Customs duty, which is an ad valorem duty, is usually charged
as a percentage of the value of the imported
goods. Therefore, the amount of customs
duty payable depends on the customs value
of the goods. Under the WTO Valuation Code, adopted
by the most of the world’s nations, there are 6 methods of
valuation which must be applied in strict
hierarchical order; the only exception
being that the importer may request that methods
4 and 5 are reversed.
Method 1, often referred to as the "transaction value",
is the most common valuation method used. In fact, over 95% of all
imports are valued under this method. The transaction value is the
price paid, or payable for the goods by the buyer to the seller,
after a number of additions and deductions have been made, unless
they have already been excluded, or included in the price paid,
or payable. If there is no sale you cannot use method 1 and you
must try another method, starting from method 2. If method 2 is
unsuitable you must go to method 3, etc.
Please note, that you may not be able
to use method 1 if you are related to the supplier and as a result
of the relationship you get a reduced price, or if the sale is subject
to any conditions which restrict your freedom to dispose of, or
sell the goods as you wish.
Planning Opportunities - It is possible
to significantly reduce custom duty liabilities by the skilful application
of a number of customs valuation planning techniques, such as the:
unbundling of buying commissions and discounts; the use of a first
sale; and the establishment of a separate sourcing company, etc.
However, before you can exploit the above
opportunities, it is often necessary to engage in complex negotiations
with Customs. Therefore, we strongly recommend that professional
advice is sought from Global Customs Compliance before any action is taken.
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