PGST & Other Taxes
The Palau Goods and Services Tax (PGST) and Other Taxes
In line with RPPL No.11-11, § 1283. Collection of PGST on imports, the BCBP must collect PGST payable under this chapter on a taxable import at the time of import and must, at that time, obtain the name and tax identification number, if any, of the importer, the customs declaration, and invoice values in respect of the import.
Effective January 01, 2023, Customs are responsible for calculating and collecting the PGST on imported goods and administering all matters concerning taxable importations. This role includes ensuring that:
- PGST exemptions claimed by importers are correct;
- The value of the taxable importation is correctly calculated; and
- PGST payable on taxable importations is paid to Customs.
Excise Tax
In line with RPPL No.11-11, it states the following:
- 2612. Imposition of excise tax on imports of excisable goods.
(a) Excise tax is imposed at the rate specified in Column 2 of the Table in Section 2614(c) on excisable goods imported into the Republic.
(b) Excise tax under Subsection (a) is payable by the importer at the time of import and in the manner specified in Section 2643.
(c) The time of import of excisable goods is:
(1) if the goods entered into the Republic under the Customs legislation, on the date on which they were so entered; or
(2) in any other case, on the date that the goods are brought into the Republic.
(d) Excisable goods that require an excise stamp can be imported only by a person licensed by the Director to import such goods.
The following goods are exempt from excise tax:
(1) for persons arriving in the Republic by common carrier:
(A) one only of the following: one opened pack of cigarettes; one cigar not exceeding fifteen (15) grams; or up to fifteen (15) grams of loose smoking tobacco, chewing tobacco, or pipe tobacco, in an opened package;
(B) a quantity of alcohol products, as selected by the person, that is in aggregate not more than two (2) litres;
(2) bona fide stores of a ship or aircraft, being goods for the use of passengers and crew of the ship or aircraft while on board and while the ship or aircraft is in international traffic in such quantities as approved by the Director;
(3) goods carried across the Republic in transit.
- 2614. Excisable goods and rates.
(a) Excisable goods are specified in Column 1 in the table in Subsection (c).
Specified excisable Goods shall be further defined by regulation.
(b) Subject to Subsection (d), the rates of excise tax are specified in the table in the table below (Subsection c).
| Excisable Goods | Excise Tax Rate |
|---|---|
|
Carbonated soft drinks |
Ten cents ($0.10) per twelve (12) fluid ounces or fractional part thereof. |
|
Beer |
Three cents ($0.03) per fluid ounce. |
|
Liquor |
Thirty cents ($0.30) per fluid ounce. |
|
Grape or other fruit-based wine |
Twenty cents ($0.20) per fluid ounce or metric equivalent rounded to the next ounce. |
|
Wine Coolers or cooking wines with a recognized alcohol content |
Five cents ($0.05) per fluid ounce or metric equivalent rounded to the next ounce. |
|
All other alcoholic beverage products, including liquors, sake, and alcohol products without grape or fruit-base |
Thirty cents ($0.30) per fluid ounce or metric equivalent rounded to the next ounce. |
|
Vehicles and vehicle chassis |
Two hundred fifty dollars ($250); A partial vehicle that constitutes more than twenty five percent (25%) of a vehicle’s composition, as determined by the Division of Customs, is subject to this rate of tax. |
|
Bottled water |
25% of excisable value |
|
Cigarettes |
Five dollars ($5.00) per 0.017 kilograms, and packs of cigarettes weighing less than 0.017 kilograms are taxed at the rate of five dollars ($5.00) per pack. |
|
Other tobacco products |
Five dollars ($5.00) per 0.017 kilograms. |
(c) The rate of excise tax on an export of excisable goods is zero percent (0%).
(d) Subject to Subsection (e), excisable goods are treated as exported if the goods are delivered to, or made available at, an address outside the Republic. For this purpose, the delivery of the goods to the owner, charterer, or operator of a ship or aircraft operating in international traffic for the purposes of carrying the goods outside the Republic is, in the absence of proof to the contrary, sufficient evidence that the goods have been exported.
(f) Excisable goods are not treated as exported if the goods have been, or will be, re-imported into the Republic.
- 2615. Excisable value.
(a) This section applies where Section 2614(c) specifies a rate of excise tax payable by reference to the excisable value of excisable goods.
(b) The excisable value of excisable goods manufactured in the Republic is the ex-factory selling price of the goods, but not including:
(1) the PGST payable on the supply of the goods;
(2) the cost of excise stamps, if any; and
(3) the cost of returnable containers, if any.
(c) The excisable value of excisable goods imported into the Republic is the total of the following amounts:
(1) the value of the goods for the purposes of import tax as determined under the Customs legislation, whether or not import tax is payable on the goods;
(2) the amount of import tax imposed on the goods under the Customs legislation;
(3) the amount of any other tax (other than excise tax or PGST), duty, fee, or other charge payable upon the entry of the goods into the Republic.
