Exemptions

Corporate Services Trade Tariff & Trade, Excise & Valuation Exemptions

What are Exempted Goods?

Exempted goods are goods imported into Papua New Guinea that, because of various Acts or decisions of Parliament, are not subject to Customs Duty.

Reporting Required The owner must still report the import of exempt goods to Customs, just like any other import.
Duty Applied Where goods would normally attract duty, Customs instead applies a zero rate.
Power to Exempt The power to exempt goods from duty lies with the Head of State, acting on advice, as stated in legislation.

Legal Framework for Exemptions

Primary Legislation

Exemptions are generally issued under specific provisions of key legislation:

  • Customs Duty: Section 9(1)(a) of the Customs Tariff Act 1990
  • Goods and Services Tax (GST): Section 25(8) of the Goods and Services Tax Act 2003

Key Exemption Laws

Goods may be exempted under various Acts, including:

  • Diplomatic and Consular Privileges and Immunities Act: Exemptions for foreign diplomats and missions.
  • Aid Status (Privileges and Immunities) Act: Exemptions for designated foreign aid organisations.
  • Customs Tariff Act 1990: General exemptions and reduced duty rates.
  • Loans and Assistance Act (Section 8): Exemptions under bilateral and multilateral agreements.

Types of Exemptions

Diplomatic and Consular Privileges

Papua New Guinea is a signatory to the Vienna Convention, the international agreement governing diplomatic relations between countries.

Key Aspects
  •   The privileges and immunities offered to foreign diplomats based in PNG are exactly the same as those enjoyed by PNG's diplomats in overseas missions.
  •   Includes exemption from paying Customs duties and other taxes.
Aid Status Privileges

An organisation and its attached personnel may be granted designated aid status by the Head of State, acting on advice.

Key Aspects
  •   Ensures aid being provided to PNG by foreign aid organisations is not impeded or restricted by domestic laws.
  •   Frees the organisation or individual from the requirement to pay Customs duties or other taxes under certain conditions.
  •   Duties or taxes must be paid if the specified conditions are not met.
  •   Contractors/Subcontractors: May not be exempt unless the contract with the aid agency specifically provides for it under Section 8 of the Loans and Assistance Act.
Customs Tariff Act Exemptions

Section 9 of the Customs Tariff Act allows the Head of State, acting on advice, to:

  •  Exempt from duty any goods (provided they are not being imported in relation to a commercial project), OR
  •  Substitute a reduced rate of duty for imported goods that would otherwise have attracted duty.
Specific Exemptions Granted
  • Community Organisations: Goods imported by a community organisation certified by the Secretary of the Department of Prime Minister as: not engaged in commercial activity; exclusively devoted to the public interest; and relating to the advancement of education and vocational training, or the provision of medical services.
  • Educational/Training Goods: Goods for educational or training purposes that meet all of the following conditions:
    • To be used by education or training institutions officially recognised by the Secretary for Education or the Commissioner for Higher Education
    • Not for sale, exchange or trade within 5 years
    • Imported on a firm and specific order
    • Cannot be locally produced or manufactured (in the Commissioner-General's opinion)
    • Certified by the Secretary for Education or Commissioner for Higher Education as necessary for approved curriculum or the institutions themselves
    • If disposed of within 5 years without prior written approval, apportioned duty for the remaining unused period is payable
    • When purchased on duty-free quotation/tender, sale price shall not exceed 120% of CIF value and be supported by import documents
Reduced Tariff Rates

The Head of State has also reduced tariff rates of duty for:

  1. Pacific Region Goods: Specified goods originating from certain countries in the Pacific region.
  2. Goods Assisting Local Industry: Goods the importation of which assists local industry.
Bilateral and Multilateral Treaties and Agreements

Papua New Guinea has Bilateral Trade Agreements and Multilateral Agreements with countries and international organisations.

Key Aspects
  •   Legal Basis: Clauses or articles in these agreements, as per Section 8 of the Loans and Assistance Act, provide for exemption from Customs duties and other taxes under certain conditions.
  •   End Use Obligation: Such agreements usually impose an end use obligation where exempt duties or taxes become liable if those conditions are not met.

Processing Your Exemption Application

Step 1: Submit a Written Application

Unless special arrangements have been made with PNG Customs, importers must apply in writing to the Tariff and Trade Branch for the granting of an exemption for each consignment.

Timing Submit applications well before the intended arrival date of the goods to allow sufficient processing time.
Content of Application Clearly state in writing:
  •  The nature of activity your organisation is engaged in
  •  The grounds for which exemption for duty and/or tax should be granted
  •  The appropriate legislation under which your organisation qualifies for exemption
  •  Whether the imported commodity qualifies as exempt goods
Step 2: Provide Supporting Documentation

It is very important that the applicant provides together with the letter to Customs all import documents relative to each import.

A checklist for required Import Documents
Airway Bill or Bill of Lading Transport document from the carrier.
Commercial Invoice Seller's invoice for the goods.
Packing List Detailed list of the contents of each package.
Purchase Order Buyer's order documentation.
Credit Note Any credit adjustments (if applicable).
Telegraphic Transfer Proof of payment transfer.
Manifest/Consignment Note Shipping manifest.
Any Email/Correspondences Relevant communications related to the transaction.
Step 3: Customs Processing
  1. Applications should be submitted to Customs marked for the attention of the Director – Tariff and Trade Section.
  2. Customs will confirm receipt of your application.
  3. Customs will process it as quickly as possible. This may take longer if further documentation is requested.
  4. If successful, you will be advised in writing.
Step 4: Clearance of Exempt Goods
Requirement Details
Present Approval Letter The exemption approval letter must be produced with supporting documentation when your Customs agent lodges your import entry at the port of discharge.
Normal Clearance Formalities Normal clearance formalities still apply to exempt goods. Customs or Quarantine may still inspect the goods.
Permits or Licences If goods require a permit or licence, they will only be released on production of that document to Customs – even if the goods are exempt.
Importer's Responsibility The importer is responsible for ensuring the importation meets all Customs requirements.
Step 5: Costs and Charges

Further costs and charges applied are primarily the responsibility of the Importer, these include:

  • Quarantine Charges
  • Wharf Handling Charges
  • Transport Company Charges
  • Customs Agent Fees

ℹ️ Important: Although goods may be exempt from Customs duty and other taxes, these charges are still the importer's responsibility and must be paid.

Delays in Exemption Processing

Cause of Delay Details
Late Application The application for exemption is not made prior to the arrival of the goods and in sufficient time for Customs to properly consider it.
Missing Approval Letter The exemption approval letter is not lodged with the import entry.

ℹ️ Customs is not responsible for any wharf charges or other costs incurred as a result of delays in clearing exempt goods – unless the importer can demonstrate that the delay occurred because of the neglect or wilful act of a Customs officer.

Need more information?

For further information on exemptions, to obtain application forms, or to submit an exemption application - contact Tariff and Trade Section, PNG Customs Service

Applications should be marked for the attention of:

Director – Tariff and Trade, Excise & Valuation
Level 2, Moale Haus, PNG Customs HQ
Melanesian Way, Waigani
Port Moresby, NCD

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