​Valuation

Customs values are set by the General Agreement on Tariffs and Trade (GATT) valuation code, which involves six valuation methods.
 
The GATT Agreement on customs valuation has been accepted by all major trading countries.
 
The Valuation Agreement prescribes six methods of valuation which must be applied in strict hierarchical order. Thus, if the transaction value cannot be ascertained in terms of Article 1, Article 2 must be tried, and so on. The methods, in order of precedence, are:
  1. The transaction value of the goods, i.e. the price actually paid or payable
  2. The transaction value of identical goods
  3. The transaction value of similar goods
  4. The “deductive” method (where the customs value is derived from the selling price of the imported goods in the Republic)
  5. The “computed” method (where the value is derived from the built-up cost of the imported goods);
  6. The so-called “fall back” method, being one of the other five methods applied more flexibly.
However, the majority of goods are valued using method one, which is the actual price paid or payable by the buyer of the goods. The "free on board" price forms the basis for the value, but allows for certain deductions (such as interest charged on extended payment terms) and additions (such as certain royalties).
 
Customs officials pay particular attention to:
  • The relationship between the buyer and seller
  • Payments outside of the normal transactions (such as royalties and licence fees)
  • Restrictions that have been placed on the buyer.
These factors can result in the price being increased for the purpose of determining customs value, directly affecting the duty payable.
Last Updated: 27/02/2014 12:13 PM     print this page
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 Top FAQs

Value Method 1 - Does it matter if the seller is not paid directly by the importer?
No. The importer can pay a third party at the supplier's request in which case it becomes a condition of sale

Value Method 1 - If a branch office is involved, can Method 1 still be used?
Method 1 can still apply, if the branch is an independent legal entity and there is no price influence. Where goods are imported: Through a branch office which does not have a separate legal status of its own;

Value Method 1 - If an intermediary (e.g. selling agent) is involved, will Method 1 still be used?
Unless already included in the price, all selling commissions incurred by the importer with respect to the imported goods are to be added to the price actually paid or payable for those goods in terms of Section 67(1)(a)(i) of the Act.

Value Method 1 - What constitutes "interest charges" in terms of Section 67(2)(b)(vi) of the Act?
Charges for interest under a financing arrangement entered into by the importer for the purchase of imported goods may be excluded from the Customs value on condition that:

Value Method 1 - What evidence is required to prove "buying commission"?
The payment for buying commission mustbe shown separately from the price for the goods on the invoice or other commercial document. Further evidence in support of any claim