How To Properly Declare The Value Of Your Goods

Posted on: 11 September 2015

The valuation of goods can be a tricky area for importers.  Here's how to accurately value your goods so that you don't fall foul of the customs brokers when importing goods for your business.

How is valuation defined?

A valuation is the determination of an accurate value of imported, declared goods.  This valuation is used by the importer to work out the taxes and duty they owe to the destination country's customs officials.  Therefore, if the valuation is inaccurate, the importer could find themselves in hot water with the customs broker for underpaying duty.

Methods of valuation

There are six recognised methods of valuing goods for customs purposes that should be considered in sequence.  The purpose of this is to ensure that any imported goods are given a value that's in line with "commercial reality", rather than using an arbitrary value that may not be accurate.

Transaction Value

Transaction value applies when you sell goods to a purchaser in the destination country for re-sale there. 

The price paid is taken into account.  This is the total of any payments made to the vendor by the purchaser, either directly or indirectly.  The price payable is also used.  This is the total of any payments owed that will be made to the vendor by the purchaser, either directly or indirectly.

The "transaction value" method of valuation should always be used first.

Transaction Value of Identical Goods

"Identical goods" are defined as being exactly the same in essence as the goods being valued but with minor differences, for example, bolts of fabric indifferent colours.  These goods would have to be manufactured in the same country as any goods being appraised for valuation.

Transaction Value of Similar Goods

"Similar goods" are those which very closely resemble the goods that are being valued.  Similar goods effectively perform the same function, are manufactured in the same location and are commercially interchangeable.  For example, several different designs of food blenders would qualify as similar goods provided they were all made in the same factory in the same country of origin.

Deductive Method of Valuation

If you can't apply any of the first three methods of valuation, you should use the deductive method of valuation.  This method is based on the importer's usual selling price to customers for the goods that you are valuing. 

Computed Method of Valuation

This method of valuation uses the cost of production and adds to that figure a reasonable figure for profit and sundry expenses incurred by the producer when selling the goods to importers in another country.

Fall-back Method of Valuation

The final method of valuation doesn't require the exporter to identify defined requirements in their calculation.  The value of the goods is instead "based on" one of the other preceding methods in the sequence.  Although this sounds like a rather loose methodology, the end value reached must be fair and commercially realistic.

In conclusion

In order to avoid getting into hot water with the customs officials when importing goods, you must produce an accurate valuation of those goods using the methodology outlined above.  If you're new to imports or are unsure of how to work out a valuation for your products, contact your local customs broker for more advice and guidance.