Ｉ．国際取引の必須要件 Must Requriements for Cross-
- 経済的合理性のある取引形態の導入 Implementation of Economically Rational Business Model
- 有形及び無形資産取引（以下、「資産取引」という。）に係る契約書の導入 Introduction of Legal Formalities for Tangible & Intangible Transactions
- 資産取引に係る適正な取引価格の設定（特に、特殊関係者間取引においては移転価格の設定において注意が必要）Use of Appropriate Transfer Prices for Related Party Transactions
- 発注書、請求書及び支払記録並びに国際取引に係る各種承認・許可書等の保管 Maintenance of PO, Invoices, Payment voucher and permission or approval required for Cross-Border Transactions
- 一般に認められる会計原則に従った会計処理 Accounting System based on the Generally Accepted Accounting Procedures
ＩＩ．関税対策 Measures for Customs Matters
- 税関事務管理人制度、限定販売取引又は輸入委託販売取引の導入 Application of Customs Affaires Representative System, Limited Distributor Business Model or Consignment Sales
- 各種協定（EPA,FTA等）の活用 Consideration of EPA or FTA
- 事前教示制度の活用（課税価格及び関税分類の適正化）Practical Use of Advance Ruling Request for Valuation and Classification Under the Provisions of the Japanese Customs Law, Article 7, Paragraph 3
III. Customs Plannings
1. Buying Agent Model
- There must be contractual arrangement between a buying agent and a buyer.
- Goods were ordered for the importing country’s market;
- A “bona fide” sale which caused goods to be exported to the country of import must have taken place, with goods sold by the manufacturer to the middleman (who is buying for and on behalf of buyer) at an arm’s length price:
- Identification, via accounting and other internal records, of specific merchandise destined for shipment to the importing country prior to shipment;
- Availability of manufacturer’s invoices and payment voucher between the middleman entity and the seller; and
- Existence of an audit trail (to be made available to Customs as requested) establishing that the goods are clearly ordered and sold for the import country’s market.
Roles and functions of each party involved in the buying agent model
- Buying Agent Agreement should clearly define that a Buying Aagent (“BA”) is only providing procurement services to a Buyer (“B”).
- A Seller (“S”) should be clearly identified as the Seller and B the Buyer and reference may be made to the services provided by BA in a Sales Agreement.
- B sells to imported goods to Customers (“C”).
- It is preferable for title to pass between S and B on FOB, CIF or C&F terms, although it may be transferred in accordance with other payment terms.
- The other aspects of the transaction, i.e. invoicing and payment, must support this flow of title.
- When B issues Purchase Orders (“POs”) to BA, the POs have to indicate the quantity, quality and terms of delivery.
- Customs clearance is made using invoice that relates only to the sales price from S or clearly separates the sales price from the service fee paid/payable by B to BA.
- Direct shipment is not a specific requirement but is significant factor in determining the import transaction.
- Where direct shipment is not possible:
careful consideration must be given to the role of BA
– other justification for S to B being the import transaction such as the goods
being clearly destined for Japan evidenced by such things as technical
characteristics of the goods or labeling
- From a purely customs perspective it is preferable for S to invoice B for the goods and BA separately invoice B for the services.
- It is preferable for B to remit two separate payments to BA, one for the sales price from S and the other for BA’s service fee.
Points to be considered
It is essential to conduct Cost / Benefit Analysis in relation to the sharing of pricing information from manufacturer and middleman entity, need to assess and implement internal controls, policies and procedures, or cash benefit by calculating present and future duty payment and other costs for the projected supply chain.
Under the Buying Agent Model, the buyer takes on key risks, roles and responsibilities within the transaction. If the Buying Agent is the Parent company, functions performed by each entity have to be carefully defined in the Buying Agent Agreement.
Corporate tax issues related to the level of profit realized in the country of import commensurate to the functions each entity performs.
If the “fully loaded price” for the imported goods includes the following costs and expenses, Customs will presume that all of these cost items are dutiable unless “Unbundled” from the price and determined to be non-dutiable through analysis and documented support.
