The amount of customs payments depends directly on the customs value of the goods. This is one of the most frequently disputed matters in an import operation, because the customs value is not simply the figure on the invoice.
How customs value differs from the invoice price
Customs value may also cover the costs of bringing the goods to the border. Depending on the delivery term (Incoterms), it may include:
This is why the customs value of the same goods brought in on EXW and on CIF terms will differ.
- the price of the goods themselves
- carriage costs up to the border
- loading, unloading and insurance costs
- intermediary commission and the cost of packing
- licence fees, where these are a condition of sale
Methods of determining the value
International practice applies six methods in a strict sequence. The next method is used only when the previous one cannot be applied:
- the transaction value method — based on the price actually paid or payable; the primary and most widely used method
- the transaction value of identical goods
- the transaction value of similar goods
- the deductive method — based on the selling price on the domestic market
- the computed method — based on production costs and profit
- the fallback method — where none of the above can be applied
Why the value gets challenged
If the customs authority considers the declared value unsubstantiated, it may request further documents or determine the value itself. The most common reasons are:
- the declared price is substantially below the figures for comparable goods
- the documents confirming payment are incomplete
- carriage and insurance costs are not shown separately
- discrepancies between the contract, the invoice and the bank documents
How to reduce the risk
How the customs value of a particular shipment will be formed can be assessed in advance. Show us the contract and invoice terms and we will indicate the approximate amount of the payments and which documents will be needed to substantiate them.
- set out in the contract how the price is arrived at
- support carriage, insurance and intermediary costs with documents
- keep the bank documents confirming payment
- state the delivery term identically across all documents
Still have a question?
Get in touch to discuss your specific customs clearance situation — our team will explain it within the framework of the law.
