Rules of Implementation Of The GCC Common Customs Law

Rules of Implementation Of The GCC Common Customs Law

CHAPTER (I)

Value of goods for customs purposes

Pursuant to the provisions of Article (26) of the GCC Common Customs Law, the Value of Goods for Customs Purposes shall be determined as follows:

Article (1)

Principles for determining the Value for Customs Purposes as set forth in the Rules of Implementation of the GCC Common Customs Law

I. General Provisions

1. The importer has the right to withdraw his goods upon submitting sufficient guarantee in form of bank or cash deposit, bank guarantee,

surety or mortgaged property of equivalent value covering the assessed customs taxes “duties”, if it is found that the final determination of the customs value is delayed.

2. The importer or any person liable for payment of the customs duties can object and appeal against the assessment of customs value, without penalty, as following:

a. At the administration level:

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i. Director, customs port,

ii. Valuation adjudication committee

b. An independent judiciary body.

3. The information, confidential or provided on a confidential basis for purposes of customs valuation, shall, be treated as strictly confidential, and may not be disclosed except to the extent required to be disclosed in the context of judicial proceedings.

4. If the declared value is stated in a foreign currency, it should be converted to the domestic currency on the basis of exchange rate announced in bulletins issued by the competent agencies. The registration date of customs declaration shall be the date approved for currency exchange rate.

5. In determining the customs value of the imported goods, no discounts or deductions made after the date of importation in the payable or actually paid price will be considered. Also, no credit balances pertaining to previous consignments will be considered at the date of customs declaration registration of the goods being valued at the customs offices.

6. This Article does not contain any provision that implies restrictions to

1or doubt in, the right of the Customs to undertake whatever is necessary to ascertain the validity or accuracy of any statement, document or undertaking submitted to the customs for valuation purposes.

7. (A) If accounting information is required to be utilized for

determining the customs value for purpose of applying the provisions

of the Clauses IV to VIII of this Article, such information shall be

utilized in a manner consistent with generally accepted accounting principles in the GCC countries when applying the Article in question.

(B) The customs may not refuse information prepared according to

the generally accepted accounting principles, and submitted by the importer, buyer or producer in connection with the valuation of goods,

on the grounds of accounting principles used.

8. Taking into account provisions of the Clause IV.B of this Article, and in determining the customs value of the information carrier media such

as the magnetic tapes or the like, containing data or computer

software recorded thereon, the value shall be assessed on the basis

of value of such media only without determining the value of

information recorded thereon.

9. Upon written request, the importer has the right to an explanation in writing from the customs administration as how the customs value of the imported goods was determined.

II. Definitions:

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Taking into account the text of Article 2 of the GCC Common Customs Law, and for the purpose of implementing this Article to determine the value for customs purposes, the following words and expressions mean: 1. “Price actually paid or payable” means the total payment made or to be made by the buyer or under his knowledge, to or for the benefit

of the seller for the imported goods. The payment need not

necessarily take the form of a transfer of money. The payment may be made by way of letters of credit or negotiable instruments. Payment

may be made directly or indirectly such as settlement by the buyer, in whole or in part, of a debt owed by the seller.

2. “Imported goods being valued” means the goods being valued for customs purposes.

3. “Packing costs” means the cost of all containers (excluding instruments of international traffic) and coverings of whatever nature

and of packing, whether for labor or material, used in packing the for shipment to the GCC States.

4. “Produced” includes grown, manufactured, mined (raw material), the services, or intellectual products.

5. “Related persons” means:

(1) legally recognized partners in business;

(2) officers or directors of one another?s business;

(3) employer and employee;

(4) any person directly or indirectly owns, controls or holds five per

cent or more of the outstanding voting stock or shares of both of

them;

(5) one of them directly or indirectly supervises or controls the other;

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(6) both of them are directly or indirectly supervised or controlled by a third person;

(7) together they directly or indirectly control a third person; or

(8) Members of the same family.

6. “Identical goods” means goods that are the same in all respects, including physical characteristics, quality and trade reputation to, and produced in the same country and by the same person as, the goods being valued. Minor differences in appearance that are ineffective in the value, would not preclude goods which otherwise conform to the definition, from being considered as identical goods. If identical goods produced by the same person cannot be found, goods identical in all respects to, and produced by another person, may be treated as identical goods. “Identical goods” do not include the goods that incorporate or reflect any engineering, development, artwork, design work, plan or sketch undertaken in the GCC States, that are not included in settlements of the transaction value according to the Clause IV.B.1.iv.(d) of this Article.

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7. “Similar goods” means the goods produced in the same country and by the same producing person, although not alike in all respects, as

the goods being valued, in characteristics, component materials and capability of performing the same functions, and commercially interchangeable with the goods being valued. The quality of the

goods, their trade reputation, and existence of a trademark will be factors considered to determine whether the goods are similar. If similar goods produced by the same person cannot be found, goods produced in the same country as, but not produced by the same person, which are like the goods being valued in characteristics and component materials, and are commercially interchangeable with the goods being valued, may be treated as “similar goods”. “Similar goods” do not include the goods that incorporate or reflect any engineering, development, artwork, design work, plan or sketch undertaken in the GCC States, that are not included in settlements of the transaction value according to the Clause IV.B.1.iv.(d) of this Article.

8. “Unit price in greatest aggregate quantity” means the price at which goods are sold in greatest aggregate quantity that is enough to determining unit price in transactions of sale to persons who are not related to the persons from whom they buy such goods, at the first commercial level after importation in the application of any of the Clause VI.

9. “Goods of same class or kind” means the goods which fall within a group or range of goods produced by a particular industry or industrial sector, including but not limited to, identical or similar goods.

10. “Generally Accepted Accounting Principles” means the recognized consensus or substantial authoritative support, at a particular time, regarding the following:

(1) resources and obligations that should be recorded as assets and liabilities;

(2) changes in assets and liabilities that should be recorded;

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(3) how the assets and liabilities, and changes in them should be measured;

(4) what information should be disclosed and how it should be disclosed; and

(5) which financial statements should be prepared.

11. “Objective Data” means the information that helps in verifying the following:

(1) an amount added according to Clause IV (b) of this Article to the price actually paid or payable;

(2) any adjustment according to Clause V of this Article;

(3) an amount deducted according to Clause VI of this Article considered as being profit or general expenses, or value arising

from further processing; and

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(4) an amount added according to Clause VII of this Article

considered as being a profit or general expenses.

III. Methods of Customs Valuation:

A. Imported goods will be valued on the basis, and in the order, of the following:

(1) The transaction value provided for in Clause IV;

(2) The transaction value of identical goods provided for in Clause

V (a), if the transaction value cannot be determined according

to Clause IV;

(3) The transaction value of similar goods provided for in Clause V

(b), if the transaction value of identical goods cannot be

determined;

(4) The deductive value provided for in Clause VI, if the transaction value of similar goods cannot be determined;

(5) The computed value provided for in Clause VII, if the deductive value cannot be determined; or

(6) The flexible method provided for in Clause VIII, if the computed value cannot be computed.

B. The importer may request application of the computed value method before the deductive value method. Such request must be made at the time of submitting the Customs Declaration to the customs port. If the importer makes the request, but the value of the imported goods

cannot be determined using the computed value method, the goods

will be valued using the deductive value method if it is possible to do so. If it is found impossible, the value will be determined according to Clause VIII.