- Buying Commission;
- Territory Charge;
- Royalties and License Fees which are not related to the imported goods and not payable as a condition of sale of the goods;
- Inspection expenses incurred by the buyer after purchasing the imported goods;
- Storage expenses;
- Quantity & Cash discount; and
- Interest for deferred payment & Dividend.
(1) Buying Commission
The term “buying commission” is defined in the Interpretative Note to Article 8 of GATT – Rules on Customs Valuation as:
“Fees paid by an importer to his agent for the services of representing him abroad in the purchase of the goods being valued.”
Buying agent commission can be deducted from the customs value if the following conditions are satisfied.
- He acts primarily for the benefit or account of the buyer and is motivated to obtain the specific goods desired by the buyer and will negotiate the lowest price on behalf of the buyer.
- His commission is paid by the buyer. It may be paid directly to him in a separate disbursement, or where the agent prepares a consolidated invoice, it may appear as a charge on the invoice.
- He does not bear risks of loss and damage should the goods be lost, damaged or defective.
- He does not ever hold title to the goods.
- He may assist in making shipping arrangements for the buyer but does not absorb the costs for shipping.
- He does not maintain stock but may have samples or may obtain samples for the buyer’s consideration.
- If he is related to or has financial interest in the seller, great care should be exercised in reviewing his exact role in the transaction.
(2) Territory Charge
Payment for the right to distribute and resell will not be added to the price actually paid or payable under the Interpretative Note to Article 8 of GATT:
“Payments made by the buyer for the right to distribute or resell the imported goods shall not be added to the price actually paid or payable for the imported goods if such payments are not a condition of the sale for export to the country of importation of the imported goods.”
(3) Royalties and License Fees
Royalties and license fees are not subject to the customs value if they are not a condition of the sale of or related to the imported goods. However, if the seller is related to a Licensor, a careful consideration is required.
- Payment for a Franchise Agreement;
- Right to use intellectual property rights in the country of importation for activities such as manufacturing, advertisement, promotion and marketing; and
- Payment for corporate services like various management support services such as legal, finance, budgeting, strategic development and other support services relating to information technology for an importer’s data processing.
(4) Inspection Expenses
The cost of the activities undertaken by the buyer on his own account after purchase of the goods but before importation would not be considered as part of the customs value. The following requirements have to be satisfied.
- Costs for inspection, relating to quality, specification, degree of purity, quantity and so on, which are incurred by the buyer;
- Formalities which define the inspection activities done by the seller on behalf of the buyer have to be implemented; and
- Where the seller prepares a consolidated invoice, it may appear as a charge on the invoice.
(5) Storage Expenses
Expenses incurred by the buyer after purchase cannot be considered as a payment made directly or indirectly to the seller or for his benefit; hence costs for the following cases would not be part of the customs value.
- The goods are put into storage abroad subsequent to their purchase but prior to their export to the country of importation.
- Cash discount;
- Quantity discount;
- Interest for deferred payment;and
5. Free Zone (“FTZ”)
Some countries have introduced “Free Zones” to facilitate and enhance development of their external trade by granting relief from import duties and taxes in respect of goods brought into a part of their territory where they are generally regarded as being outside of the Customs territory. This part of the territory is knows as a “free zone”.
There are two types of free zone, commercial and industrial. In commercial free zones, the permitted operations are generally limited to those necessary for the storage of the goods and usual forms of handling to improve their packaging, sorting or marketable quality or to prepare them for shipment. In industrial free zone, processing operations are authorized.
Although goods introduced into free zones are generally regarded, insofar as import duties and taxes are concerned, as being outside the Customs territory, certain provisions laid down by the State concerned may remain applicable, e.g. prohibitions and restrictions deriving from national legislation. The Customs also carry out certain controls within the free zone to ensure that the operations carried out are in accordance with the requirements laid down.
Goods introduced into a free zone from the Customs territory normally, qualify for the exemption from or repayment of import duties and taxes or internal duties and taxes granted at exportation.
