1onga. No. 13 of 2003.

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f assent,

TAUFA 'AHAU TUPOU IV,

18th November, 2003.

AN ACTTO AMEND THE CUSTOMS AND EXCISE ACT

[4th of September 2003.]

BE IT ENACTED by the King and Legislative Assembly of Tonga in the- Legislature of the Kingdom as follows:

1. (I) This Aet may be cited as the Customs and Exci3e (AmendmentNo.3) Act 2003.

(2) The Cus!01llS &: Excisc I.\ct (C'.lp. (1) ,ti amcnded. is in this Aetrer~rred !d y..; tl'~:- j;wip;.!1 '\ 't.

( I) f'h;5 ACl .,lJ!! COin:-

ivh~jesty i!) ~\)tlncil.

Dch1imcd ['i I Ii;

2. (I) Section 15 of 1.lw Princi~,d Act is rcpeulccl.

(2) NotwithstanJing subsection (I). valuation of goods imported beforethe date of commencement of this f\ct shall continue to be valued

under section 15 as if it has not been repealed.

Short titleandcommence-ment

Amendment

of section 15

3. The Principal Act is amended by inserting the following Part at the end NewPARTof Part n - 11A

"PART UA

VALUATIONOF IMPORTED GOODS

Application 44A. This Part shall apply to all goods imported onor after the date of commencement of this Act.

Interpretation 44B. (I) In this Part, unless the context requires other-wIse -

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2 The Customs and Excise (Amendment No.3) Act -13 of 2003. The Custor.

"family" means, in relation to an individual, thehusband or wife of the individual, a relative ofthe individual, and a relative of the individual'~husband or wife, and "relative" means mother,father, brother, sister, ancestor or linealdescendant and includes any person who isadopted legally or customarily by or as a siblingto the individual;

"foreign inland insurance" means the cost ofany insurance relating to foreign inland freight;

"foreign inland freight" means the cost oftransportation (including loading, unloading,

"foreign inland freight" means the cost oftransportation (including loading, unloading,handling and other expenses associated withtransportation) of the goods to the place in thecountry of export from which the goods wereshipped to Tonga;

"identical goods", in relation to imported goods,means goods that the Chief Commissioner issatisfied -

(a) are the same in all material respects,including physical characteristics, qualityand reputation, as the imported goods;

(b) were produced in the same country as theimported goods; and

(c) were produced by or on behalf of theproducer of the imported goods.

but does not include goods in relation towhich -

(i) art, design, development, or engineer-ing work undertaken or substantiallyundertaken in Tonga; or

(ii) models, plans, or sketches prepared orsubstantially prepared in Tonga,

was or were supplied, directly or indi-rectly, by or on behalf of the purchaserfree of charge or at a reduced cost for usein relation to their production;

"overseas freight", in relation to importedgoods, means amounts (but not an amount ofoverseas insurance) paid or payable in respectof the transportation of the goods from theirplace of export to Tonga;

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The Customs and Excise (Amendment No.3) Act-13 of 2003.

"overseas insurance", in relation to importedgood,s, means amounts paid or payable inrespect of insurance of the goods from theirplace of export to Tonga;

"place of export", in relation to imported goods,means:

(a) the place where the goods were posted forexport to Tonga;

(b) the place in the country of export to Tongathat the goods were packed into a transportcontainer;

(c) if goods, not being goods referred to in(a) or (b), were exported from a countryby air or sea - the place where the goodswere placed on board a ship or aircraft forexport to Tonga; or

(d) in any other case - a place determined bythe Chief Commissioner;

"price", in respect of imported goods, meansthe sum of all amounts paid or payable, directlyor indirectly, for the goods by or on behalf ofthe purchaser to or for the benefit of the vendor;

"similar goods", in relation to imported goods,means goods that the Chief Commissioner issali:,fied-

(a) closely resemble the imported goods inrespect of their component materials andcharacteristics;

(b) are functionally and commercially inter-changeable with the imported goods;

(c) were produced in the same country as theimported goods; and

(d) were produced by or on behalf of the sameproducer as the imported goods,

but does not include goods in relation towhich -

(i) art, design, development, or engineeringwork undertaken or substantially under-taken in Tonga; or

(ii) models, plans, or sketches prepared orsubstantially prepared in Tonga,

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The Customs and Excise (Amendment No.3) Act-13 of 2003. The Cust.4

was or were supplied, directly or indirectly, byor on behalf of the purchaser free of charge orat a reduced cost for use in relation to theirproduction; and

"time of importation", in respect of goodsmeans the date on which the Chief Commis-sioner prescribes those particular goods aredeemed to be imported.

