must be produced with supporting documentation when your Customs agent lodges your import entry formally reporting the goods to Customs at the port of discharge.
Normal clearance formalities still apply to exempt goods and Customs or Quarantine may still inspect the goods. Goods are of a type that can only be imported under a permit or licence will only be released on its production to Customs even if the goods are exempt goods. The importer is responsible for ensuring the importation of the goods meets the requirements of Customs.
Although the goods may be exempt Customs duty and other taxes, any charges levied by Quarantine or handling charges levied by the wharf or transport company are the responsibility of the importer and must be paid. This applies to any fees levied by the customs agent in clearing the goods through Customs formalities.
Delays in clearing exempt goods will occur if either the application for exemption is not made prior to the arrival of the goods and in sufficient time for Customs to properly consider the application or if the exemption approval letter is not lodged with the import entry. Customs is not responsible for any wharf charges or other costs incurred as a result of any delays in clearing exempt goods unless the importer can demonstrate that the delay occurred because of the neglect or wilful act of an officer.