IV. Transaction value of the goods being valued:

A. The customs value of the goods imported to the GCC States shall be the transaction value i.e., the price actually paid or payable when the goods are sold for export to the GCC States, according to the provisions of Clause (B) under this method, and subject to the

following conditions:

1. that there are no restrictions as to the disposition or use of the imported goods by the buyer, other than the restrictions provided

for in the GCC Common Customs Law, restrictions that limit the geographical area in which the goods may be resold; or the

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restrictions that do not substantially affect the value of the goods; 2. that the sale or price is not subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued;

3. that no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the --

seller, unless an appropriate adjustment can be made according to the provision of Clause (B) under this method;

4. that the buyer and seller are not related according to Clause II.5 of this Article, or where the buyer and seller are related, that the transaction value is acceptable for customs purposes according to the provisions of Clause (A) under this method, if any of the following conditions is met:

a. if an examination of the circumstances surrounding the sale demonstrates that the relationship between the buyer and the seller did not influence the price actually paid or payable; or

b. if the transaction value of the imported goods closely approximates to one of the test values noted below:.

i. a transaction value of identical or similar goods in sales to unrelated buyers at the GCC States;

ii. a customs value of identical or similar goods as

determined under the Clause VI: Deductive Value;

iii. a customs value of identical or similar goods as

determined under the Clause VII: Computed Value

- When applying Clause IV.A.4.b, the difference adjustment will be taken into account if existed between the declared value and the test value, based on objective data provided by the buyer or available to the customs according Clause II.11 taking into account Clause IV.B. of this Article. These test values may not be used as a substitute value.

B. Additions to the price actually paid or payable (Adjustments):

1. In determining the customs value according to this Clause IV, the following costs will be added to the extent incurred by the importer but are not included in the price actually paid or payable for the imported goods:

i. commissions and brokerage, except buying commission;

ii. the cost of the containers which are treated as being one for customs purposes with the goods in question;

iii. the cost of packing whether for labor or materials;

iv. the value of the following goods and services (assists) provided by the buyer, directly or indirectly, free of charge or at a reduced cost, for its use in the production of the

imported goods and sale thereof for export to the GCC States, provided that such value is properly apportioned:

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(a) materials, components, parts and similar items used in production of the imported goods;

(b) tools, dies, molds and similar items used in production of

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the imported goods;

(c) materials consumed in production of the imported goods;

and

(d) engineering, development, artwork, design work, and

plans and sketches undertaken elsewhere than the GCC

States, and necessary for the production of the imported

goods.

v. royalty and license fees related to the goods being valued

that the buyer must pay, either directly or indirectly, as a

condition of sale of the goods being valued, to the extent

that such royalties and fees are not included in the price

actually paid or payable;

vi. the value of any part of the proceeds from any subsequent

resale, disposal or use of the imported goods that accrues

directly or indirectly to the seller;

vii. the cost of transport of the imported goods to the port or

place of importation; and

viii. loading, unloading, handling and insurance costs associated

with the transport of the imported goods to the port or place of importation.

2. No additions shall be made to the price actually paid or payable except according to the provisions of Clause IV.B. of this Article.

Any addition must be made only on the basis of objective and quantifiable data, i.e., on the basis of facts supported by actual

figure without personal interpretation taking into account Clause

II.11 of this Article. Otherwise, arriving at the transaction value will

not be considered feasible under this method.

C. Exclusions from the transaction value:

The value for customs purposes shall not include the following costs and amounts provided that they are identified separately from the price actually paid or payable:

1. Post-importation costs, such as:

a. charges for construction, erection, assembly, maintenance or technical assistance, undertaken after importation of goods to

the GCC States;

b. transportation, loading, unloading, handling and insurance

charges of the imported goods after importation;

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c. customs duties or any other taxes levied on the imported

goods after importation to the GCC States;

d. dividends or other payments from the buyer to the seller that

do not relate to the imported goods;

e. interest that might have accrued on the basis of a financial

agreement concluded by the buyer for purchasing the

imported goods;

f. activities undertaken by the buyer on his own account;

2. credit balances with the buyer in favor of the importer;

3. amounts of export subsidy that might be provided by some

countries for exportation of some goods; and

4. any anti-dumping amounts when goods are sold at dumped prices

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(i.e., less than the cost), since the dumping must be treated

according to the Anti-Dumping Agreement.

D. If it is found that there are reasonable grounds to doubt validity of the submitted documents or the data contained therein, the importer should be notified in writing, upon his request, of such grounds, and will be

given sufficient time, to be specified by the customs port, to provide response. If he does not provide evidence acceptable to the customs

port within such period, and the customs value could not be determined according to the provisions of Clause IV of this Article, the value must

then be determined according to the methods specified in Clauses V to VIII sequentially until a customs value according to a practical method is established.

V. The transaction value of Identical and Similar Goods:

A. the transaction value of identical goods already accepted as a transaction value according to Clause IV of this Article, sold for export to the GCC States at or about the same date as the export of the goods being valued, at the same commercial level and quantity of the imported goods being valued. Where no such value is found, the transaction

value of identical goods sold at a different commercial level and/or in different quantities, adjusted to take account of differences attributable

to commercial level and/or to quantity shall be used based on objective data and demonstrated evidence which establishes reasonableness of

the adjustment according to Clause II.11. of this Article, whether the adjustment leads to an increase or decrease in the value, taking into consideration the difference in the costs mentioned in the Clauses

IV.B.1. of this Article. If more than one transaction value for identical goods is found, the lowest of such values shall be used as the customs value for the goods being valued, according to Clause V.A. of the Interpretative Annex;

B. the transaction value of similar goods already accepted as a transaction value according to Clause IV of this Article, sold for export to the GCC States at or about the same date as the export of the goods being

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valued, at the same commercial level and quantity of the imported

goods being valued. Where no such value is found, the transaction

value of similar goods sold at a different commercial level and/or in different quantities, adjusted to take account of differences attributable

to commercial level and/or to quantity, based on objective data and demonstrated evidence which establishes reasonableness of the adjustment according to Clause II.11., whether the adjustment leads to

an increase or decrease in the value, taking into account the difference

in the costs mentioned in Clauses IV.B.1. of this Article. If more than

one transaction value for similar goods is found, the lowest of such

values shall be used as the customs value for the goods being valued, according to Clause V.B. of the Interpretative Annex.

VI. Deductive Value:

1. The customs value shall be based on the unit price at which the imported goods or identical or similar goods are sold at the first commercial level, in the GCC States? local market, in the same

condition as imported, at the greatest aggregate quantity according to

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Clause II.8, at or about the time of the importation of the goods being valued, to non-related persons according to Clause II.5 of this Article, but with excluding the sale of the goods incorporating in production any of the assists mentioned in Clause IV.B.1.iv of this Article, subject to deductions for the following:

a. either the commissions (usually paid or agreed to be paid), or the additions usually made for profit and general expenses in the GCC States for goods of the same class or kind;

b. the usual costs of transport and insurance after importation and associated costs in the GCC States, provided that such costs are not included as general expenses according to Clause (a) above;

c. customs taxes “duties”, other taxes or Zakat payable in the GCC States by reason of importation or local sale of the goods, taking into account that such taxes and Zakat shall not be deducted according to this Clause in case the importer records them within the general expenses mentioned in Clause (a) of this method.

2. If neither the goods being valued nor identical nor similar imported goods are sold at or about the time of importation of the goods being valued, the customs value, taking into account the provisions of Clause 1 of this method, will be based on the unit price at which the imported goods or identical or similar goods are sold in quantities sufficient for determination of the unit price at the first commercial level, in the GCC States? local market, in the condition as imported at the earliest date after the importation of the goods being valued but before the expiration of ninety days after such importation..