(2) For the purposes of this Part, two persons arerelated persons if -(a) both being natural persons -

(i) they are connected by family; or

(ii) one of them is an officer or directorof a company controlled, directly orindirectly, by the the other;

(b) both being companies -

(i) both are controlled. directly or indi-rectly, by a third person (whether ornot a company);

(ii) both together control, directly orindirectly, a third company; or

(iii) the same person (whether or not acompany) is in a position to cast, orcontrol the casting of 5% or more ofthe maximum number of votes thatmight be cast at a general meeting ofeach company;

(c) one person being a company is, directlyor indirectly, controlled by the otherperson (whether or not a company);

(d) one person being a natural person, is anemployee, officer, or director of the otherperson; or

Transaction

value ofimportedgoods not toapply

44D

Customs value 44C. (I)

(e) they are members of the same partnership.

For the purposes of any Act under which anyimport duty is imposed on imported goods byreference to their value, the value of the goodsfor customs purposes shall be the customs valuedetermined in accordance with this section.

(2) Subject to this section, the customs value ofimported goods shall be the transaction valueof the goods as determined under section 44E.

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The Customs and Excise (Amendment No.3) Act-13 of 2003.

Transaction

value ofimportedgoods not toapply

(3) If the Chief Commissioner cannot detennine thetransaction value of imported goods or thetransaction value cannot be used as a result ofsection 44D, the customs value of the goodsshall be determined in accordance with the fIrstof the following methods, applied in the orderset out below, that can be applied in respectof the goods -

(a) the transaction value of identical goods asdetermined under section 44F;

(b) the transaction value of similar goods asdetennined under section 440;

(c) the deductive value of the goods deter-mined under section 44H; or

(d) the computed value of the goods deter-mined under section 441.

(4) An importer may apply, in writing, to the ChiefCommissioner for the order of consideration ofthe methods in subsection (3)(c) and (d) to bereversed.

(5) An application under subsection (4) must bemade before the Chief Commissioner com-mences to determine the customs value of thegoods.

(6) If the customs value of imported goods cannotbe detennined under subsection (3). thecustoms value shall be determined undersection 44J.

44D. The transaction value of imported goods shall notbe the customs value of the goods if -

(a) there is a restriction on the disposition oruse of the goods by the purchaser, otherthan a restriction -

(i) imposed by Tongan law;

(ii) limiting the geographical area inwhich the goods may be resold; or

(iii) that does not substantially affect thevalue of the goods;

(b) the sale or price of the goods is subjectto a condition or consideration for whicha value cannot be determined;

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6 The Customs and Excise (Amendment No, 3) Act-13 of 2003.

Transaction

value ofimportedgoods

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(c) part of the proceeds of any disposal, useor resale of the goods by the purchaseraccrues, directly or indirectly, to thevendor, unless an appropriate adjustmentcan be made in tenns of section 44E(2)(g);or

(d) the vendor and purchaser are relatedpersons at the time the goods were soldfor export unless -(i) the Chief Commissioner is satisfied

that the relationship did not influencethe price paid or payable for thegoods; or '

44E, (I)

(ii) the importer satisfies the ChiefCommissioner that the transaction

value of the goods closely approxi-mates the transaction value, deductivevalue, or computed value of identicalor similar goods sold at comparabletrade and quantity levels to unrelatedbuyers in Tonga at or about the sametime as the goods to b~ valued.

The transaction value of imported goods is theprice of the goods at the time they are soldfor export to Tonga increased by the amountsspecified in subsection (2) and decreased by theamounts specified in subsection (3).

(2) For the purposes of computing the transactionvalue of imported goods, the price of the goodsshall be increased by the sum of the followingamounts paid or payable, directly or indirectly,by or on behalf of the purchaser in respect ofthe goods to the extent that the amount is notincluded in the price:-

(a) commission and brokerage, other thanbuying commission;

(b) packing costs, including any labour andmaterial costs;

(c) the cost of containers that are treated asbeing one with the goods;

(d) royalties or licence fees payable as acondition of sale, other than for the rightto reproduce the goods in Tonga;

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The Customs and Excise (Amendment No.3) Act-13 of 2003.

