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Customs policy, procedures, rules and regulations are the responsibility of the Division of Customs and Taxation Administration (DCTA) of the Department of Finance and Tax Administration. (DFTA)

While each State maintains various departments, at state level customs is regulated and controlled nationally with an office in each of the 4 states.

Duties and Tax Exemption

Duties and tax exemption can be applied for all goods that are part of a foreign aid program and for all good which are used for humanitarian purposes. Tax exemption requests must be agreed to and approved by the Secretary of the Department of Finance and Tax Distraction.

Applications are made on a consignment or case by case basis and organisations are not given a blanket exemption based on the organisations activities.

All goods which are classified as being goods that fall under the import category of Foreign Aid and also for use in Humanitarian Aid are tax exempted. However any of these goods being imported under such classification and subsequently which are sold will attract the all taxes. Imported goods which are donated are not taxed. (Source: Dept Customs and Tax Administration (Palikir)

Emergency Response

[Note: This section contains information which is related and applicable to 'crisis' times. These instruments can be applied when an emergency is officially declared by the Government.  When this occurs, there is usually a streamlined process to import goods duty and tax free.]

In the following table, state which of the following agreements and conventions apply to the country and if there are any other existing ones

Agreements / Conventions Description

Ratified by Country?

(Yes / No)

WCO (World Customs Organization) member

No

Annex J-5 Revised Kyoto Convention

No

OCHA Model Agreement

No 

Tampere Convention (on the Provision of Telecommunication Resources for Disaster Mitigation and Relief Operations)

No

Regional Agreements (on emergency/disaster response, but also customs unions, regional integration)

Public Law 15-58 section Compact of Free Association with United States

Exemption Regular Regime (Non-Emergency Response)

Duties and tax exemption fall under Section 222 of title 54 1 of the Code of the 2 Federated States of Micronesia Amendment 15-118. Specifically section 6 Refers to the exemption for goods imported for foreign aid projects and Section 9 refers to good used for humanitarian purposes.

The procedures and polices do not change with the enactment of a state of disaster or emergency.

The official process to be followed for taxes exemption is the same.

 While an organisation can directly apply for tax exemption directly to the DFTA during non-disaster times, during a national state of emergency channelling duty and tax exemption requests through the Department of Environment, Climate Change, and Emergency Management  (DECEM) who are the national focal point and cluster coordination focal point will be able to expedite exemption requests directly to the Secretary.   

Organizational Requirements to obtain Duty Free Status

United Nations Agencies

  All UN Organisations are exempt from duties and taxes if the goods are for the use in humanitarian programs assessed on a case by case or individual consignment bases

Non Governmental Organizations

All Non-Government Organisations are exempt from duties and taxes if the goods are for the use in humanitarian programs assessed on a case by case bases individual consignment basis.

Note: Organisations cannot get a blanket exemption based on the organisation activities. (source Assistant Secretary to DCTA)

Exemption Certificate Application Procedure

 

Duties and Taxes Exemption Application Procedure

Generalities (include a list of necessary documentation)

 

 The Tax exemption process requires only standard transport and shipping documentation to request the exemption.

Documentation Required

  1. Copy Air Waybill/ Bill of Lading
  2. Copy Commercial Invoice. Indication value of goods
  3. Itemised Packing List
  4. Letter of Donation detailing consignee -If being donated to DECEM or Govt Department
  5. Letter of Request for duty and tax exemption detailing purpose of use i.e. humanitarian disaster relief.

Process to be followed (step by step or flowchart)

 

  1. Pre Shipment Approval
    1. Goods donated to FSM Govt Entities and Agencies
    2. For all goods being donated to Government entities and agencies it is essential that prior to shipment, Approval for from the departments as the consignee, has been granted. This includes DECEM, Department of Health and all other departments
    3. There must be documented approval of the packing list and the agreement to receive the goods consigned
  1. Obtain Dispatch Documents from Point of Origin
    1. Obtain from point of origin
    2. Original Bill of Lading/ Airway Bill
    3. Commercial Invoice/ Invoice for value of goods in consignment
    4. Itemised packing list
    5. Letter of Donation
  2. Send Original Documents
    1. Courier copies or original documentation -Specific to consignment to in country contact.
    2. Shipping Agent if relevant
    3. National Office or organisation
    4. If DECEM or Govt Department consignees  they must be notified prior to dispatch
  3. Arrival of documents
    1. Obtain Request for Tax exemption letter from Govt Dept. or Organisation to complete
  4. Submit to DECEM
    1. Take all original documentation to DECEM to facilitate exemption request to DCTA
  5. DCTA Approval
    1. Once Exemption is granted take documentation to Customs agent at point of import or shipping agent if applicable