3. If neither imported goods nor identical nor similar imported goods are sold in the GCC States? local market in the condition as imported, then, if the importer so requests, the customs value, shall be based on the unit price at which the imported goods, after further processing, unless --

their identity is lost, are sold at the greatest aggregate quantity,

between un-related persons according to the definition in Clause II.5 of this Article, due allowance being made for the value added by such processing, and the deductions provided for in Clause 1 of this method. VII. Computed Value:

1. If the customs value could not be determined according to Clause VI of this Article, or in case the importer requested application of the

computed value before the deductive value according to Clause III (B)

of this Article, the customs value, according to the provisions of this Clause, shall be based on the computed value. The computed value

shall consist of the sum of:

(a) the cost or value of materials and fabrication or other processing employed in producing the imported goods;

(b) an amount for profit and general expenses equal to that usually reflected in sales of goods of the same class or kind as the goods

being valued which are made by other producers in the same

country of exportation for export to the GCC States;

(c) the charges and costs listed in the Clauses IV.B.1. (7) and (8) of this Article.

2. Any person resident outside the GCC States shall not be required to

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produce for examination, or to allow access to, any account or other

record for the purposes of determining a computed value. However, the customs administration may verify the information supplied by the

producer of imported goods for the purposes of determining the customs value under the provisions of this Article in another country, with

agreement of the producer, provided a sufficient advance notice is given

to the government of the country where the investigation is to take

place, and the government does not object to it.

VIII. Flexible Method:

(a) If the customs value of the imported goods cannot be determined under the forgoing methods mentioned in Clauses IV through VIII of this

Article, the provisions of the same Clauses shall be applied once again sequentially with reasonable flexibility, until the customs value

according to the first possible method is arrived at.

(b) If the customs value could not be arrived at by applying those methods even flexibly, reasonable methods not inconsistent with the principles

and general provisions of the Customs Valuation Agreement (CVA), the Article VII of the GATT 1994, on the basis of data available anywhere

in the GCC States may be applied. However, no customs value shall

be determined on the basis of the following:

i . the selling price in the GCC States of goods produced therein;

ii . the higher of the alternative values;

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iii . the price of goods in the domestic market of the country of

exportation;

iv . the production costs other than the computed value determined

under provisions of the Clause VII of this Article;

v . the price of goods for export to a country other than the GCC

States;

vi . arbitrary or fictitious values; or

vii . minimum customs values.

(c) Upon request, the importer has the right to be informed in writing of the methods adopted for determining the customs value according to

provisions of this Clause. This clarification will only cover the goods

being appraised, and will not serve as a reference with regard to

appraisal of any other goods imported through the same or other port

of entry. This procedure is only intended for information purposes, and

does not affect or replace procedure of objection and appeal provided

for in this Clause.

IX. The following Interpretative Annex is to be considered as an integral part of this Article.

Interpretative Annex

Article Interpretative Notes

I.5 No credit balances pertaining to previous consignments will be considered when determining the value of the goods being valued.

Example: An importer receives a shipment of TVs for SR10,000. The invoice shows SR9,000 as price of the

TVs, and a balance of SR1,000. The importer stated

that the balance of SR1,000 is given to him as

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compensation for 10 TVs damaged in the previous

shipment.

In this case, the balance is irrelevant to the shipment being

valued. So, the customs value of the shipment will be

SR10,000.

IV.A Price actually paid or payable:

1. In determining the transaction value, the price actually

paid or payable defined in the Clause II.(1) of this Article, irrespective of the method applied, shall be considered. It

may be an outcome of deductions, additions or

negotiations, or may be arrived at by applying a particular

formula.

2. “Payable” means price of goods not paid at time of

determination by the customs of the transaction value of

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the imported goods. The price agreed to be paid will be

the basis for determination of the customs value. The

payment need not necessarily take the form of a transfer

of money. Payment may be made by letters of credit or

financial instruments, directly or indirectly.

3. “Indirect payment” includes settlement of a debt owed by

the seller to the buyer, totally or partially. The buyer may

obtain discount in the price of the goods being valued as

a settlement method for his debt owed by the seller. The

indirect payment will not include activities undertaken by

the buyer on his own account such advertisement (except

the activities provided for in Clause IV.B) despite being

beneficial also to the seller. In determining the customs

value of imported goods, the costs of such activities shall

not be added to the price actually paid or payable.

4. Assembled Goods: The price actually paid or payable can represent an amount paid against assembly of the

imported goods. So, the price actually paid or payable will

be calculated by adding the value of the components and assembling.

Example: An importer had already provided a foreign

assembler readymade components for assembling, the

price or cost of which at the assembling factory is SR1 per

unit. The importer pays to the assembler SR0.05 per unit

against assembling. So, the transaction value of each unit

will be SR1.50.

IV.A.1 The restrictions that have no substantial effect on the price of the goods, shall not preclude determination of the customs

value by applying the transaction value method. For example:

1. Restrictions specifying a particular date for selling the

imported goods.

Example 1: An importer buys a lot of garment. It is found

that the purchasing contract contains a condition by the

seller that the buyer (i.e., importer) shall only start selling

after a particular date, for instance at the onset of the

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winter.

2. Restrictions specifying a particular place in the country of importation for reselling the imported goods.

Example 2: Taking into account the Example 1, if the

seller specifies a condition requiring that the buyer (i.e.,

importer) shall only resell, for instance, in the city of

Riyadh.

3. Restrictions specifying a particular method of reselling in

the country of importation.

Example 3: If the seller in the Example 1, specifies a

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condition requiring that the buyer (i.e., importer) shall only

resell through the sales representatives only, or through advertisement in the information media.

IV.A.2 Condition or consideration for which a value cannot be determined:

A seller specifies, for instance, the price of the imported goods

on the condition that the importer shall also buy other goods

also in specified quantities; or the price of the imported goods

is dependent upon price/s at which the importer shall sell

other goods to the seller of the imported goods; or the price of

the imported goods is specified on the basis of a form of

payment not related substantially to the goods, e.g., the goods

is to be subjected to further processing by the buyer, and the

seller requires from the buyer to take a particular quantity of

the goods after processing.

IV.A.4. If the customs has sufficiently detailed information on the buyer and seller indicating to its satisfaction that the

relationship between both of them has not influenced the price actually paid or payable, the price shall be accepted without

requiring additional information from the importer. If the

customs has doubt that the relationship has influenced the

price, then the importer shall be notified thereof, and be given sufficient time to reply. The notification shall be in writing, if

the importer so requests.

IV.A.4.a The transaction value, after examination of the circumstances surrounding the sale, shall be accepted, if the customs found:

1. that the buyer and seller, despite their relationship, buy

and sell to each other as non-related person;

2. if the price was established consistent with normal pricing

practices of the industry in question, this would

demonstrate that the price has not been influenced by the relationship; and

3. if it is shown that the price is adequate to ensure recovery

of all costs plus a profit which is representative of the

firm?s overall profit realized over a representative period of

time, in sales of goods of the same class or kind.

IV.A.4.b Test Value:

1. These are values previously accepted as customs values

for goods exported to the GCC States at or about the time

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of the importation of the goods. The test values shall only

be used for comparison with the transaction value of the imported goods.

