Importers may apply to Customs to defer duty payment on goods for business purposes.
Import duty is normally payable when goods are—
- removed from a bonded warehouse
By deferring duty payment, the time of payment is delayed until a later prescribed payment day.
There are two kinds of duty deferment—
- short term (up to sixth months)
- long term (over six months)
At this time duty deferment is not being offered on goods being removed from a bonded warehouse.
Short term duty deferment
Importers may apply for short term duty deferment by making a customs declaration. Importers should specify CPC 5000 on the declaration upon importation.
CPC 5000 provides 100% duty deferment for all goods, subject to the following conditions:
- The goods must be imported only for a business purpose.
- Security for the relieved duty may be required.
Not later than six months from the time of importation, the holder of a deferment must make a second (adjusting) declaration and pay the import duty due together with a small surcharge. Importers should specify CPC 4000 on the second declaration.
To calculate the surcharge, multiply the deemed customs value by the relevant duty rate. The deemed customs value is equal to 10% per annum of the customs value.
Long term duty deferment
Importers may apply for long term duty deferment by writing a letter to the Collector of Customs which answers the following questions:
- What are the goods?
- Why is deferral sought?
- How is the business use of the goods of benefit to the economy of Bermuda?
- How much is being deferred?
- What is the proposed repayment period?
- To which banks and/or lending institutions has the applicant already applied to finance this project?
- What were the responses from those banks and/or lending institutions?
To the extent possible, the deferment application letter should be accompanied by—
- Business Plan in support of the proposed project including a Cash Flow Forecast Statement
- Audited financial statements for past three years which includes a Statement of Total Recognised Gains and Losses (Profit and Loss), Statement of Financial Position (Balance Sheet)
- Cash Flow Statement
- Reference letter from a local financial institution stating that the business is in good financial standing
- Most recent three months bank statements
- A statement of current outstanding liabilities, correct at time of application
Goods approved for long term duty deferment should be declared by specifying CPC 4000 or some other relevant end-use CPC on the customs declaration as normal.
Long term duty deferment is subject to the following conditions:
- The goods must be imported only for a business purpose
- Partial payment of the duty due may be required
- Security for the relieved duty may be required
- After three months deferment, compensatory interest in respect of the duty amount deferred will be assessed at a variable rate based upon the level of risk as assessed by the Customs Department, however, the interest rate will not be less than 6% plus the United States of America Federal Reserve Federal Funds Rate.