Valuation of Goods

The primary basis for Customs value under the Agreement is “transaction value” as defined in Clause 2 of the Customs Tariff Act 1986 which is to be read together with Clause 3 which provides, interalia, for adjustments to the price actually paid or payable in cases where certain specific elements which are considered to form a part of the value for Customs purposes are incurred by the buyer but are not included in the price actually paid or payable for the imported goods.

Clause 3 also provides for the inclusion in the transaction value of certain considerations which may pass from the buyer to the seller in the form of specified goods or services rather than in the form of money. Clause 4 to 8 in Part 2 of the Customs Tariff Act provide methods of determining the Customs value whenever it cannot be determined under the provisions of Clause 2.

Where Customs values cannot be determined under the provisions of Clause 2, it is to be determined by proceeding sequentially through succeeding Clause to the first such Clause under which the Customs value can be determined. Except as provided in Clause 11 of Schedule 1 of Part 1 of the Customs Tariff Act, it is only when Customs value cannot be determined under the provisions of a particular Clause that the provisions of the next Clause in the sequence can be used.

If the importer does not request that the order of Clauses 4 and 5 be reversed, the normal order of the sequence is to be followed. If the importer does so request but it then proves impossible to determine the Customs value under the provisions of Clause 4, the Customs value is to be determined under the provisions of Clause 5, if it can so be determined.

Where the Customs value cannot be determined under the provisions of Clause 2 through to 6, it is to be determined under the provisions of Clause 7.

Why is Customs Valuation Needed?

Customs value is a fundamental aspect of:

  • the collection of duties and taxes.
  • trade statistics.
  • quota agreements and licensing.

The final objective is a universal valuation system based on simple and equitable criteria consistent with commercial practices.

Specific and Ad Valorem Customs Duties

Customs duties can be either on specific or ad valorem terms or as a combination of the two.

Specific duty – a concrete sum is charged for a quantitative description of the good, (e.g. FJ$1 per item or per unit). The Customs value of the good does not need to be determined, as the duty is not based on the value of the good but on other criteria. In this case, no rules on Customs valuation are needed and the Valuation Agreement does not apply.

Ad valorem duty – depends on the value of a good. Under this system, the Customs valuation is multiplied by an ad valorem rate of duty (e.g. 5%), in order to arrive at the amount of duty payable on an imported item.

General Agreement on Tariffs and Trade (GATT)

The General Agreement on Tariffs and Trade laid down the general principles for an international system of valuation. It stipulates that the value for Customs purposes of imported merchandise should be based on the actual value of the imported merchandise on which duty is assessed, or of like merchandise, and should not be based on the value of merchandise of national origin or on arbitrary or fictitious values.

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CONTACT DETAILS

Revenue & Customs Service Complex,
Lot 1 Corner of Queen Elizabeth Drive
& Ratu Sukuna Road,
Nasese,
Suva.
Phone: (+679) 3243000
Fax: (+679) 3315537
Email: info@frcs.org.fj