2. In order to determine whether the transaction value closely --

approximates to the test value, the following factor will be considered:

(a) the nature of the imported goods, and the industry; (b) the season in which the goods are imported;

(c) whether the difference in value is commercially significant; and

(d) whether the difference in value is attributable to internal transport costs in the country of exportation.

Since these factors may vary, a uniform standard, such as a fixed percentage in each case cannot be applied. A small difference in value in a case involving one type of imported goods could be unacceptable, although a large difference in a case involving another type might be acceptable.

3. In applying the test values, differences between the declared value and the test value will be taken into account. The difference will be adjusted if it is based on objective data supplied by the importer or available to the customs. The difference may be related to the following: (a) commercial level of the importer;

(b) imported or contracted quantity;

(c) costs specified in Clauses IV.B.1.(7) and (8) of this Article; and

(d) costs borne by the seller in sales where the seller and buyer are unrelated, which is not borne by him in sales where the seller and buyer are related.

4. If it is found through comparison and inquiry that a test value provided for in the Clause IV.A.4.b is approximate to the declared value, an examination of the circumstances surrounding the sale to determine whether the relationship between the buyer and seller influenced the price, shall

not be required. If the customs has sufficient information to be satisfied, without further detailed inquiries, that one of the test values is approximate to the declared value, it shall not require the importer to prove accuracy of the test value.

IV.B.1.i “Buying Commission” means expenses paid by the importer to his agent for his services of representation abroad for buying the goods being valued. It is not included in the customs value.

“Selling Commission” means expenses paid to the seller?s --

agent, who is related to or controlled by , or works for or

on behalf of, for selling the goods.

IV.B.1.iv A. Requirements of adding value of assists:

1. If the value was not already included in the declared

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price actually paid or payable.

2. If the assists were provided by the importer (buyer)

free of charge to the producer (manufacturer) directly

or indirectly.

3. If the assists were provided at a reduced cost, the

addition shall be only apportioned to the amount

reduced by the importer (buyer).

4. If the assists were used in production of the goods

being valued.

B. Determining value of assists:

If cost of assists is to be added to the transaction value of the goods being valued, or to be used as a component of the computed value, the value of the assists and transportation costs thereof, to the production place of the goods being valued, including non-refundable duties and taxes, shall be determined and apportioned to the price of the goods in the following manner:

1. If the assists consist of materials, components, parts or similar items incorporated in the imported goods, or

goods consumed in production of the imported goods, acquired by the buyer from an unrelated seller, the

value of the assists is cost of its acquisition. If the assist

was produced by the buyer or a person related to the

buyer, the value would be the cost of its production.

2. If the assist consists of tools, dies, molds, or similar

items used in the production of the imported goods,

acquired by the buyer from an unrelated seller, the

value of the assist is the cost of its production. If the

assist has been used previously, the original cost of acquisition or production will be adjusted to reflect its

use before its value could be determined. If the assist

was leased by the importer from an unrelated person,

the value of the assist would be the cost of the lease. Repairs or modifications to an assists may increase its

value.

Example 1: A??n importer of the GCC states supplied detailed designs required for the goods manufacturing,

to a foreign producer. The Saudi importer bought the

designs from an engineering company in the GCC

States for providing to the foreign producer.

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Question: Should the customs value of the goods

include the value of the assist?

Answer: No, design work undertaken in the GCC

States may not be added to the price actually paid or payable.

Example 2: An importer of the GCC states supplied

molds free of charge to foreign producer (exporter).

The molds were necessary to manufacture goods for

the GCC importer. The GCC importer had some molds

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manufactured in a GCC State and others manufactured outside GCC States.

Question: Should the customs value of the goods include the value of the molds?

Answer: Yes. The value of the molds must be added to the transaction value whether manufactured in or out of the GCC States.

C. Apportionment of the value of assists: .

The apportionment of the value of assists to imported goods will be made in a reasonable manner appropriate to the circumstances and according to generally accepted accounting principles. The method of apportionment will depend upon the documentation submitted by the importer. If the entire anticipated production using the assist, for example, is for exportation to the country of importation, the total value may be apportioned applying one of the following methods:

1. the first shipment, if the importer wishes to pay duty on the entire value of the assist at once,

2. the number of units produced up to the time of first shipment,

3. the entire anticipated production of the assist, if definite contracts or undertakings exist regarding to such production,

4. any other method of apportionment requested by the importer according to generally accepted accounting principles, or

5. if the imported goods are only a part of the production, or if the assist is used in several countries, the method of apportionment will depend upon the documentation submitted by the importer.

Example: A?n importer provides the producer with a mold to be used in production of the imported goods, and contracts to buy 10,000 units. By the time of arrival of the first shipment of 1,000 units, the producer has already

--

produced 4,000 units.

In this case, the importer may request the customs to apportion

the value over 1,000, 4,000, 10,000 units, or any other

figure which conforms to generally accepted accounting

principles.

IV.B.1.v. 1. Fees or amounts paid by the importer for use of royalties and license fees, may include, among other things,

payments in respect to patents, trademarks and

copyrights, and shall be added to the customs value.

2. The price actually paid or payable for the imported goods

being valued shall not include the charges for right of

reproduction. It relates to the following goods: originals or

copies of artistic or scientific works, originals or copies of

models and industrial drawings, model machines and

14

prototypes, and plants and animal species.

3. The payments made by the buyer for the right to distribute

or resell the imported goods shall not be added to the

price actually paid or payable if such payments are not a

condition for the sale to export the imported goods to the

GCC States.

4. If the royalty is based partially on the imported goods and

partially on other factors which have nothing to do with the

imported goods (such as when the royalty cannot be

distinguished from special financial arrangements

between the buyer and the seller), the customs value

cannot be determined according to the transaction value

method specified in the Clause IV of this Article.

5. If the royalty, however, is based only on the imported

goods and can readily be quantified, an addition to the

price actually paid or payable shall be made.

IV.C.1.c. How to exclude the ad valorem customs duties and any other taxes:

Example: If the price actually paid or payable is SR56,000

inclusive of the value of the imported goods, insurance and

freight (CIF), plus an ad valorem duty reaching for example in

the GCC States to 20%, in addition to a post-importation

payable tax of SR500.

The customs duties and taxes shall be excluded as following:

56,000 – 500 = 55,500

55,500 / 1.20 = 46,250 (The outcome represents CIF.)

IV.C.1.d. Dividends or other payments from the buyer to the seller, which do not relate to the imported goods, will not be added to

the customs value, such as the dividends of the shares paid to

the shareholders, which are not directly related to the

imported goods. Share dividends must be distinguished from

--

the proceeds since the proceeds represent a part of the

proceeds due to the seller from any subsequent resale,

disposal or use of the imported goods that accrues directly or

indirectly to the seller, which must be added to the value of the

goods.

IV.C1.e. The interest on financing provided by the seller, a bank or any other person, for buying the imported goods, shall not be

included in the customs value, provided:

1. that such interest is separated from the price actually paid

or payable for the imported goods;

2. that the financial agreement is concluded in writing;

3. that the buyer can prove that the goods is really sold at the

price declared, i.e., the price actually paid or payable; and

4. that the financing interest rate does not exceed the

prevalent rate of the country where the financing was

extended regarding such transaction.

IV.C.1.f. The activities undertaken by the buyer on his own account other than those for which an adjustment provided in Clause

15

IV.B, even if beneficial to the seller, include for example studies, market researches, publicity and advertisement, preparation of showrooms, and participation in the commercial exhibitions.

