Page 151 - DCOM308_DCOM502_INDIRECT_TAX_LAWS

Indirect Tax Laws Neha Khosla , Lovely Professional University

Notes Unit 9: Valuation of Custom Goods

CONTENTS
Objectives
Introduction

9.1 Rules of the Agreement on Customs Valuation
9.1.1 Main Standard: Transaction Value
9.1.2 Five Other Standards

9.2 Developing Countries and the Agreement
9.3 Valuation of Goods
9.4 Valuation Rules for Imported Good
9.5 Summary
9.6 Keywords

9.7 Review Questions
9.8 Further Readings

Objectives

After studying this unit, you should be able to:

 Know about valuation of Custom Goods
 Know about rules of the agreement and Customs valuation
 Know about five other standards

Introduction

When customs duties are levied on an ad valorem basis (e.g. 10 % of the value of imported
goods), the actual incidence of duty depends on how Customs determines dutiable value. The
Agreement on Customs Valuation requires Customs to determine the value on the basis of the
price paid or payable by the importer in the transaction that is being valued. As a result of a
Decision adopted in the Uruguay Round, Customs can reject transaction values when it has
reasons to doubt the truth or accuracy of the value declared by importers or of the documents
submitted by them. In order to protect the interests of importers in such situations, Customs is
required to provide them with an opportunity to justify their price. Where Customs is not
satisfied with the justifications given, it is obliged to give to these importers in writing its
reasons for not accepting the transaction value they have declared.
When the transaction value is not accepted by Customs, the Agreement lays down five methods
for establishing value. In determining value on the basis of these methods, Customs is required
to consult the importers and take their views into account.
A number of developing countries currently use valuation systems based on the Brussels
Definition of Value, developed by the World Customs Organization (WCO). These countries
will have to modify their systems to bring them in conformity with the rules of the Agreement
on Customs Valuation within the transitional period of five years (i.e. up to 1 January 2000) that

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