Where goods which have not been processed in a free zone are allowed to be introduced into the Customs territory for home consumption, they become liable to import duties and taxes, as if they had been imported directly from abroad. However, special assessment rules, laid down in national legislation, are applicable in the case of foreign goods utilized were of national origin or had been imported against payment of import duties and taxes and had been granted exemption from or repayment of duties and taxes when they were introduced into the free zone.
In some countries Customs facilities comparable to those characteristic of free zones are granted throughout the territory, in the context of other Customs procedures such as Customs warehousing, drawback, temporary admission for inward processing or Customs transit.
- The term “free zone” means a part of the territory of a State where any goods introduced are generally regarded, insofar as import duties and taxes are concerned, as being outside the Customs territory and are not subject to the usual Customs control;
- The term “Customs territory” means the territory in which the Customs law of a State applies in full;
- The term “import duties and taxes” means Customs duties and all other duties, taxes fees or other charges which are collected on or in connection with the importation of goods, but not including fees and charges which are limited in amount to the approximate cost of services rendered;
- The term “Customs control” means the measures applied to ensure compliance with the laws and regulations which the Customs are responsible for enforcing; and
- The term “person” means both natural and legal persons, unless the context otherwise required.
Standard for Goods admitted
Admission to a free zone is authorized not only for goods imported direct from abroad but also for goods brought from the Customs territory of the State concerned. (Notes: Goods brought form the Customs territory of the State concerned may be goods in free circulation or goods placed under a procedure affording conditional relief from import duties and taxes or a processing procedure.)
Goods admissible to a free zone which are entitled to exemption from or repayment of import duties and taxes or internal duties and taxes when exported will qualify for such exemption or repayment immediately after they have been introduced into the free zone. (Note: Exemption or repayment is generally granted immediately after introduction of the goods into the free zone. In special cases, exemption or repayment may be made subject to the exportation of the goods from the national territory. Exceptionally, evidence of arrival of the goods in the country of destination may also be required.)
In addition to loading, unloading, transhipment and storage, goods admitted to a commercial zone are allowed to undergo operations necessary for their preservation and usual forms of handling to improve their packaging quality or to prepare them for shipment, such as breaking bulk, grouping of packages, sorting and grading, and repacking. (Note: The right to carry out processing operations may be made subject to the condition that the proposed operations are regarded by the competent authorities as advantageous to the national economy.)
Transfer of ownership
The transfer of ownership of goods admitted to a free zone is allowed.
Retail sales within free zones may be prohibited.
Goods admitted to free zones may be used for provisioning ships and aircraft.
Standard for assessment of duties and taxes
National legislation shall specify the point in time to be taken into consideration for the purposes of determining the value and quantity of goods which may be taken into home consumption on removal from a free zone and the rates of the import duties and taxes applicable to them.
National legislation shall specify the rules applicable for determining the amount of the import duties and taxes chargeable on goods taken into home consumption after manipulation or processing in a free zone. (Note: The amount of the import duties and taxes chargeable on goods taken into home consumption after processing in a free zone may be limited to the amount of the import duties and taxes applicable to the foreign goods utilized, in the state in which they were introduced into the free zone, plus, where goods of national origin or goods imported against payment of import duties and taxes were utilized, the amount of any exemption from or repayment of internal duties or taxes or import duties and taxes granted when those goods were introduced into the free zone.)
6. Bonded Area
National legislations for a Customs warehousing procedure allow goods that are liable to, or have borne, import or internal duties and taxes to be stored in Customs warehouses in order that they may qualify for exemption from, or repayment of, such import or internal duties and taxes.
Any person entitled to dispose of the goods is authorized to remove all or part of them from warehouse for re-exportation, home consumption, removal to another Customs warehouse or assignment to any other Customs procedure, subject to compliance with the conditions and formalities applicable in each case.
The term “Customs warehousing procedure” means the customs procedure under which imported goods are stored under customs control in a designated place (“Bonded area”) without payment of import duties and taxes;
The term “security” means that which ensures to the satisfaction of the Customs, that an obligation to the Customs will be fulfilled. Security is described as “general” when it ensures that the obligations arising from several operations will be fulfilled.