IV.C.2. Credit balances with the seller in favor of the importer, included in the price actually paid or payable for the goods being valued, as compensation for a previous consignment or business transaction. Since balance adjustment for previous consignments must be settled separately from the consignment being valued, refer to the Example in I.5 of this Annex.

V.A. 1. The customs value will be the transaction value of identical goods already accepted as transaction value under Clause

IV of this Article, on the basis that such identical goods

were sold for export to a GCC State, as of or about, the

same date as the export of the goods being valued, from the same manufacturer, at the same commercial level of the importer, and same quantity of the goods being valued. 2. Where no such value is found, the transaction of identical goods according following priorities will be used:

a. from the same manufacturer, in different quantities and/or commercial level;

b. from a different manufacturer, in the same quantities and/or same commercial level;

c. from a different manufacturer, in different quantities and/or commercial level;

--

3. The commercial level means form of dealing exercised by the importer, i.e., wholesale, retail or self-consumption.

4. If there is difference in the goods being valued and the identical goods in the quantities, commercial level and costs mentioned in Clause IV.B.1. of this Article, the transaction value of identical goods shall be adjusted to take account of such differences, whether the adjustment leads to an increase or decrease in the value, based on demonstrated evidence which establishes reasonableness and accuracy of the adjustment, such as authorized price lists containing values reflecting different levels or quantities.

Example: If the imported goods being valued consist of 10 pieces, and the only identical goods for which a transaction value exists involved 500 pieces, and if a price list from the foreign seller is available that contains different prices according to the quantities, then an adjustment can be reached by referring to that price list, through applying an appropriate value according to the imported goods being valued. This does not require that a transaction of identical goods had to have been made in quantities of 10 as long as the price list has been established as being bona fide through sales at other

16

quantities. In absence of such an objective measure, however, the determination of a customs value under the provisions of the identical goods transaction value is not appropriate.

5. If, in the application of this Article, more than one

transaction value for identical goods is found, which were

sold at same commercial level, in same quantity and in

same sale circumstances (in mode of payment i.e., cash or credit; condition of goods at the time of sale i.e., at first line

of production, stocks as backlog of the line of production, factory clearance, or end-of-the-season sales, etc.), then

the lowest of such values shall be used.

V.B 1. The customs value will be the transaction value of similar goods already accepted as transaction value under Clause

IV of this Article, on the basis that such similar goods were

sold for export to a GCC State, as of or about, the same

date as the export of the goods being valued, from the

same manufacturer, at the same commercial level of the importer, and same quantity of the goods being valued.

2. Where no such value is found, the transaction of similar goods according following priorities will be used:

a. from the same manufacturer, in different quantities

and/or commercial level;

--

b. from a different manufacturer, in the same quantities

and/or same commercial level;

c. from a different manufacturer, in different quantities

and/or commercial level;

3. The commercial level means form of dealing exercised by

the importer, i.e., wholesale, retail or self-consumption.

4. If there is difference in the goods being valued and the similar goods in the quantities, commercial level and costs mentioned in Clauses IV.B.1. of this Article, the transaction value of similar goods shall be adjusted to take into

account such differences whether the adjustment leads to

an increase or decrease in the value, based on

demonstrated evidence which establishes reasonableness

and accuracy of the adjustment, such as authorized price

lists containing values reflecting different levels and

quantities;

Example: If the imported goods being valued consist of 10 pieces, and the only similar goods for which the

transaction value exists involved 500 pieces and if a price

list from the foreign seller is available that contains

different prices according to the quantities then an

adjustment can be reached by referring to that price list, through applying an appropriate value according to the imported goods being valued. This does not require that a transaction of similar goods had to have been made in quantities of 10 as long as the price list has been

17

established as being bona fide through sales at other quantities. In absence of such an objective measure, however, the determination of a customs value under the provisions of the similar goods transaction value is not appropriate.

5. If, in the application of this Article, more than one transaction value for similar goods is found, which were sold at same commercial level, in same quantity and in same sale circumstances (in mode of payment i.e., cash or credit ; condition of goods at the time of sale i.e., at first line of production, stocks as backlog of the line of production, factory clearance, or end-of-the-season sales, etc.), then the lowest of such values shall be used.

VI.1. 1. If a number of units of the same imported goods, or of identical or similar goods, have been sold in different quantities, the unit price to be used will be the price at

which the greater number of the units is sold.

Example 1: Goods are sold based on a price list which grants favorable unit prices for purchases made in larger quantities:

Unit Total

--

Sale

quantity

price

(SR)

Number of sales quantity

sold at

each

price

1-10 units 100 10 sales of 5 units 5 sales of 3 units

65

11-25 units 95 5 sales of 11 units 55

Over 25

units

90 1 sale of 30 units

1 sale of 50 units

80

The greatest number of units sold at a price in this example is 80 units sold at a price of SR90. Therefore, the unit price in the greatest aggregate quantity is SR90. Example 2: Two sales to unrelated persons occur. In the first sale, 500 units are sold at a price of SR95 each; in the second sale, 400 units are sold at a price of SR90 each. The greatest number of units sold at a price in this example is 500 units sold at a particular price. Therefore, the unit price in the greatest aggregate quantity is 95 ryals. Example 3: Various quantities are sold to unrelated

18

persons at various prices:

Sales:

Sale quantity (unit) Unit price (SR)

40 units 100

30 90

15 100

50 95

25 105

35 90

5 100

Totals:

Sale quantity sold (unit) Unit price (SR)

65 units 90

50 95

60 100

105 25

In this example, the greatest number of units sold at a

particular price is 65; therefore, the unit price in the greatest

aggregate quantity is 90 Riyals.

VI.1.a 1. In case the goods being valued are owned by the seller or exporter outside the GCC States, and are sold on the

basis of commission, that which is usually paid or agreed

to be paid by the seller to the importer for costs borne by

him for selling the goods locally, shall be deducted.

--

2. If the goods being valued, however are sold to an importer

who works for his own account, then “the profits and

general expenses”, that is usually added by the importer to

the selling price in the local market, shall be deducted,

unless inconsistent with the amount of profit usually added

by the importer to the selling price in the local market and

general expenses usually added to sales of goods being

valued, of the same class or kind, in the GCC States,

imported from the same or other countries. Deduction of

such usual amount will be based on relevant information

other than supplied by or on behalf of the importer.

3. The profit and general expenses should be taken as a

whole. A figure can be inconsistent with similar figure of

the same industry. As long as the total of both is consistent

with the total of usual profit and general expenses, it

should be used. This deductible figure should be

determined on the basis of the information supplied by or

on behalf of the importer. The general expenses shall

include direct and indirect costs of marketing the particular

goods.

4. “Goods of same class and kind” are goods falling within a

group or range of goods produced by a particular industry

or industrial sector, including but not limited to, identical

goods and similar goods, whether imported from the same

country of production or exportation of the goods being

19

valued, or from another country. Whether certain goods

are “of same class or kind” must be determined on a caseby- case basis by reference to circumstances surrounding

the goods.

VI.3 1. There might be instances where, although the identity of the of the imported goods is lost, the value added by

processing can be determined accurately without

unreasonable difficulty, provided that it is based on the

basis of objective and quantifiable data related to cost of

such work. Acceptable industry formula, recipes, methods

of construction, and other industrial practices would form

the basis of the calculations.

2. On the other hand, there can also be instances where the imported goods maintain their identity but form such a

minor element in the goods sold in the country of

importation that the use of this valuation method would be unjustified. In view of the above, each situation of this type

should be considered on case-by-case basis.

