If you are unfamiliar with how to determine the tariff classification, Customs valuation or permit requirements for the goods you import, the BCBP suggests you contact Customs or a Customs broker to lodge import documents on your behalf.

Tariff

• The Harmonized System (HS) codes are an international standard for calculating Import Duty tax. Controlled by the World Customs Organisation (WCO), the system was first introduced in 1988 and has since been developed and maintained by the World Customs Organization (WCO), an independent intergovernmental organization based in Brussels, Belgium.. Each HS code describes a particular trade product, which allows governments around the world to charge the right tariffs. It is used by over 200 WCO member countries and economies as a basis for their Customs tariffs and for the collection of international trade statistics as well as many other purposes.
• As of January 22, 2024, Palau moved to the HS 2022 version.

Valuation

Since the implementation of the RPPL 11-11, the value of the goods to include any fees imposed by customs at the time of import are subject to the payment of PGST (10%). This includes the Deposit Beverage Container Fee, Excise Tax, Carbon Tax, Customs Entry Fee, the cost of freight, insurance, and other costs associated with the cost of shipments of the goods.

The Customs value of imported goods is determined under RPPL 11-11. It constitutes the taxable basis for Customs duties. It is also an essential element for compiling trade statistics, for monitoring quantitative restrictions, for applying tariff preferences, and for collecting national taxes.

At the same time, while Palau is currently not a member of the World Trade Organisation (WTO), Customs has been using the WTO Valuation Method that forms the basis for the Customs values declared to Customs administrations. The Agreement establishes a Customs valuation system which bases the Customs value primarily on the transaction value of imported goods, i.e. the price actually paid or payable for the goods when sold for export to the country of importation with certain adjustments. The BCBP is responsible for the assessment and collection of Customs duties.

As the WTO Valuation Method provides more predictability, stability and transparency for the trading community, it is regarded as a major contributor towards the facilitation of international trade while ensuring compliance with national laws and regulations.

Transaction Value: The primary basis for customs valuation under the Agreement is “transaction value” as defined in Article 1. Article 1 defines transaction value as “the price actually paid or payable for the goods when sold for export to the country of importation.” Article 1 must be read together with Article 8, which lets Customs authorities make adjustments to the transaction value in cases where certain specific parts of the good – considered to be a part of the value for customs purposes – are incurred by the buyer but are not actually included in the price paid or payable for the imported goods. Article 8 also allows for the inclusion in transaction value of exchanges (“considerations”) between the buyer and seller in forms other than money. Articles 2 through 7 provide methods of determining the customs value whenever it cannot be determined under the provisions of Article 1.

The methods of customs valuation, in descending order of precedence, are:

1. Transaction Value of Merchandise in Question – price actually paid or payable for the goods sold.(Art. 1)
2. Transaction Value of Identical Merchandise (Art. 2)
3. Transaction Value of Similar Merchandise (Art. 3)
4. Deductive Value (Art. 5)
5. Computed Value (Art. 6)
6. Derivative Method (Art. 7)

In line with RPPL No.11-11 (PGST Act), it states the following:

• 1005. Fair market value.

(a) For the purposes of this division and subject to this section, the fair market value of goods, an asset, service, or supply at a particular time is the amount that the goods, asset, service, or supply would fetch in an open market transaction freely made at that time between persons dealing with each other at arm’s length.

(b) If it is not possible to determine the fair market value of goods, an asset, service, or supply at a particular time under Subsection (a), the fair market value is the amount that similar goods, asset, service, or supply would fetch in an open market transaction freely made at that time between persons dealing with each other at arm’s length, adjusted to take account of the differences between the similar goods, asset, service, or supply and the actual goods, asset, service, or supply.

(c) For the purposes of Subsection (b), goods, an asset, service, or supply is similar to other goods, asset, service, or supply, as the case may be, where it is the same as, or closely resembles, the other goods, asset, service, or supply in character, quality, quantity, functionality, materials, sale terms, and reputation.

(d) If the fair market value of goods, an asset, service, or supply cannot be determined under Subsection (a) or (b), the fair market value is the amount determined by the Director, provided the valuation is consistent with generally accepted valuation principles.

(e) For the purposes of this Section, a transaction is treated as having been made between persons dealing with each other at arm’s length if the parties to the transaction, whether or not associates, have acted separately and independently in negotiating the terms of the transaction.