Customs valuation is the process of determining the value of imported goods for the purpose of assessing customs duties and taxes. The value of the goods is used as the basis for calculating the amount of duty and tax that must be paid to the customs authorities.
Customs valuation is an important part of international trade because it ensures that customs duties and taxes are applied fairly and accurately to all imported goods. It is also a key factor in determining the competitiveness of a product in the global marketplace.
The World Trade Organization (WTO) sets out the rules and guidelines for customs valuation under the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade (GATT). The agreement establishes a set of methods for determining the value of imported goods, including:
- Transaction value method: the price actually paid or payable for the goods.
- Transaction value of identical goods method: the price of identical goods sold in the same quantity and at the same time and place as the imported goods.
- Transaction value of similar goods method: the price of similar goods sold in the same quantity and at the same time and place as the imported goods.
- Deductive value method: the sale price of the goods in the importing country, less any costs incurred after importation.
- Computed value method: the sum of the cost of production, selling and general expenses, and a reasonable profit margin.
Customs valuation can be a complex process, and importers may need to work with customs brokers or trade consultants to ensure that their goods are valued correctly and that they comply with all relevant regulations and requirements.