Customs valuation is the method used to determine the value on which customs duties and certain import taxes are assessed. It is not always the same as the supplier’s invoice total because customs rules can require additions, exclusions or an alternative valuation method.
How is customs value determined?
The transaction value is commonly the starting point when the price actually paid or payable is acceptable. Depending on local rules and the delivery term, customs may require additions for items such as assists, royalties, packing, commissions, freight or insurance.
Illustrative customs value calculation
| Calculation step | Amount | Treatment |
|---|---|---|
| Invoice price | $50,000 | Starting transaction value |
| Buyer-supplied tooling | $4,000 | Addition for an assist |
| Packing cost | $1,000 | Addition under the assumed rules |
| Customs value | $55,000 | $50,000 + $4,000 + $1,000 |
| Duty at 6% | $3,300 | $55,000 × 6% |
The example is illustrative. The correct additions, currency conversion date and valuation basis depend on the importing jurisdiction and transaction facts.
What if transaction value cannot be used?
Customs rules normally prescribe a sequence of alternative methods, such as the transaction value of identical or similar goods, a deductive method, a computed method or a fallback method. The importer should document why the selected method applies.
Customs value vs. commercial invoice value
The invoice states the commercial charge between buyer and seller. Customs value is a regulatory calculation. Related-party pricing, discounts, free-of-charge goods and post-import payments can require additional analysis even when the invoice is accurate.
What evidence should be retained?
Keep purchase orders, invoices, contracts, royalty agreements, freight and insurance records, evidence of assists, transfer-pricing support and the final declaration. The records should reconcile the declared amount to the underlying transaction.
