Duty-free allowance to rise to $500

Returning from a trip abroad and clearing customs has not only become quicker after the scrapping of customs forms for passengers who have nothing to declare; it will also become cheaper following an increase of the personal duty allowance from $350 to $500 per person.

Cayman Islands Premier Alden McLaughlin announced Wednesday that the increased value of goods that returning residents can bring into the jurisdiction without having to pay customs duty will take effect on Nov. 1.

He said the change is being made to encourage truthful duty declarations, speed up the arrival process at the airport, and enable customs officers to focus on security threats.

The Customs Department at Owen Roberts International Airport introduced red and green customs channels at the end of 2016 to expedite the duty declaration system. The “red-green” system was intended to improve the flow of passengers without reducing the effectiveness of customs checks.

Passengers entering the green channel are deemed to have made a declaration that they have nothing to declare but may still be vetted by customs officials. Since June 30 this year, customs has also waived the need for inbound travelers to fill in a goods declaration form, provided that those travelers do not exceed the duty allowance.

Passengers with goods to declare enter a separate red channel and can pre-pay customs duties with a cashier before collecting their luggage and entering the line.

“The introduction of the ‘Customs Green Channel’ at airport arrival is allowing those returning home, who do not have purchases above the dutiable limit, to clear customs much quicker,” Mr. McLaughlin said in the Legislative Assembly on Cayman Brac on Wednesday.

On regular weekdays, about 700 passengers arrive at Owen Roberts. About 10 percent of travelers may have goods to declare. The number of arrivals more than doubles on weekends and during holidays, according to Customs.

While Customs reserve the right to stop and search anyone suspected of evading duty, the premier said, border security depends increasingly on the ability to act on specific intelligence rather than suspicion.

“This is why we recently passed legislation to allow the Cayman Islands to participate in the Advanced Passenger Information Program – receiving early warning of individuals of concern that are on their way to our airports and seaports,” the premier said. “This is the direction that we are working towards: intelligence-based vetting that has the best chance of stopping those bringing in contraband or trying to circumvent the Customs Law.”

In June, Customs Collector Charles Clifford said the changes to the customs clearance process allowed customs officers to focus on security threats at the border.

At the same time, the new approach relies even more on residents making truthful declarations about goods that exceed the allowed duty-free limit.

Rather than increase the fines for duty violations, government has chosen to increase personal duty-free limits to encourage compliance, Premier McLaughlin said.

“Our preference is to offer a ‘carrot’ rather than to rely on ‘the stick’ approach,” he said.

The duty allowance continues to apply only to purchases imported for personal use and not for commercial purposes.

“I believe the vast majority of Caymanians and residents will welcome this increase in the duty allowance and will abide by the rules requiring them to declare any goods imported over that limit,” Mr. McLaughlin said. However, if there was abuse of the system, higher fines could still be considered. The increase in duty allowance will naturally reduce government’s revenue from duty collection. Based on past duty declarations, the Ministry of Finance estimates lost revenue of about $1 million per year as a result.

The premier called that sum an “affordable amount,” in light of the health of government finances.

“In addition to encouraging proper declarations at the airport, this increase will also provide our people with some useful monetary relief when returning home from their annual vacation and shopping trips,” he said.

Note: This story has been edited to reflect that the $500 duty-free allowance is applicable to residents only.