VII.1. As a general rule, customs value under this Article will be determined on the basis of information readily available in

the country of importation. In order to apply the computed

value method falling under Clause VII, it may be necessary

to examine the costs of producing the goods being valued

and other information, which is to be obtained from outside

--

the GCC States. The use of computed value method will generally be limited to those cases where the buyer and

seller are related, and the producer is prepared to supply to

the customs the necessary costing, and to provide facilities

for any subsequent verification.

VII.1.a. 1. The “cost or value” referred to in this paragraph is to be determined on the basis of information relating to the

production of the goods being valued, supplied by or on

behalf of the producer and where it is consistent with

generally accepted accounting practices in the country of

the exporter. Where such information is available from

another source, the customs shall inform the importer, if he

so requests, of the source of such information, the data

used, duly observing confidentiality according to Clause I.3

of this Article.

2. The cost or value mentioned in this Clause includes the following:

(a) cost of elements specified in Clause IV.B.1.(ii) and (iii).

of this Article; and

(b) cost of elements specified in Clause IV.B.1.(iv). of this

Article apportioned as appropriate under the provisions

of Clause IV.B.1.iv. of this Interpretative Annex. Taking

into account that the costs of the elements specified in

Clause IV.B.1.iv.(d) undertaken in the GCC States shall

be included only to the extent that the elements are

21

borne by the producer for obtaining such elements. No

cost or value of elements referred to in this Clause shall

in any case be counted twice.

VII.1.b. 1. The amount for profit and general expenses should be taken as a whole. If the producer?s profit figure is low

and general expenses are high, those figures taken

together may be consistent with those usually reflected

in sales of imported goods of the same class or kind.

2. If the producer?s figures for the profit and general expenses are inconsistent with those usually reflected in sales of goods of the same class or kind as the goods

being valued, which are made by the producer in the

country of exportation, for export to the GCC countries,

in that case, the amount for profit and general expenses may be based on objective data, according to Clause

II..11 of this Article, other than that supplied by or on

behalf of the producer of goods.

3. The general expenses mentioned in Clause VII.1.b of

this Article shall cover all direct or indirect costs of production and sale of the goods for export, not included

in Clause VII.1.a of this Article.

--

4. While determining usual profit and general expenses according to the provisions of Clause VII.1.b of this

Article, the narrowest group or range of the goods of

same class or kind will be examined including sales of identical or similar goods from same country of

production of the goods being valued, which are sold for export to the GCC States, including the goods being

valued. Whether certain goods are of the same class or

kind as other goods, must be determined on a case-bycase basis with reference to the circumstances involved.

VIII.(a) This Clause does not provide for a specific method of valuation. Rather, it requires that the customs value shall be determined according to the following:

1. using reasonable means or methods;

2. should be consistent with the principles and general provisions of the Customs Valuation Agreement (CVA),

and Article VII of the GATT 1994; and

3. be based on the data available in the country of importation.

1. Value determination using reasonable methods:

The customs value under provisions of this Clause should, to the greatest extent possible, be based on the customs values determination methods already mentioned in Clauses IV to VII with reasonable flexibility in the application in conformity with the purposes and provisions of the Customs Valuation Agreement. If the customs value could not determined using such methods, the customs value may be determined using other logical methods provided that:

21

1. such methods are not prohibited under Clause VIII.B; and

2. such methods are consistent with general principles and provisions of the CVA.

Example: A consignment containing an equipment leased for specified period, for instance, of three years (that is the supposed life of the equipment) against a monthly rent

of SR2,000, is imported. No identical or similar

equipment was previously imported. The customs value of such equipment could not be determined according to the methods specified in Clauses IV to VII.

In order to determine the customs value of the equipment, it should be taken into account that there is no sale to apply to the transaction value; no identical or similar equipment was previously imported; the equipment is not resold in the GCC States; and no information on production cost of the equipment is

--

available, therefore the customs value can not be determined according to Clauses IV to VII even if in its flexible form. However, there is reasonable method that can be applied according to Clause VIII, i.e., using total rent representing the supposed life of the equipment

(36 months x 2,000 = SR72,000) as the customs value.

2. General principles of the Customs Valuation Agreement: a. Reliance to the greatest extent possible on the transaction value of the imported goods;

b. Uniform valuation system;

c. Simple and equitable criteria;

d. Clear and neutral systems;

e. Consistent with commercial practices.

3. Data available in the country of importation:

In case of availability of data from a foreign source, utilization of such data for purposes of determining customs value under Clause VIII of this Article is not precluded. So long as correct and accurate information, however is available in the GCC States, it should be used.

CHAPTER (II)

Temporary Admission

Based on the provisions of Articles (89 – 94) of the Common Customs Law of the GCC Member States, temporary admission shall be subject to the following conditions and procedures: Article (2)

(a). the goods mentioned in Articles (89) and (90) herein shall be allowed to be placed under temporary admission for six renewable months with the suspension of the levied customs taxes “duties? as stated in the Rules of implementation.

(b). the customs taxes “duties? and other taxes “duties” , if any, shall be secured by a bank or cash guarantee as circumstances may

22

require and at the discretion of the director general.

( c). Temporary admission status shall be terminated by reexporting the admitted goods to outside of the state or

--

depositing them into the free zones or customs warehouses or stores or placing them for home consumption and payment of payable customs taxes “duties” according to the procedures prescribed by the director general.

Temporary admission of heavy machinery and equipment Article (3)

a). Temporary admission of the heavy machinery and equipment, which are not available in the markets and are required for the completion of projects or the conducting of practical and

scientific tests relating to those projects, shall be granted for a period of six months renewable for similar periods which shall

not exceed three years at the most unless the completion of a project requires a longer period.

b). for the project to benefit from temporary admission under these rules , it shall be one of the projects completed for favour of the government or an investment project the completion of which requires the admission of such machinery and equipment for

this purpose.

Article (4

a). Temporary admission shall not be granted to the spare parts, tyres, batteries and other materials that can be consumed in the projects.

b). the type and description of the admitted piece of machinery or equipment may not be changed unless after obtaining approval from the Customs Administration.

c). the use of the machinery and equipment shall be limited to the completion of project for which they have been admitted.

Article (5)

The entity applying for the temporary admission of the machinery and equipment required for the completion of its projects shall:

1. submit a copy of the contract or agreement made with

the governmental body for the account of which the

projects being completed; and

--

2. make a customs declaration according the form approved

for temporary admission and state all information and

attach the documents required under this Law. The

declaration shall be subject to all customs procedures;

and

3. submit a bank guarantee or cash deposit equivalent to

the amount of the customs taxes “duties” payable on the registration date of customs declaration for placing them

under the temporary admission procedure.

Temporary admission of goods for finishing and re-exportation Article (6)

Foreign goods shall be temporarily admitted into the State with the

23

suspension of the customs taxes “duties” levied on them for the purpose of finishing and re-exportation within a time period not to exceed a year.

Article (7)

The director general shall give instructions specifying the conditions to be satisfied for granting temporary admission to the other types of goods mentioned in Article (90) of this Law, provided that the period of temporary admission shall not exceed six months. Temporary admission of foreign vehicles

Article (8)

Foreign tourist vehicles (other than those registered in a GCC member state) shall be granted a temporary admission as follows: 1. Six months for the vehicles covered by an International Passage Carnet (IPC); and

2. Three months for the vehicles not covered by an

International Passage carnet to be renewed for a similar

period if the person concerned submits bank guarantees

or cash deposit equivalent to the amount of the payable

customs taxes „duties”.