 

Exemption Certificate Document Requirements

 

Duties and Taxes Exemption Certificate Document Requirements (by commodity)

 

Food

NFI (Shelter, WASH, Education)

Medicines

Vehicle & Spare Parts

Staff & Office Supplies

Telecoms Equipment

Invoice

Yes, 1x copy

Yes, 1x copy

Yes, 1x copy

Yes, 1x copy

Yes, 1x copy

Yes, 1x copy

AWB/BL/Other Transport Documents

Yes, 1x copy

Yes, 1x copy

Yes, 1x copy

Yes, 1x copy

Yes, 1x copy

Yes, 1x copy

Donation/Non-Commercial Certificates

Yes Letter of Donation

1x copy

Yes Letter of Donation

1x copy

Yes Letter of Donation

1x copy

Yes Letter of Donation

1x copy

Yes Letter of Donation

1x copy

Yes Letter of Donation

1x copy

Packing Lists

Yes, 1x copy

Yes, 1x copy

Yes, 1x copy

Yes, 1x copy

Yes, 1x copy

Yes, 1x copy

Other Documents

Letter of Duty and Taxes

Exemption Request Original

Letter of Duty and Taxes

Exemption Request Original

Letter of Duty and Taxes

Exemption Request Original

Letter of Duty and Taxes

Exemption Request Original

Letter of Duty and Taxes

Exemption Request Original

Letter of Duty and Taxes

Exemption Request Original

Additional Notes

Medical Items- There are no specific requirement for import of medical items other than outlined above

Vehicles- There are no specific documentation requirement for the import of vehicles for use in humanitarian or disaster programs

Communications Equipment- There are no specific requirements for the importation of Satellite phones / VHF or HF radios

(Source :Assistant Secretary -Division of Customs and Tax Administration Palikir)

Customs Clearance

General Information 

Customs Information

Document Requirements

As Outlined Above

Embargoes

None

Prohibited Items

Firearms, illegal drugs

General Restrictions

There are no general restrictions

Customs Clearance Document Requirements

Customs Clearance Document Requirements (by commodity)

 

Food

NFI (Shelter, WASH, Education)

Medicines

Vehicles & Spare Parts

Staff & Office Supplies

Telecoms Equipment

D&T Exemption Certificate

Yes 1 x original

Yes 1 x original

Yes 1 x original

Yes 1 x original

Yes 1 x original

Yes 1 x original

Invoice

Yes 1 x original

Yes 1 x original

Yes 1 x original

Yes 1 x original

Yes 1 x original

Yes 1 x original

AWB/BL/Other Transport Documents

Yes 3 x original

Yes 3 x original

Yes 3 x original

Yes 3 x original

Yes 3 x original

Yes 3 x original

Donation/Non-Commercial Certificates

Yes Letter of Donation

1x Original

1x Copy

Yes Letter of Donation

1x Original

1x Copy

Yes Letter of Donation

1x Original

1x Copy

Yes Letter of Donation

1x Original

1x Copy

Yes Letter of Donation

1x Original

1x Copy

Yes Letter of Donation

1x Original

1x Copy

Packing Lists

Yes 1 x original

Yes 1 x original

Yes 1 x original

Yes 1 x original

Yes 1 x original

Yes 1 x original

Phytosanitary Certificate

No

No

No

No

No

No

Other Documents

 

 

 

 

 

 

Additional Notes

Used clothing

For the import of used clothing items no phytosanitary certificate is required to facilitate the import. However such good however will be inspected by quarantine. Should there be identifiable contamination the container will be decontaminated at cost to the consignee.

Transit Regime

No ports in FSM have bonded facilities but can however store full containers for goods in transit. 

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