(e) the cost of foreign inland freight andforeign inland insurance;

(f) the cost of overseas freight and overseasinsurance;

(g) the whole or any part of the proceeds ofa subsequent use, resale or disposal of thegoods by or on behalf of the purchaser thataccrues to the vendor; and

(h) the value of any of the following goodsand services supplied, directly or indi-rectly, by the purchaser free of charge orfor reduced consideration for use inconnection with the production and salefor export of the imported goods, appor-tioned to the goods in a reasonable mannerand in accordance with generally acceptedaccounting principles -

(i) any materials, components, parts, andother goods incorporated in theimported goods;

(ii) any tools, dies, moulds, and othergoods utilised in the production of theimported goods;

(iii) any materials consumed in the pro-duction of the imported goods; and

(iv) any engineering, development, art, ordesign work, plans or sketches under-taken outside Tonga and necessaryfor the production of the goods.

(3) For the purposes of computing the transactionvalue of imported goods, the price of the goodsshall be decreased by the sum of the followingamounts to the extent that these amounts areseparately identified in the price paid or payablefor the goods;

(a) any expenditure incurred for the construc-tion, erection, assembling or maintenanceof, or technical assistance provided inrespect of the goods after importation;

(b) the cost of transportation (includingloading, unloading, handling and otherexpenses associated with transportation) ofthe goods after importation, and the costof any insurance relating to such transpor-tation; and

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Transactionvalue ofidentical goods

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44F. (I)

(c) any duties or taxes paid or payable byreason of the importation or sale of the

'goods in Tonga.

If the customs value of imported goods cannotbe determined under section 44E, the customsvalue shall be the transaction value of identicalgoods in a sale of those goods for export toTonga if -

(a) the transaction value of the identical goodsis the customs value of those goods; and

(b) the identical goods were exported toTonga at the same or substantially thesame time as the imported goods and weresold to a purchaser -

(i) at the same or substantially the sametrade level as the imported goods; and

(ii) in the same quantities as the importedgoods.

(2) If subsection (I) does not apply solely becauseidentical goods were not sold under theconditions specified in subsection (I)(b), thecustoms value of the imported goods may bedetermined by reference to the transaction valueof identical goods in a sale of those goods forexport to Tonga if the identical goods were soldunder any of the following conditions -(a) to a purchaser at the same or substantially

the same trade level, but in differentquantities from the imported goods;

(b) to a fJurchas;.:rat a trade level differentfrom the purchaser of the imported goods,but in the same or substantially the samequantities as the imported goods; or

(c) to a purchaser at a trade level differentfrom the purchaser of the imported goodsand in different quantities from theimported goods.

(3) The customs value of imported goods under thissection shall be the transaction value ofidentical goods referred to in subsection (I) or(2) adjusted to take account of -

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Transactionvalue ofsimilar goods

Deductivevalue

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The Customs and Excise (Amendment No.3) Act-'13 of 2003.

Transactionvalue ofsimilar goods

Deductivevalue

(a) commercially significant differences in theforeign inland freight and foreign inlandinsurance costs of the identical goods andthose costs for the imported goodsattributable to differences in distance andmodes of transport; and

(b) if subsection (2) applies, differences in thetrade levels, quantities, or both, as the casemay be.

(4) If, in relation to imported goods, there are twoor more transaction values for identical goodsthat meet the requirements of subsection (1) or(2), as the case may be, the customs value ofthe imported goods shall be determined on thebasis of the lowest of such transaction value.

(5) This section shall not apply if there isinsufficient information to determine thecustoms value of imported goods undersubsection (3).

44G. (I) If the customs value of imported goods cannotbe determined under section 44E or 44F, thecustoms value shall be the transaction value of

similar goods in a sale of those goods forexport to Tonga if -

(a) the transaction value of the similar goodsis the customs value of those goods; and

(b) the similar goods were expoited to Tongaat the same or substantially the same timeas the imported goods were sold to apurchaser -

(i) at the same or substantially the sametrade level as the imported goods; and

(ii) in the same quantities as the importedgoods.

(2) Section 44F(2) to (5) apply for the purposesof this subsection on the basis that the referenceto "identical goods" is a reference to "similargoods".

44H. (1) Subject to section 44C, if the customs valueof imported goods cannot be determined undersection 44E, 44F, or 44G, the customs valueshall be the deductive value of the goods.

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10 The Customs and Excise (Amendment No.3) Act-13 of 2003.