Goods allowed to be warehoused
Storage in public Customs warehouses should be allowed for all kinds of imported goods liable to import duties and taxes or to restrictions or prohibitions other than those imposed on grounds of public morality or order, public security, public hygiene or health, or for veterinary or phytopathological considerations, or relating to the protection of patents, trade marks and copyrights, irrespective of quantity, country of origin, country whence arrived or country of destination. (Note: Goods which constitute a hazard, which are likely to affect other goods or which require special installations should be accepted only by Customs warehouse specially designed to receive them.)
The kinds of goods which may be stored in private Customs warehouse shall be specified by the competent authorities in the authority granting the benefit of the Customs warehousing procedure or in an appropriate provision.
Storage in Customs warehouses should be allowed for goods intended for exportation that are liable to, or have borne, internal duties or taxes, in order that they may qualify for exemption from, or repayment of, such internal duties and taxes, on condition that they are to be exported subsequently.
Any person entitled to dispose of the warehoused goods is allowed:
- to inspect them;
- to take samples, against payment of the import duties and taxes where appropriate;
- to carry out operations necessary for their preservation.
Warehoused goods are allowed to undergo usual forms of handling to improve their packaging or marketable quality or to prepare them for shipment, such as breaking bulk, grouping of packages, sorting and grading, and repacking.
Duration of warehousing
The authorized maximum duration of storage in a Customs warehouse will be fixed with due regard to the needs of trade and will be not less than one year.
Transfer of ownership
The transfer of ownership of warehoused goods is allowed.
VI. The general structure of The Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade is as follows;
The adoption of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade (“Agreement”) is not only the introduction of the uniform valuation criteria but also the facilitation and promotion of international trade. The Agreement provides the simple and fair system which is consistent with commercial practices and enables a trader to proceed with a reasonable degree of certainty and to be fully aware of how the declared value will be determined. It also seeks to achieve the first and principal method of determining Customs Value by basing the customs value as far as possible on the TRANSACTION VALUE OF THE IMPORTED GOODS, that is, the price actually paid or payable for the goods when sold for export to the country of import.
The Agreement was one of the codes resulting in 1979 from the Multilateral Trade Negotiations in GATT, which aimed to reduce or eliminate non-tariff measures with restrictive effect on international trade, and to bring such measure under more effective international discipline.
The Agreement therefore provided a detailed set of valuation rules expanding and giving greater precision to the general principles established in the General Agreement on Tariffs and Trade.
Their underlying principles and objectives are stated as follows;
- “to further the objectives of the General Agreement on Tariffs and Trade
- “to secure additional benefits for the international trade of developing countries”
- “a fair, uniform and neutral system that precludes the use of arbitrary or fictitious Customs values”
- “the basis for valuation should, to the greatest extent possible, be the transaction value of the goods being valued“
- “Customs value should be based on simple and equitable criteria consistent with commercial practices”
- “valuation procedures should be of general application without distinction between sources of supply”
The aforementioned principles are developed in the “Rules on Customs Valuation” (“Code”).
The Agreement was designed to be fair, uniform and neutral. Also it precludes the use of arbitrary or fictitious values. This means that Customs valuation should always be based on factual evidence and should not resort to the creation of values which do not have any basis in commercial reality. That is, Customs should rely on the price actually paid or to be paid between the buyer and the seller in the transaction which brought the imported goods into the country.
The general structure of the Agreement is as follows:
Part I: Rules on Customs Valuation
(Article 1 to 17)
Part II: Administration, Consultation and Dispute Settlement
(Article 18 & 19)
Part III: Special and Differential Treatment (Article 20)
Part IV: Final Provisions (Article 21, 22, 23 & 24)
Annex I: Interpretative Notes
Annex II: Technical Committee on Customs Valuation
Annex III: Provisions concerning the special problems and trading needs of developing countries
Detailed Structure of Part I
Part I: Rules on Customs Valuation
Article 1: The Primary Valuation Method (Transaction Value)
Article 2: The Transaction Value of Identical Goods
Article 3: The Transaction Value of Similar Goods
Article 4: Choice of Alternative Valuation Methods
Article 5: The Deductive Method
Article 6: The Computed Value
Article 7: The “Fall-Back” Method
Article 8: Adjustment of The Price Actually Paid or Payable
Article 9 – 17: Other Provisions
– Article 9: Currency Conversion
– Article 10: Treatment of Confidential Information
– Article 11: Right of Appeal
– Article 12: Publication of Laws and Regulations
– Article 13: Release of Goods From Customs Control Pending Determination of
– Article 14: Status of Annexes I, II and III
– Article 15: Definition of Terms
– Article 16: Importer’s Right to Information as to Determination of the Customs
Value of his Goods
– Article 17: Customs Right to Verify Information
Annex I – Interpretative Notes
Article 14 provides that the Notes at Annex I form an integral part of the Agreement and the Articles of the Agreement are to be read and applied in conjunction with their respective Notes (Annexes II and III also form an integral part of the Agreement).