--

Article (9)

A). for a vehicle to benefit from the provisions of temporary admission, the following conditions shall be satisfied:

1. The vehicle shall be officially registered in the country

licensed in under a document proving the same; and

2. The vehicle?s licence shall be valid and shall not have

export plates; and

3. Production of an insurance from an insurance company approved in the State covering its territories during the

period of temporary admission; and

4. The production of an accredited IPC to secure the

customs taxes “duties”.

B). In order to benefit from the provisions of these Rules, the following shall be satisfied by the person wishing to obtain temporary admission for his vehicle:

1. He shall be the owner of the vehicle or authorized to drive

it under a special authorization issued from the country of registration and duly certified; and

2. He shall have a valid residence in the country where the

vehicle is registered unless he? is a national of that

country; and

3. He shall have a valid driving licence.

Article (10)

a. To benefit from the provisions of these Rules, the IPC shall be accepted by the customs administration and its validity shall

cover the period of temporary admission of the vehicle.

b. The following procedures shall be followed when a vehicle is admitted under the IPC:

1. The number, date and period of the temporary admission permit shall be recorded on the IPC.

24

2. The relevant coupon shall be cut out from the carnet at entry and exit.

Article (11)

--

Students and those on scholarships (other than the GCC nationals) studying at one of the universities and institutes in the State shall be allowed to renew the period of temporary admission for their vehicles during the period of study or scholarship, provided that the vehicle shall be guaranteed by a valid IPC. Article (12)

The customs office shall grant temporary admission to vehicles according to the provisions herein.

Article (13)

a. The temporary admission permit shall contain all the information

relating to the vehicle and the person concerned (i.e. plates No., chassis No., engine No., make and colour of vehicle a well as the name of the person concerned, his nationality and passport number).

b. The procedure of the temporary admission of foreign vehicles shall terminate when the vehicle leaves the country via one of the customs offices or when it is placed in the free zone or when it is cleared for home use with the payment of the due customs taxes “duties” subject to the approval of Customs.

CHAPTER (III)

Re-exportation of the Goods

Pursuant to the provisions of Article (95) of the GCC Common Customs Law, procedures, conditions and guarantees when re-exporting the foreign goods entering the country shall be as follows:

Article (14)

Foreign goods, imported into the country without payment of the customs taxes “duties”, may be re-exported. Such goods include the following:

1. Imported goods that were not withdrawn from the

customs stores.

2. Imported goods, intended to be re-exported, which have

been temporarily released against cash or bank

guarantees covering the customs taxes “duties” to be

--

submitted within a period not to exceed six month from

the date released.

3. Goods imported into the country under the temporary

admission procedure whose owners wish to re-export

them.

4. Goods deposited at warehouses which is one of the

situations for suspension of the customs taxes “duties”.

Article (15)

a) Re-exportation of the goods shall be under re-export

declarations containing all the distinctive elements of the

goods; such declarations are made at the discretion of

the director general.

b) The goods may be re-exported by a person other than the

importer subject to the approval of the customs office.

25

c) The number of the customs declaration under which the goods have been imported shall be affixed on the reexport declaration.

d) The goods shall be subject to the customs inspection and procedures prescribed by the Common Customs Law

“Law?.

Article (16)

Pursuant to the provisions of Article (97) of the Common Customs Law of the GCC Member States, the customs taxes “duties” levied on the foreign goods re-exported to outside of the GCC Member States shall be refunded (drawn back) according to the following controls:

1. The exporter “re-exporter” shall be the person in whose name the foreign goods were imported or any other person who can definitely prove to the customs administration that he has purchased the goods.

2. The value of the re-exported foreign goods for which the customs taxes “duties” are to be refunded shall not be less than

five thousand US dollars (or its equivalent in the local currency).

3. A) The foreign goods “commodity” shall be re-exported within one Gregorian year from the date of payment of the customs

taxes “duties”

B) The claim for drawback shall be made within six Gregorian months from the date of re-exportation.

--

4. The foreign goods to be re-exported shall be of a single consignment for ease of identification and matching with the importation documents; however, a single consignment may be re-exported in part shipments once it is definitely proven for the customs administration that such shipments constitute a part of

the same consignment.

5. The claim for drawback shall be for foreign goods that were not locally used after importation from outside of the GCC Member States and at the same condition when imported.

6. Drawback shall be limited to the customs taxes “duties” that

were actually paid on the imported foreign goods.

7. The customs taxes “duties” shall be refunded after reexportation of the foreign goods and verification of all the

documents required for re-exportation.

8. The approved unified “single” customs declaration shall be used for re-exportation of the goods, whose customs taxes “duties”

are to be refunded, to outside of the GCC Member States.

9. These controls shall be implemented immediately upon the application of the single point of entry and the common

collection and allotment of the customs taxes “duties” levied on

the foreign goods.

10. These controls shall be reviewed after three years of application or whenever necessary at the request of a member State, and

the Financial and Economic Cooperation Committee has the

right to interpret and amend these controls.

11. These controls shall have priority of application upon

26

contradiction with the regulations, procedures and laws in force in any member State.

Article (17)

a) Means of land transport carrying re-exported

goods shall be subject to the provisions relating to the customs sealing and security of covering (canvas), ropes and the other provisions applicable to transit.

b) Goods shall b re-exported within the prescribed period.

c) Customs taxes “duties” levied on the goods to be re-exported shall be secured by cash or bank guarantees.

Article (18)

Re-export declarations shall be discharged and settled and their guarantees shall be released upon submission of one of the following evidences:

--

1. a copy of the re-export declaration sealed and signed by the

competent customs officer at the customs office of exit proving that the goods have left the country.

2. a copy of the re-export declaration sealed and signed by the competent customs officer indicating that the goods have entered he free zone.

3. a discharge certificate approved by the competent authorities at the country of destination certifying that the re-exported goods have been imported into it.

CHAPTER (IV)

Exemption of personal effects and gifts accompanying the passengers

Pursuant to the provisions of Article 103(b) of the GCC Unified Customs Law, the conditions and controls for exempting the personal effects and gifts accompanying the passengers shall be as follows:

Article (19)

Personal effects and gifts accompanying the passengers whose value does not exceed 3000 Saudi riyals or its equivalent value in one of the other GCC currencies shall be exempted from the customs taxes “duties”.

Article (20)

The following requirements shall be satisfied to qualify to this exemption: 1. Effects and gifts shall be of a personal nature and in non-commercial quantities.

2. The passenger shall not be a frequent traveler through the customs office or a trafficker of the items in his possession.

3. The number of cigarettes subject to exemption shall not exceed 400

(four hundred) cigarettes.

Article (21)

Personal effects and gifts benefiting from the exemption referred to in Articles 18 and 19 of these Rules shall be subject to the provisions of prohibition and --

restriction set forth in the GCC Unified Customs Law and the national legislation of each Member State.

27

CHAPTER (V)

Exempting the imports of the philanthropic societies (charities) from he customs taxes “duties”

According to the provisions of Article (140) of the Common Customs Law of the Cooperation Council for the Arab States of the Gulf , the conditions and controls for exempting the imports of the charities from the customs taxes “duties” shall be as follows:

Article (22)

a) The charity benefiting from exemption shall be registered with the competent authority in the State and the purpose for establishing it shall be to provide services in the humane, social, educational, scientific or religious fields or any other charitable purpose not being a profitable one.

b) Societies with political purposes shall not benefit from exemption from the customs taxes „duties?.