(2) If-

(a) the imported goods, or identical or similargoods are sold in Tonga at the same orsubstantially the same time as the time ofimportation of the imported goods;

(b) the goods were sold in Tonga in the samecondition in which they were imported;

(c) the sale was made at the fIrst trade levelafter importation; and

(d) the Chief Commissioner is satisfIed that thepurchaser in the sale was not related to theimporter and did not incut any costs referredto in section 44E(2)(h) in relation to thegoods sold,

the deductive value of the imported goods is theunit price of the imported goods, or identical orsimilar goods, as the case may be, at which thegreatest number of the goods are sold, reducedby the following amounts determined on a perunit basis -

(i) the amount of any commission;

(ii) an amount for profIt and generalexpenses, including all costs ofmarketing the goods based on salesin Tonga of goods of the same classor kind as the goods sold;

(iii) the cost of transportation of the goodsin Tonga (including loading, unload-ing, handling and other expensesassociated with transportation) andinsurance in relation to such transpor-tation to the extent not deducted underparagraph (ii); and

(iv) any amount referredsection 44E(3)(c).

into

(3) If-

(a) the imported goods, or identical or similargoods are not sold at the same orsubstantially the same time as the time ofimportation but are sold within 90 daysafter the time of importation; and

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Computedvalue

The Customs and Excise (Amendment No.3) Act-;\3 of 2003.

(b) subsections (2)(b) to (d) are satisfied,

the deductive value of the imported goods isdetennined in accordance with subsection (2)by reference to such later sale.

(4) If-

(a) the imported goods, or identical or similargoods are not sold in Tonga at the timeof importation or within 90 days after thattime;

(b) the goods are sold in Tonga, after beingassembled, packaged, or further processed,within 180 days after the time ofimportation; and

(c) subsections (2)(b) to (d) are satisfied,

the deductive value of the imported goods isdetermined, at the request of the importer, inaccordance with subsection (2) by reference tosuch sale and making a reduction on a per unitbasis for the value added attributable to theassembly, packaging or further processing inTonga.

(5) Subsection (4) shall not apply if the ChiefCommissioner has insufficient information todetermine the amount of the reduction for thevalue added attributable to the assembly,packaging or further processing in Tonga.

Computedvalue

44L ( I) If the customs value of imported goods cannotbe determined under section ME, 44F, 440, or44H, the customs value shall be the computedvalue of the goods.

(2) The computed value of imported goods is thesum of the following amounts -

(a) the cost or value of materials used inproducing the goods;

(b) the cost of manufacture or processing toproduce the goods;

(c) any costs referred to in subsec-tions 44E(2)(c), (f) and (g);

(d) the value of any goods or services referredto in section 44E(2)(h); and

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12 The Customs and Excise (Amendment No.3) Act-13 of 2003. Tonga.

Residualmethod ofvaluation

Importeradvised ofmethod ofcomputation

44J.

(e) an amount for profit and general expensesequal to that generally applicable in salesof goods of the same class or kind as theimported goods, which are made byproducers in the country of exportation.

If the customs value of imported goods cannot bedetermined under the preceding sections, the valueshall be determined by the Chief Commissionerhaving regard to the methods for valuation specifiedin this Part and to any other information availableto the Chief Commissioner but not including any ofthe following matters -

(a) the selling price in Tonga of goodsproduced in Tonga;

(b) any system that provides for the accep-tance for valuation purposes of the higherof two alternative values;

KE FAKATON(c) the selling price of goods on the domestic

market of the country of exportation of theimported goods;

(d) the cost of production, other than com-puted values which have been determinedfor identical or similar goods in accor-dance with section 441;

'OKU TU'UTU'Ul'Alea '0 e Pule'ang

1. (I) 'E ui 'a t

mo e Tut,

(e) the price of the goods for export to acountry other than Tonga:

(f) a system of minimum customs values: or

(g) arbitrary or fictitious values.

(2) 'Oku ui "FakatlJl1l1tc

(3) Kuo pall .'e he "En

44K. The Chief Commissioner shall, upon written request,advise the importer, by notice in writing, of themethod used to determine the customs value of

imported goods."

2. (I) 'Oku fak<

(2) Neongo ';kimu'a'i

'i he kup

3. 'Oku fakatonuko 'eni hili' fPassed in the Legislative Assembly this 4 day of September, 2003.

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FAKAMA

Ngaue'aki

'Uhinga'j lea

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