Use of Generally Accepted Accounting Principles
The term “Generally Accepted Accounting Principles”, in brief “GAAP”, refers to the recognized consensus of substantial authoritative support within a country at a particular time as to:
- which economic resources and obligations should be recorded as assets and liabilities
- which changes in assets and liabilities should be recorded
- how the assets and liabilities and changes in them should be measured
- what information should be disclosed and how it should be disclosed, and
- which financial statements should be prepared.
The specific areas of use of GAAP are:
- determination of adjustments under transaction value (apportionment of assists)
- determination of usual profit and general expenses under deductive value
- determination of costs of materials and fabrication, and profit and general expenses under computed value.
V. WTO Valuation Epitome
1.The Condition for the use of the transaction value method are as follows:
(1) The first of the six conditions that must be fulfilled if the transaction value is to be taken as the customs value is as follows:
- There must be evidence of a sale for export to the country of importation i.e. commercial invoices, contracts, purchase order, etc.
(2) The second condition is:
There are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which:
- are imposed or required by law or by the public authorities in the country of importation;
- limit the geographical area in which the goods may be sold; or
- do not substantially affect the value of the goods.
(3) The third condition is:
The sale or price is not subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued.
(4) The fourth condition is:
That no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller unless an appropriate adjustment can be made in accordance with Article 8.
(5) The fifth condition is:
The buyer and seller are not related, or where the buyer and seller are related, that value is acceptable for Customs purposes if the importer demonstrate that:
- the relationship did not influence the price actually paid or payable, or;
- the transaction value closely approximates a test value.
(6) The sixth condition is:
Sufficient information is available to enable the following additions to be made to the price actually paid or payable under Article 8 of the Agreement:
- commissions and brokerage, except buying commissions,
- packing and container costs and charges,
- royalties and license fees,
- subsequent proceeds, and
- the cost of transport, insurance and related charges up to the place importation, if the country bases its valuation law on c.i.f.
The Customs value must not include the following charges or costs, if they are distinguished from the price actually paid or payable for the goods:
- freight after importation into the Customs territory of the importing country;
- cost of construction, erection, assembly, maintenance or technical assistance occurring after importation; and
- duties and other national taxes of the importing country.
2. Related Parties
(1) The definition of “related” is found in Article 15 which states that “— person shall be deemed to be related only if:
- they are officers or directors of one another’s business;
- they are legally recognized partners in business;
- they are employer and employee;
- one of them directly or indirectly controls the other ; both of them are directly or indirectly controlled by a third person;
- together they directly or indirectly control a third person; or
- they are members of the same family.
(2) Paragraph 2(a) – The Circumstances of the Sale
The Interpretative Note Article 1 gives the following examples of circumstances in which transaction value will be accepted between buyer and seller:
l If the price has been settled in a manner consistent with the normal pricing practices of the industry or in the way the seller settles prices for sales to buyers who are not related, this will demonstrate that the price had not been influenced by the relationship.
l If it is shown that the price is adequate to assure recovery of all costs plus a profit that is equivalent to the firm’s overall profit over a representative period of time in sales of merchandise of the same class or kind this will demonstrate that the price has not been influenced by the relationship.
