Introduction

The Bond Unit falls under the responsibility of the Bureau of Customs and Border Protection (BCBP) and has the mandate to carry out documentary control of the goods entering or exiting the warehouse. The unit keeps stock account of goods and carries out physical examination/ spot checks, stack takes and conduct yearly reconciliation on goods being warehoused.

This guide is not intended as a definitive advice but to be used only as an explanatory guide. It is strongly recommended that where there are aspects relating to law which are not clear or covered in this guide, reference needs to be made to the following legislations and regulations listed below.

Legislation

The legislation for the general procedures for bonded warehouse is set down in the following legislation:

• RPPL NO. 11-15 (To amend Title 28 of the Palau National Code and include a new chapter to provide for Customs Bonded Warehouse.) Approved on December 22,
• Chapter 13 of Division 2 of Title 40, entitled 28 II “Import Tax”, and any subsidiary legislation that amends the provisions of that 29 II chapter, successor legislation to that chapter, or other subsidiary
• RPPL 11-11 (Palau Goods and Services Tax).
• Customs Rules and Regulations (2006).

What is a Customs Bonded Warehouse

 A Customs bonded warehouse is any warehouse approved by the BCBP for the deposit of goods. It is a facility provided  to  traders  that  allows  the  payment  of  duty  and  taxes  on  goods  imported for warehouse  to  be  deferred  until  the  goods  leave  the  facility  either  for  home consumption or   for export. In other words, duty and taxes are applicable only on removal of goods from the approved warehouse.

According   to   RPPL   11-17, a Customs Bonded Warehouse or a Bonded Warehouse is a building or secured area, licensed as a bonded warehouse, in which dutiable goods may be stored, manipulated, or undergo manufacturing operations without payment  of  excise  tax  prior  to such  time as  the  goods  are  withdrawn  from  the  warehouse  for  local  consumption. Any such are shall be considered an extension of the points of entry for purposes of customs jurisdiction.

Types of Goods Authorized for Bonded Warehouse

In accordance with RPPL No. 11-11, Palau Goods and Services Tax”, Chapter 26 Excise and Carbon Taxes Subchapter I, Excise Tax, Part I.

1. “Excisable goods” means the goods specified in Column 1 of the table provided in Section 2614(c), other than exempt

2. “Excisable value”, in relation to excisable goods, has the meaning set forth in Section

3. “Excise tax” means excise tax imposed under this

The following are types of excise goods that are authorized to enter a bonded warehouse:

• Carbonated soft drinks
• Beer
• Liquor
• Grape or other fruit-based wine
• Wine coolers or cooking wines with a recognized alcohol content
• All other alcoholic beverage products, including liquors, sake, and alcohol products without grape or fruit-base
• Vehicles and vehicle chassis
• Bottled water
• Cigarettes
• Other tobacco products

Export of Excise Goods

• The rate of excise tax on an export of excisable goods is zero percent (0%).
• Subject to Subsection (f), 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
• Excisable goods are not treated as exported if the goods have been, or will be, re- imported into the

Classes of Bonded Warehouse

The following are classed of bonded warehouse:

• Class A. Private Bonded Warehouse
• Class B. Public Bonded Warehouse
• Class C. In-bond Manufacturing Warehouse
• Class D. Cleaning, Sorting, Re-packaging, or changing  the  condition  of, but  not manufacturing  of,  imported  merchandise,  under  Bureau supervision,  and  at  the  expense  of the above

Application for Bonded Warehouse

You must seek approval from the BCBP to operate a bonded warehouse. The Applicant must submit a completed application on a form to be prescribed by the Director, together with a detailed plan of the proposed bonded warehouse.

The following information has to be submitted with the application:

• The name and/or business name and address of the applicant;
• TIN Number of the company or individual;
• Whether the place proposed to be operated as a bonded warehouse exists or is to be constructed;
• Type of construction of the facility regardless of whether or not it already exists or is to be constructed;
• Types of goods to be warehoused;
• The location of the premises;
• General physical description of the premises;
• Security arrangement;
• The largest quantity and value of goods to be warehoused at any given time;
• The amount and policy holder of fire and general liability insurance covering the value of the merchandise to be stored;
• The person who will be in charge of the bonded warehouse ( warehouse keeper)
• Whether the applicant intends to store any hazardous materials, and what type; and
• Affidavit that applicant complies with Section 1208. Prohibition on Carting Company Ownership of this Title.

Who can Apply for a Bonded Warehouse

• Any person (business or individual) who has established a business can make an application to operate a bonded warehouse;
• The applicant is of good character and has not been convicted, found guilty or plead guilty to any felony or crime of dishonesty, unless subsequently pardoned;
• The site of the proposed bonded warehouse is within the area served by a customs officer;
• The applicant has sufficient financial resources to lease and purchase the facility;
• The applicant will provide conditions suitable for the safekeeping of goods, including any hazardous materials;
• The Bureau is able to provide services with respect to the proposed bonded warehouse;
• A permit from the Environmental Quality Protection Board (EQPB) to operate shall be required for the storage, treatment, or handling of hazardous waste;
• Approval will be granted if the applicant meets all the Customs requirements for warehouse operations; and
• Any facility, warehouse, building, ports, airports and post office within the Republic, that retain any imported cargo and operates with functions of a Customs Bonded Warehouse, as defined in this chapter, shall be licensed and regulated by the BCBP as a customs controlled area.

Processing of Application for Bonded Warehouse

Application is made at the Customs Main Office or by way of the following link:

Email: customs@palaugov.org

Website: https://bcbp.pw/

Customs will only accept an application if all relevant information is present. After receiving the application, Customs officers will contact the applicant by phone to make the necessary arrangements to conduct a visit to the proposed warehouse. This is to inspect the building and ensure that the security component and storage areas meet Customs requirements.

The visit will determine if all the following regulatory and administrative requirements have been met:

• CCTV camera facility preferable in the entrance of the warehouse
• Sufficient lighting facilities in the warehouse
• Easy access to the warehouse
• Fire security system (fire extinguisher or a water host)
• Enough ventilation in the

If the proposed warehouse is not to the required standard, Customs officers will advise the applicant on any adjustments or improvement that needs to be done. If the proposed warehouse is at the required standard, the Customs officer will brief the applicant on conditions that have been set to operate a bonded warehouse.

Customs officers will then make the necessary recommendations to the Director of Customs for approval of the facility. It  will  take  Customs  maximum  three  days  after  the  visit  to  inform  the  applicant  in writing on the status of his/her application.

The approval for a bonded warehouse is not transferable from one proprietor to another or from one premise or location to another. Depending on the nature of the application, the Director of Customs can impose certain specific conditions when granting the authorization to operate a bonded warehouse.