Customs Import Duties & Excise Duties

The authorities announced a good news and a bad news (see article from Brunei Times below). The good news was that import duties are being abolished for cars. The bad news was that this will be replaced by an excise duty with exactly the same rate. Impact - none to you and me. Slight administration adjustment to importers but otherwise absolutely no impact.

Why do this? It's the government's committments to WTO and to other international and regional agreements to bring import duties to zero or at least very low. Import duties discriminate against imports as home grown products are not dutiable. But if import duties are abolished and replaced by excise duties, then there will no longer be any discrimination between imports and home grown products. The theory is that imports can compete in any market and this will be better for everyone's development (except those industries which used to be protected which luckily enough for us, we do not have.)

Don't we gain anything? Well, there is the Brunei Japan Economic Partnership Agreement. Technically speaking with or without the Agreement, now that the authorities have reduced the import duties rate to zero, Japanese car exports will still be dutiable - excise duties. But, due to some technical quirks, car spare parts are still dutiable the same 20% under the import duties. But, with the agreement, car spare parts which are imported directly from Japan will be much cheaper because of the agreement between the two countries. So, buy Lexus. In the longer run, this is the only car which will have cheaper imports.

THE BRUNEI TIMES 1st January 2008

New tax plan for sin products, cars

THE government won't collect import duty on cigarettes, alcohol and motor vehicles starting today, but instead levy excise taxes on their sale in a bid to reconcile the sultanate's tax system under the trade deals it is pursuing with other countries.

The government assured since the excise taxes to be levied will be equivalent to the import duty collected previously, the public is not expected to feel any impact financially in their purchase of the said items.

Acting Permanent Secretary of the Ministry of Finance, Hj Md Rozan bin Dato Paduka Hj Md Yunos, yesterday made the announcement before the directors and senior officials of the government sector and representatives from the Brunei Automobile Transport Association and the Brunei Freight Forwarders Association.

To this end, the ministry issued Customs Import Duties Order 2007 and the Excise Duties Order 2007, which contain the changes. Under the rules, imports of motor vehicles and so-called sin product likes cigarettes, tobacco and alcoholic beverages will no longer be levied import tax. Instead, they will be slapped excise duty equivalent to the rates levied previously.

Both duties will be collected by the Royal Customs and Excise Department.

Assistant Controller of Customs, Ali Rahman Hj Tasim, said Brunei made the change "to fulfil the commitment of the country in reducing import customs taxes in the country, regionally and internationally in order to encourage trade among one another".

However, he added, the lowering of the rates should be made up for so that the government is not affected while providing services to the public.

Free trade deals usually require participating countries to gradually phase out import duties in a bid to spur trade. Once import duties or tariffs have been phased out, government loses out some revenues.

Both orders were made under the authority of the Customs Order 2006 and Excise Order 2006, which were released in 2006.

The orders also contain schedules stating the rates for import and excise duty to be imposed.

Under the orders, alcoholic beverages under Chapter 22 and involving 47 tariff lines, cigarettes and tobacco under Chapter 24 involving 29 tariff lines, and motor vehicles under Chapter 87 involving 640 tariff lines, will be imposed excise duties.

Under the Customs Import Duties Order 2007, the three schedules include Rate of Import Duty, Exemption From Import Duty, and Scheduled Persons.

Meanwhile, for the Excise Duties Order, the three schedules are Rate of Excise Duty, Exemption From Import Duty, and Scheduled Persons.

According to the Customs Import Duties Order 2007, duty must be paid for importing products into the country. While, Excise Duties Order 2007 requires the payment of excise duties which applies to products manufactured locally.

Those involved in the administrative changes such as motor vehicle importers will be given another briefing on January 2.

The Royal Customs and Excise department will also be holding a series of briefings on the issue.


Anonymous said…
Useful article. I was looking for more details and info on the excise duties payable for importing my car to Brunei. Any idea where can I take a look at the excise schedules of all taxable items, including cars? Thanks
Rozan Yunos said…
The list is very long and has only been recently gazetted. If you really need one, it's only available on hardcopy. Go to the Government Printing Department or the Attorney General's Chambers and purchased the gazettes on Customs Import Duties Order and Excise Duties Order.
Unknown said…
Actually I read it yesterday but I had some thoughts about it and today I wanted to read it again because it is very well written. Custom Car Hoods

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