(3) Paragraph 2(b) – The Test Values
Under paragraph 2(b) the transaction value must be accepted whenever the importer demonstrates that such value closely approximates to one of the following, occurring at or about the same time:
- the transaction value in sales to unrelated buyers of identical or similar goods for export to same country of importation;
- the customs value of identical or similar goods as determined under the provisions of Article 5; and
- the customs value of identical or similar goods as determined under the provisions of Article 6.
3. ADJUSTMENT OF THE PRICE ACTUALLY PAID OR PAYABLE (ARTICLE 8)
(1) Paragraph 1 – Additions to the Price Actually Paid or Payable
The additions which must be made to the price actually paid or payable are:
(a) Commissions and Charges
To the extent that they are incurred by the buyer but not included in the price of the goods:
- commissions and brokerage, except buying commissions;
- the cost of containers which are treated as being one for customs purposes with the goods in question;
- the cost of packing whether for labour or materials.
(b) Elements Supplied by the Buyer
The value, apportioned as appropriate, of the following goods and services where supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale for export of the imported goods, to the extent that such value has not been included in the price actually paid or payable, has to be added to the customs vale. They are as follows:
- materials, components, parts and similar items incorporated in the imported goods;
- tools, dies, moulds and similar items used in the production of the imported goods:
- materials consumed in the production of the imported goods; and
- engineering, development, artwork, design work, and plans and sketches undertaken elsewhere than in the country of importation and necessary for the production of the imported goods.
Royalties and license fees related to the goods being valued that the buyer must pay, either directly or indirectly, as a condition of sale of the goods being valued, to the extent that such royalties and fees are not included in the price actually paid or payable, has to be added to the customs value. However, two conditions must be satisfied before a royalty can be made dutiable, i.e.
- it must be related to the goods being valued, and
- it must be a condition of sale of the goods being valued.
(d) Resale Proceeds
The value of any part of the proceeds of any subsequent resale, disposal or use of the imported goods that accrues directly or indirectly to the seller has to be added to the customs value.
(2) Paragraph 2 – Inclusions or exclusions from customs value
“In framing its legislation, each country shall provide for the inclusion or the exclusion from the customs value, in whole or in part, of the following”:
- the cost of transport of the imported goods to the port or place of importation;
- loading, unloading and handling charges associated with the transport of the
- imported goods to the port or place of importation; and
- the cost of insurance.
4. ALTERNATIVE VALUATION METHOD
The Transaction Value of Identical or Similar Goods (Article 2 & 3)
(1) Definitions of “Identical” and “Similar”
Identical goods are defined in Article 15 as goods which are the same in all respects, including physical characteristics, quality and reputation. Minor differences in appearance would not preclude goods otherwise conforming to the definition from being regarded as identical.
Similar goods are also defined in Article 15 as goods which, although not alike in all respects, have like characteristics and like component materials which enable them to perform the same functions and to be commercially interchangeable. The quality of the goods, their reputation and the existence of a trademark are among the factors to be considered in determining whether goods are similar.
Goods are not regarded as identical or similar goods unless they were produced in the same country as the goods being valued.
Article 2 and 3, unlike Article 1, mention time in relation to the transaction value established under that Article. They require that the customs value be the transaction value of identical goods exported at or about the same time as the goods being valued.
(3) Level and Quantity
In addition to a time difference, there may be other differences, such as the level at which the sales were made or the quantities sold, which would result in different prices for the goods being valued and the identical or similar goods.
(4) Choice Of Alternative Valuation Methods (Article4)
The first three Articles of the Code provide for Customs values based on transaction value and give the order of priority for applying those Articles. Customs values which are not based on transaction value and which are relevant only when a customs value cannot be determined under the first three Articles are prescribed in Articles 5 and 6. The sequence of application of those two Articles is laid down in Article 4.
5. The Deductive Method (Article 5)
Under Article 5, the customs value is to be determined by the “deductive” method. It is to be based on the unit price at which the imported goods or identical or similar imported goods are sold in the greatest aggregate quantity in the country on importation. There is no order of precedence but the buyer and the seller must not be related and the sale must take place at or about the time of importation of the goods being valued.
(2) Sales in the Greatest Aggregate Quantity
Firstly, the sales to be considered are those that occur at the first commercial level after importation.
