The law on duty-free purchases of US$50 or less
Most of us who shop online and import items through courier agencies know that Jamaica Customs Agency (JCA) will not charge customs duties on personal items valued under US$50. What many are only just learning, is that JCA will often disregard any discount displayed on the invoice and assess the duty on the pre-discount price. In this article we look at why they are wrong to do that and what, if anything, you can do about it.
The US$50 threshold, or what the Customs Agency calls the de minimis value, is explained in JCA’s guide titled “Importation of Personal Items”. The document was last revised in June 2018. Personal items are defined as “those goods whose nature, quantity, and intended use indicate that they are for private, personal or household consumption and do not reflect any commercial intent.” The guide says that packages with a Free on Board (FOB) value of US$50 or less will not attract customs charges, but “if the value is greater customs charges will be calculated on the full value.” The term “full value” is not defined in the guide, but there are detailed provisions in the Customs Act for determining the value of imported goods.
The Customs Act says that, subject to certain exceptions, the customs value of imported goods shall be the “transaction value” which is “the price actually paid or payable for the goods when sold for export to the Island.” Those exceptions include, for instance, where the buyer and seller are related or where the seller receives a commission or from the proceeds of sale by the buyer. Save for those exceptional circumstances listed in the Act, the JCA is not permitted to ignore a discount that is legitimately given to a buyer and apply a higher value than what was actually paid for the imported item. It therefore should not matter if that discount is shown on the invoice.
If the importer has been assessed for duty on a higher value than shown on the invoice, the Act gives them the right to request of the Commissioner of Customs written reasons as to how the customs value of the goods was determined. On receipt of those reasons, the importer may request a review of the valuation and if dissatisfied with the review, they may file an appeal to the Revenue Appeals Division. They may also appeal the Revenue Appeals Division’s decision to the Revenue Court, which is a specialized division of the Supreme Court.
Before taking the matter to court, however, there are 2 important factors to consider. First, the US$50 threshold does not appear to be part of our law but more likely is an administrative policy decision that can be changed or removed by JCA at any time. If so, then online shoppers would not have a legal right to not pay customs charges on personal items below the threshold. In other words, you could ruin a good thing for everyone.
Second, the JCA has the right to include the cost of air freight to Jamaica in the value of the goods but thus far they have not done so. They are not permitted to include any transportation costs after the goods have been imported, such as delivery charges from their offices to your home. The shipping and handling costs to get the personal items into the island are usually determined based on the weight of the item and will often be between US$6 and $12.
Decisions of the JCA are subject to review by, or appeal to the Supreme Court and must be shown to be both legal and reasonable. They are legal when the Commissioner and his agents act within the 4 corners of the law, which in this case, would be the Customs Act. They are reasonable when the law gives the Commissioner or his agents a discretion to exercise and there is some basis, however slim, that supports the exercise of that discretion. The practice of ignoring legitimate discounts would appear to be an illegal one. However, based on the discretion exercised in importers’ favour to have the US$50 threshold in the first place, there may be little practical value in raising the issue in Court.
Gavin Goffe and Jahmar Clarke are attorneys at Myers, Fletcher and Gordon and members of the firm's Litigation Department (Tax Practice Group). They may be contacted at firstname.lastname@example.org and email@example.com or through the firm's website www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice