When to Avoid the Transaction Value? No sale – no method 1, or transaction value is not acceptable (e.g. price has been affected by certain conditions) The Hierarchy must be kept 1. Article 1 – Transaction value 2. Article 2 – Value of identical goods 3. Article 3 – Value of similar goods 4. Article 4 – Deducted Value 5. Article 5 – Computed value 6. Article 6 – Fall back (reasonable means)

Identical Goods Produced in the same country Identical to the goods actually valuated (physical characteristic, quality) There must be identical goods that were valuated by the transaction value as the basement for valuation of identical goods in relevant time Time – 30 days before or after the valuation If there are more than one case of identical goods - the lowest value

Identical goods should be sold to the same country Identical goods value of a sale at the same commercial level Identical goods imported at the same quantity Allowed adjustments: Considering the commercial level Considering quantity Considering the cost of transportation

Similar Goods Based on the similar goods produced in the same country - Similar characteristics and materials - Same functionality - Same function - Commercially switchable There must be similar goods that were valuated by the transaction value as the basement for valuation of identical goods in relevant time Time – 30 days before or after the valuation If there are more than one case of similar goods - the lowest value

Deductive Value based on the unit price of imported goods or identical or similar imported goods in the greatest aggregate quantity - based on the selling price of the goods in the country of importation. Persons involved in the exportation – importation are not in connection Relevant time of importation of goods valuated by transaction or identical or similar methods (max 90 days after importation). Formula: Selling price – commissions (or) additions for profit and general expenses – cost of transportation in the country of importation – duties = Customs Value

if the goods are not sold in the country of importation in the condition as imported - customs value base on the price at which the goods are sold after processing Not possible if : - Goods lost their identity and it is not possible to accurately deduct the value added by the processing, or - keep their identity but it is only a minor part of the goods sold No sales to unrelated persons in the country of importation - go for method 5

Computed Value (unusual) Based on sum of: Costs/value incurring in producing of imported goods - Materials - Manufacturing - Processing - Containers and packing - Value of assist Reasonable amount of profit and general expenses - Profit - Distribution expenses - Any other general expenses not included in the costs of production - Transportation, insurance, handling charges

Can be used only if : Information on above mentioned costs is easily available in the country of importation The producer is willing to deliver necessary information in the country of importation The producer agrees to possible verification by customs in the country of exportation Customs authorities of the country of exportation willing to verify cost of production in the exporter premises (international agreement on customs cooperation in place) Neither customs of the country of importation nor customs of the exportation country can force producer to provide info/records for determination of the customs value

‘Fall-back' Method (reasonable means) Based on “reasonable means” and on the basis of available data”. According to the principles and general provisions of the Article VII GATT/WTO According to the general provisions and other legislation of the country of importation

The customs value cannot be based on: — the selling price of goods in the country of importation e.g. the sale price of goods manufactured in the country of importation — a system which provides for the acceptance for customs purposes of the higher of two alternative values; just use the lowest one — the price of goods on the domestic market of the country of exportation — the cost of production other than computed values which have been determined for identical or similar goods

— the price of goods for export to a third — minimum customs value ; exception for developing country allows for use of minimum values — arbitrary or fictitious values

Questions?