Forms of security

Where an importer applies to Customs for duty relief, duty deferment or duty suspension (bonded warehousing) or has some other specific obligation, Customs may ask for security.

Security is intended to safeguard the revenue, encourage payment of outstanding duty, or to promote compliance with any other customs obligation or conditions.

Customs will not require security when they are satisfied that outstanding duty will be paid or that any other specific obligation to Customs will be fulfilled.

Where security is required, Customs will determine the amount of security.  In addition Customs will ensure that the amount of security is as low as possible.  Security in respect of the payment of duty, will not exceed the amount of the outstanding duty.

Security will be cancelled or paid back as soon as possible after Customs is satisfied that outstanding duty has been paid or any other customs obligations have been fulfilled.

There are a number of forms of security.  Security includes but is not limited to—

  • Letter of undertaking – a formal written assurance to Customs declaring an intention to pay outstanding duty
  • Monetary security – an amount of money deposited with Customs which may be paid in to the General Revenue as an amount of duty due in default of a specific customs obligation
  • Letter of credit – a letter issued by a financial institution to Customs to serve as a guarantee for payment of outstanding duty
  • Customs surety bond – a contract used for guaranteeing that outstanding duty will be paid or that a specific obligation will be fulfilled.  One or more sureties may be required. A surety is a guarantor that assumes the responsibility of paying the outstanding duty due in case the debtor is unable to make the duty payments or fails to carry out a specific obligation
  • Hypothecation agreement – an agreement that pledges an asset as collateral to secure payment of outstanding duty without giving up title, possession or ownership rights, such as income generated by the asset.

Where Customs requires an importer to provide security, that importer will normally be allowed to choose any form of security, provided that it is acceptable to Customs.  Customs may vary the form and amount of security on a case-by-case basis according to the assessed of risk to the revenue in each particular case.