Customs responds to purchase costs

THE Customs and Excise Division has noted numerous complaints over social media regarding charges applied to items purchased by the public and imported via Express Consignment Cargo Reporters (courier companies).

To ensure greater understanding of the calculation of these charges, the Comptroller of Customs and Excise Division, in a press release on Wednesday, advised that the customs value (also called CIF – Cost, Insurance and Freight) of an item is determined by calculating the sum of the cost (invoice value), insurance (if paid) and freight (the cost of shipping).

Once the customs value of the item has been determined, duties and taxes inclusive of Online Purchase Tax (OPT) are applied as shown in two examples:

Example 1

Clothing imported with an invoice value of US$400;

Invoice value – US$400;

Insurance – US $10.00

Freight – US$150

Customs Value (US$)– 400 + 10 + 150 = US$560

Rate of Exchange – TT$6.77 to US$1

Customs Value (TT) – $560 x 6.77 = TT$3,796.57

Rate of Import Customs Duty (ICD) on clothing – 20%

Import Duties – $3,796.57 x 20% = $759.31

Online Purchase Tax (OPT) = $3,796.57 x 7% = TT$265.76

Value Added Tax (VAT) = ($3,796.57+$759.31+$265.76) x

12.5% = $602.71

Total Taxes Payable = 759.31 + 265.76 + 602.71 = TT $1,627.78

Example 2

A Laptop imported with an invoice value of US$400

Invoice value – US$400

No insurance paid

Freight – US$22

Customs Value (US$) – 400 + 22 = US$422

Rate of Exchange – TT$6.77 to US$1

Customs Value (TT) – $422 x 6.77 = TT$2,860.99

Rate of Import Customs Duty (ICD) on laptop = 0%

Import Duties = $0.00

Online Purchase Tax (OPT) = $2,860.99 x 7% = $200.27

Value Added Tax (VAT) = ($2,860.99 + $200.27) x 12.5% = $382.66

Total Taxes Payable = $200.27 + $382.66 = TT $582.93

The press release noted that the rate of exchange to be used in any period shall be that notified to the Comptroller by the Central Bank, in accordance with Section 23 (3) of the Customs Act, Chapter 78:01.

Additionally, Import Duty rates are listed under the respective tariff heading number of the item as classified under the First Schedule of the Customs Act, Chapter 78:01.

Online Purchase Tax (OPT) is applied at a rate of 7% of the Customs Value of goods that have been purchased by means of an electronic transaction, imported into TT by air transportation, consigned to a consumer and entered from a transit shed in accordance with Section 70 of the Miscellaneous Taxes Act, Chapter 77:01.

VAT is calculated at a rate of 12.5% of the Customs Value and other Ttaxes on importation, in accordance with Sections 7 and 9 to 12 of the VAT Act, Chapter 75:06.

The release pointed out that charges such as fuel surcharge, miscellaneous fees or handling charges are not Customs charges. Members of the public should ensure that a copy of the supplier’s invoice is included with their online purchases. In cases where invoices are not provided or the declared values are found to be unacceptable, the public is advised that the Customs Value shall be determined in accordance with the Sixth Schedule of the Customs Act Chapter 78.01.

All breaches pertaining to a false declaration, evading Customs Laws or concealment of goods will be dealt in accordance with Sections 212 to 214 of the Customs Act, Chapter 78:01.