Article (23)

To benefit from exemption from the customs taxes “duties”, imports of the charities shall:

1. be of a nature suitable for the purposes and activity it performs according to its Articles of Incorporation; and

2. the volume and quantity of the imports to be exempted shall be proportional to the actual needs that enable it to perform its charitable activity; and

3. Such imports shall be directly imported in the name of the charity.

Article (24)

a) the charity may not dispose of the exempted imports for

purposes other than those for which they have been exempted

and the management of the charity shall be held responsible for

that vis-à-vis customs.

b) Should the charity wish to sell the consumed or used materials

and supplies that were exempted from customs taxes “duties”,

the charity shall apply in writing to the customs administration to

obtain approval of the sale after conducting the necessary

inspection thereof.

--

Article (25)

The competent government authority shall address the customs administration for exempting the imports of charities from the customs taxes “duties” on a case by case basis.

CHAPTER (VI)

Goods subject to the provisions of the customs zone and the conditions of transport therein

Pursuant to the provisions of the GCC Common Customs Law, goods subject to the provisions of customs zone shall be treated as follows:

Article (26)

Goods subject to the provisions of the customs zone shall be accompanied with a transport authorization issued by the customs office indicating the following:

1. name of the person concerned

28

2. The distinguishing elements of the goods such as type, number,

weight, origin and value.

3. Name, type and number of the means of transport and the name of its driver.

Article (27)

A) Possession of goods within the customs zone shall be prohibited except at the places specified by the customs office.

B) Normal requirements of goods which can be possessed within

the customs zone for consumption purposes shall be specified

by a decision of the customs administration.

Article (28)

--

The illegal transportation of the goods that are subject to the provisions of customs zone or possession or circulation thereof within the customs zone shall be deemed as smuggling.

CHAPTER (VII)

Fines imposed on the customs offences

Without prejudice to the provisions of Articles 142, 143, 144 and pursuant to the provision of Article 141 of the Common Customs Law, the rules for imposing fines on the customs offences shall be as follows:

Article (29)

A fine not exceeding twice the amount of the customs taxes “duties? and not less than their equivalent amount on the following offences:

1. The customs declaration (exportation, re-exportation) that could lead to benefiting from drawback or finalization of the temporary admission procedure for temporarily admitted goods without a legal ground.

2. The unjustified increase/decrease of the goods compared to that stated in the manifest.

3. The use of the materials subject to exemption or to reduced customs tariff for purposes other than those for which they have been imported

or replacing, selling or disposing hem without the approval of the

customs administration and the payment of the customs taxes “duties” imposed under Articles 99, 100 and 104 of the Customs Law and the provisions of these Rules.

4. Disposing the goods on which the customs taxes “duties” have been suspended for purposes other than hose for which hey have been

imported or replacing them without the approval of the customs administration and the payment of the customs taxes “duties”.

5. Redemption of or the attempt to redeem the customs taxes "duties”. Article (30)

A fine not less than five hundred Saudi riyals (SR 500) and not exceeding five thousand riyals (SR 5000) or its equivalent in the other currencies of the GCC Member States on the following offences:

1. improper customs declarations that may lead to evading any condition

or restriction relating to import or export.

2. improper customs declaration in respect to value, type, number, weight

, measurement or origin that may lead to the loss of the customs taxes

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„duties? through misdeclaration according to the provisions of Article

(47) of the Law.

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3. Alteration of the routes specified in the transit declaration without the consent of the Administration according to the provisions of Article (710 of the Law.

4. Non-presentation of the manifest of the goods or the availability of more than one manifest for the goods according to the provisions of Articles 30/ (a), 36 (a) and (38) of the Law.

5. Submission of the required certificates for the discharge and settlement of the transit, temporary admission or re-export declarations in contravention to the conditions prescribed by the director general under the provisions of Article (68) of the Law.

6. Contravention of the rules and conditions prescribed by the director general for depositing the goods at the warehouses according to the provisions of Articles (74, 75) of the Law.

7. Anchorage of vessels, landing of aircrafts or stopping of other means of transport at places other than those prescribed by the Administration according to the provisions of Articles (20, 21, 22, 37) of the regulation” law”.

8. Departure of vessels, aircrafts and other means of transport from the ports or the customs boundary without authorization by the customs administration according to the provisions of Article (41) of the Law.

9. Transfer of goods from one means of transport to another without the consent of the Administration according to the provisions of Articles (32, 45) of the Law.

10. Unloading of goods from vessels and other means of transport or withdrawing the goods without authorization from the Customs Administration or in the absence of the customs officers or outside the office hours prescribed according to the provisions of Articles (32, 40, 45) of the regulation” Law”.

11. Impeding the customs officers from carrying out their duties and exercising their right of inspection, auditing and reviewing according to the provisions of Section XIII of the Law. This fine shall be imposed on every individual involved in the offence.

12. Not keeping records, documents and the like for the period prescribed in Articles (115, 127) of the Law.

13. Breaking the sealing or removing the customs seals from goods. Article (31)

A fine not less than five hundred Saudi riyals (SR 500) and not exceeding one thousand riyals (SR 1000) or its equivalent in the other currencies of the GCC Member States on the following offences:

1. Non-submission of the manifest or the other documents at importation

or exportation as well as delaying the submission of the manifest or he

other documents beyond the prescribed time according to the

provisions of Articles (30, 36, 39, and 40) of the Law.

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2. Not having the manifest endorsed by the customs authorities at the port of shipping in the cases so requiring according to the provisions of

Article (31) of the Law.

3. Declaring several sealed packages combined in any way in the

manifest or the like document as being a single package according to

the provisions of Article (44) of the Regulation (Law) subject to the

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instructions given by the director general in respect of the containers, pallets and trailers.

4. Neglecting to mention some necessary information in the manifest or the like document.

5. The postal import of closed parcels or boxes not bearing the approved labels which is contrary to the provisions of the Arab and international postal agreements and the national legislations according to the provisions of Article (40) of the Law.

6. Any other contravention to the provisions of the ministerial resolutions

and the instructions issued under the Law.

Article (32)

A fine amounting to two hundred Saudi riyals (SR 200) or its equivalent in the currencies of the other GCC Member States for each day of delay provided that the fine shall not exceed half the price of the goods; this applies to the offences of delaying the production of the transit goods or re-exportation to the customs office through which the goods will leave or to the customs office to which the goods are dispatched after expiry of the period prescribed in the customs declarations.

Article (33)

A fine amounting to two hundred Saudi riyals (SR 200) or its equivalent in the currencies of the other GCC Member States for each day of delay of the public transport vehicles and taxis entering the country provided that such fine shall not exceed one thousand Saudi riyals (SR 1000) or its equivalent in the currencies of the other GCC Member States.

Article (34)

A fine amounting to one thousand Saudi riyals (SR 1000) or its equivalent in the currencies of the other GCC Member States for each week of delay or a fraction of the week provided that the fine shall not exceed twenty percent (20%) of the value of the goods, for the offences of delaying re-exportation of the temporarily admitted goods beyond the period prescribed in the customs declarations. In respect of the tourist cars, these shall be subject to a fine of twenty Saudi riyals (SR 20) or its equivalent in the currencies of the other GCC Member States for each day of delay provided that he fine shall not exceed ten percent (10%) of the price of the tourist car after expiry of the period prescribed in the temporary admission licence.

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