The second consideration is that no sale is to be taken into account for purposes of determining the greatest aggregate quantity, if that sale is to a person who supplies, directly or indirectly, any of the elements specified in Article 8 free of charge or at reduced cost for use in connection with the production and sale for export of the imported goods.
(3) Commissions or General Expenses and Profit
Deductions must also be made either for commissions or for general expenses and profit. If deductions are made for commissions then no deductions would be made for general expenses and profit and vice versa..
The commissions to be deducted are those usually paid or agreed to be paid in connection with sales in the importing country of imported goods of the same class or kind. Such deductions will be applicable when the sale is made on an agency basis.
The general expenses and profit to be deducted for the purpose of Article 5 are those usually made in connection with sales in the importing country of imported goods of the same class or kind. Such deduction will be applicable when the seller is acting for his own account and at his own risk.
– Duties and taxes
– Delivery Costs
– Goods Processed after Importation
The Customs value is to be based on the unit price at which the imported goods, after further processing, are sold in the greatest aggregate quantity to persons in the country of importation who are not related.
6. The Computed Value Method (Article 6)
Under Article 6 the customs value is based on a computed value which is the sum of the following:
- the cost or value of materials and fabrication or other processing employed in producing the imported goods ;
- an amount for profit and general expenses equal to that usually reflected in sales of goods of the same class or kind as the goods being valued which are made by producers in the country of exportation for export to the country of importation ;
- the cost or value of all other expenses necessary to reflect the valuation option chosen by the Party under Article 8, paragraph 2.
(2) Production Cost or Value
The computed value consists firstly of the cost or value of materials and processing employed in producing the imported goods. In those cases where a cost has been incurred by the producer for the materials or processing, that cost is used in establishing the computed value ; when no cost has been incurred for the materials or processing in question, then their value is used.
(3) Profit and General Expenses
The general expenses to be used in computed value are the direct and indirect costs of selling the goods for export and any production costs not already taken into account.
(4) Delivery Expenses
The cost or value of delivery expenses, namely transport of the imported goods to the port or place of importation, loading and handling charges and the cost of insurance, are to be reflected in the computed value depending on the treatment to be accorded to these charges by nation legislation.
(5) Procurement of Information on Computed Value
The computed value method will generally be limited to those cases where the buyer and the seller are related, and the producer is prepared to supply to the authorities of the country of importation the necessary costing and to provide facilities for any subsequent verification which may be necessary.
7. The “Fall-Back” Method (Article 7)
This Article does not provide a new definition of value but rather requires that the customs value be determined using reasonable means consistent with the principles and general provisions of the Code and of Article 7 of WTO and on the basis of data available in the country of importation.
(1) Identical Goods
Identical imported goods produced in a country other than the country of exportation of the goods being valued could be the basis for Customs valuation; Customs values of identical imported goods already determined under the provisions of Article 5 and 6 could be used.
(2) Similar Goods
Similar imported goods produced in a country other than the country of exportation of the goods being valued could be the basis for customs valuation; customs values of similar imported goods already determined under the provisions of Article 5 and 6 could be used.
(3) Deductive Method
The requirement that the goods must have been sold in the condition as imported in paragraph 1 of Article 5 could be flexibly interpreted; the 90-day requirement could be administered flexibly.
(4) Other Aspects of Article 7
Paragraph 2 of Article 7 lists valuation methods which are not to be employed in determining a customs value under the provisions of that Article; these are:
- the selling price in the country of importation of goods produced in such country;
- a system which provides for the acceptance for customs purposes of the higher of two alternative values;
- the price of goods on the domestic market of the country of exportation;
- the cost of production other than computed values which have been determined for identical or similar goods in accordance with the provisions of Article 6;
- the price of the goods for export to a country other than the country of importation;
- minimum customs values;
- arbitrary or fictitious values.
The Agreement emphasizes the fact that not only is transaction value the primary basis of valuation, it is the preferred basis. Also emphasize that language that indicates that the “value should be based on simple and equitable criteria” and that the intent was that customs value should reflect commercial reality.