(d) The ex-factory selling price of excisable goods is:
(1) if the excisable goods are sold by the manufacturer to an associate, the fair market value of the goods at the time of removal from the manufacturer’s factory; or
(2) in any other case, the price payable by the purchaser.
- 2616. Quantity of excisable goods.
(a) This section applies where Section 2614(c) specifies a rate of excise tax payable by reference to a quantity measured by volume or weight.
(b) Subject to Subsection (c), if goods are imported or removed from licensed premises in a container intended for sale with, or of a kind usually sold with, the goods in a sale by retail and the container is marked, labelled, or commonly sold as containing, or commonly reputed to contain, a specified quantity of the goods, the container is deemed to contain not less than the specified quantity for the purpose of determining the excise tax payable in respect of the goods.
(c) If the package referred to in Subsection (b) contains more than the specified quantity, excise tax is calculated based on the actual quantity.
(d) Subsection (e) applies if the following conditions are satisfied:
(1) excisable goods are imported into the Republic, or removed from licensed premises, in a package intended for sale with, or of a kind usually sold
with, the goods in a sale by retail;
(2) the package is not marked or labeled with a net weight, and is not commonly sold as containing, or is not commonly reputed to contain, a specific 18 II quantity or weight; and
(3) the owner of the goods is unable to satisfy the Director of the correct net weight of the package.
(e) Where the conditions in Subsection (d) are satisfied, the excisable goods are subject to excise tax according to the gross weight of the package and its contents.
- 2617. Deemed removal of excisable goods.
(a) A registered manufacturer who cannot account, to the satisfaction of the Director, for any quantity of excisable goods manufactured or warehoused by the manufacturer is deemed to have removed those goods from licensed premises in the month in which the discrepancy arose.
(b) A registered manufacturer must notify the Director of any discrepancies between the manufacturer’s actual and recorded inventory as soon as the manufacturer becomes aware of the discrepancy.
- 2618. Relief for raw materials.
If excise tax has been paid in respect of excisable goods imported into, or manufactured in, the Republic by a registered manufacturer and those goods have been used as raw materials in the manufacture of other excisable goods (hereinafter referred to as “finished goods”), the excise tax paid on the raw materials is offset against the excise tax payable on the finished goods.
- 2619. Relief for damaged or destroyed excisable goods.
No excise tax is payable by a registered manufacturer in respect of excisable goods:
(1) destroyed by fire or other natural cause prior to removal from licensed premises; or
(2) that have deteriorated or been damaged in storage at the manufacturer’s licensed premises and are securely disposed of under the supervision of an authorized tax officer.
Excise Tax Procedure
- 2641. Records.
An importer or registered manufacturer must keep such accounts, documents, and records as enable the calculation of the excise tax payable by the importer or manufacturer.
- 2642. Excise tax returns.
A registered manufacturer must file an excise tax return, in the approved form and prescribed manner, for each calendar month within fifteen (15) days after the end of the month, whether or not any excise tax is due for that month.
- 2643. Due date for payment of excise tax.
(a) The excise tax payable by a registered manufacturer for a calendar month is due for payment by the due date for filing the manufacturer’s excise tax return for the month.
(b) The excise duty payable by an importer in respect of the importation of excisable goods into the Republic must be paid to the Director at the time of importation.
(c) For the purposes of collecting and enforcing the payment of excise tax on the import of goods into the Republic, the Customs legislation applies as if the excise tax were import tax.
- 2644. Offenses.
(a) A person who contravenes Section 2621 is guilty of an offense and upon conviction is subject to a fine not exceeding ten thousand dollars ($10,000) or to a term of imprisonment not exceeding five (5) years, or both.
(b) A person who, without authorization, enters licensed premises is guilty of an offense and upon conviction is subject to a fine not exceeding five thousand dollars ($5,000) or to a term of imprisonment not exceeding five (5) years, or both.
(c) A person is guilty of an offense and upon conviction is subject to a fine not exceeding five thousand dollars ($5,000) or to a term of imprisonment not exceeding two (2) years, or both if the person is involved in:
(1) the unauthorized removal of excisable goods from licensed premises; or
(2) the alteration of, or interference with, excisable goods in licensed premises.
(d) A person is guilty of an offense and upon conviction is subject to a fine not exceeding ten thousand dollars ($10,000) or to a term of imprisonment not exceeding three (3) years, or both, if the person:
(1) marks alcoholic spirits or tobacco products with an excise stamp knowing that the excise tax in respect of alcoholic spirits or tobacco products has not been paid;
(2) fraudulently appropriates excise stamps belonging to a registered manufacturer; or
(3) manufactures excise stamps when not being the lawful holder of a license to manufacture such stamps.
Carbon Tax
- 2661. Imposition of carbon tax.
(a) Every person who imports into the Republic liquid fuel or liquid petroleum- based products, except for butane and propane, regardless of the purpose of the import, shall be assessed and levied, and shall pay, carbon tax in respect of the import at the rate of two cents ($0.02) per gallon or metric equivalent, or fraction thereof rounded to the nearest quart.