Customs Valuation
Customs Valuation is the process of determining the value of imported goods for the purpose of assessing duties and taxes. Since most duty is charged ad valorem (as a percentage of value), the declared value directly drives how much duty and import tax is paid, making valuation a core customs discipline governed internationally by the WTO Customs Valuation Agreement.
The primary and preferred method is the transaction value — the price actually paid or payable for the goods when sold for export — adjusted to include certain costs (such as freight and insurance to the border under a CIF basis, commissions, royalties and assists) and to exclude others. Where the transaction value cannot be used, a hierarchy of fallback methods applies (identical/similar goods, deductive, computed values). Correct valuation is essential and closely audited: under-valuation to reduce duty is a serious offence, while over-declaration overpays. Valuation, together with tariff classification and origin, is one of the three pillars that determine the duty payable on an import.
Duty is a percentage of value, so how goods are valued directly sets how much is paid — and under-valuation is a serious, heavily audited offence. Together with classification and origin, valuation is one of the three pillars of duty calculation. Getting the transaction value and its adjustments right is fundamental to both compliance and correct landed cost.
What is the main method of customs valuation?
The transaction value — the price actually paid or payable for the goods sold for export — adjusted for certain costs such as freight, insurance, commissions and royalties.
What happens if the transaction value can't be used?
Customs applies a hierarchy of fallback methods: identical or similar goods, deductive value and computed value.