An importer making declaration for home consumption is required to answer questions relating to the entry or produce commercial documents. The Customs may not give permission for the goods to be dealt with in accordance with the declaration unless Customs have verified the details of particulars.
As for the operation and management of the Agreement, documents relating to the import are very important. Therefore, we need to have some kind of standard for the entry relating documents. The standard for the documents are:
The importer must state;
- whether any payment in addition to the invoice price has been or will be made;
- whether the importer is related to the foreign supplier;
- whether any part of the proceeds of later resale will accrue directly of indirectly to the seller, etc.
If the imported goods are not the subject of a sale, this also has to be stated in declaration of facts. Goods sent on consignment to an agent or transferred to a branch.
The entry related documents should provide a number of other particulars required by Customs for valuation purposes, including the following;
- identification of the parties to the transaction;
- the description and quantity of the goods;
- the selling price of the goods, including the terms of sale, the currency and method of payment and exchange contract details (where appropriate, such as T/T, D/A, D/P, L/C, private money transfer concerning the targeted importers.);
- particulars of all arrangements or undertakings that have or may have the effect of varying the selling price of the goods, whether by way of discount, rebate, commission, compensation or any other means;
- the value of the outside packages and the labour costs incurred in packing the goods into the outside packages, where these costs are not included in the selling price;
- whether any royalties or license fees or other deferred payments, such as any part of the proceeds of any resale disposal or use of the goods by the buyer, are payable;
- details of any goods or services that may have been supplied, whether or not free of charge, directly or indirectly, by the buyer in connection with the production of the goods;
- any inland freight or inland insurance in respect of the goods paid or payable in accordance with the terms of the relevant transaction by the buyer to or for the benefit of the seller, where such costs are not included in the selling price of the goods.
It is always the importer’s responsibility to obtain from the exporter any information not contained in normal commercial documentation which Customs may require to ensure that the goods are entered in accordance with the provisions of the Customs Law. One example of additional evidence that may be required to enable clearance is the production of manufacturer’s / sellers’ invoices in cases of transactions arranged through intermediaries.
One of the main objectives of the Agreement is that customs value should be based on simple and equitable criteria consistent with commercial practice. It follows that entry processing should be based to the greatest extent on normal commercial documentation.
The onus is at all times on the importer to produce complete and legible documentary evidence to support the entry at the time of lodgement, including details of any valuation determinations for previous shipments.
The Agreement Article VII stipulates that the Customs value of imported goods;
- should be based on the actual value of the merchandise;
- should not be based on the value of merchandise of national origin or on arbitrary or fictitious values;
- should be the price at which such or like merchandise is sold in the ordinary course of trade under fully competitive conditions.
The basis for valuation should, to the greatest extent possible, be the transaction value of the goods being valued.
Customs value is the transaction value of the imported goods that is the price actually paid or payable for the goods when sold for export to the country of import and adjusted in accordance with the provisions of Article 8.
In very general terms, a sale could involve the transfer of title of goods for a consideration. That is, a sale requires a “buyer” who agrees to obtain certain goods for a certain amount and a “seller” who agrees to transfer ownership of those goods for a certain amount. When both parties agree, we have a “sale”.
The General introduction to the Agreement on Implementation of Article VII of the GATT states that the Members to the Agreement recognise that the basis for valuation of goods for Customs purposes should, to the greatest extent possible, be the transaction value.
Therefore, the first and principal method of determining Customs value is the TRANSACTION VALUE OF THE IMPORTED GOODS, that is, the price actually paid or payable for the goods when sold for export to the country of import and adjusted in accordance with the provisions of Article 8.
The term “importation” itself is not defined as that particular definition has been left up to each nation’s legislation or regulation. This is appropriate because the term has relevance beyond the scope of just valuation. It can be that date which determines when goods are released, when entry occurs, when a rate of duty will be fixed, etc.
Before the examination of the primary method of valuation under the Agreement, let us have a look at two of the terms used in Article 1 which are defined in Article 15 of the Agreement:
- “Customs value of imported goods” means the value of goods for the purposes of levying ad valorem duties of Customs on imported goods; and
- “Country of importation” means country or Customs territory of importation.