ASG Customs to levy 5% excise tax based on new parameters
The Department of Treasury, Customs Division has written a letter to “all concerned” of the new way Customs will be computing the 5% excise tax it currently levies on all goods for sale or commercial use coming into the Territory, as of February 1, 2017. However, Samoa News has found out that apparently not all businesses have received the letter — it was ‘handed out’ to some businesses by Custom’s agents.
The letter is dated January 18, 2017, and is from the Chief of Customs Moetului S.U. Fuiava.
It states effective Feb. 1, 2017, “customs will include freight and insurance costs in calculating excise taxes. Only bulk fuel will be exempted from this edict.”
The current method of calculating excise taxes is based on the FOB — “freight on board’ — value of goods, which excludes freight and insurance; the excise tax rate is 5%, as outlined in the annotated code of the American Samoa, section 11.1002.
However, in his letter, the Chief of Customs points to the new way of calculating excise taxes as “in line with the annotated code of the American Samoa, section 11.1002.
Moetului writes that the code “states that the basis for computing the excise tax is the price of the items, except for certain petroleum products and shall include costs, charges, and expenses incident to placing the items in conditions, packed and ready for shipment to American Samoa. The basis for computing the tax on certain petroleum products shall be gallons; freight charges, insurance, and other shipping expenses shall not be included in the basis for the computing the tax.”
Samoa News looked up the American Samoa annotated code on “Excise Tax on Imports” — Chapter Ten and found the following:
Section 11.1002 is subtitled “Amount of tax on certain items” and lays out the excise tax rate on certain items, including the 5% excise tax rate on goods, “not listed in subsections… which are imported for commercial use or resale purposes.” This section does not have the ‘basis for computing the excise tax’ the Chief of Customs is pointing to as the reason for their new way of computing the excise tax.
The basis for computing the excise tax is found in Section 11.1001 “Imposition-Basis for computation —Conditional release.”
However, it differs from what Moetului is saying, in that it is states in three parts:
(a) An excise tax shall be levied and paid at the point of entry, on the items listed in 11.1002, except those items imported by the United States Government.
(b) The basis for computing the tax is the purchase price of the items, except for certain petroleum products, and shall include costs, charges, and expenses incident to placing the items in condition, packed and ready for shipment to American Samoa. The basis for computing the tax on certain petroleum products shall be gallons. Freight charges, insurance, and other shipping expenses shall not be included in the basis for computing the tax.
(c) All items released by customs officers as duty free at the time of entry shall be entered as conditionally duty free and subject to duty if within 90 days of entry it is discovered that the items should have been taxed.
Samoa News points out that essentially, the Chief of Customs has put a semi-colon at the end of the sentence, “The basis for computing the tax on certain petroleum products shall be gallons” instead of the period that appears in the annotated code version.
By doing so he has connected the sentence that follows, “Freight charges, insurance, and other shipping expenses shall not be included in the basis for computing the tax” to read as relating only to petroleum products, and not to all goods entering American Samoa.
Under this manifestation of the code, Moetului has in effect “re-interpreted” or “rewritten” the statute allowing for the excise tax to be levied on goods based on CIF (cargo, insurance, freight) and not the FOB (freight on board) value of the goods.
Business owners who have received the letter or been made aware of the existence of the letter are extremely upset.
One saying, “Customs has creatively rewritten the Code by inserting a semi colon where a period exists. The letter also cites the wrong Code section.” While another says, “Now there's a perfect example of "taxation without representation"!! What happened to the January 11 meeting we were supposed to have with the governor and key staff to address these issues?”
The difference in price of goods is as a business owner said, “A saimin package that now costs 25¢ would be around $1.00. So much for a government for the people!”