Components of Valuation

For almost two months, we have been discussing valuation of imported goods. Now that we’ve discussed the various methods of valuation, we’ll look at the various components of valuation.

You may remember reading that transaction value is the price paid or payable for the imported products. Sounds simple, right? Well, it does provide us with a basis to start, but now we must determine if the "price paid" actually includes everything that is required. Then we must also determine if there are items included that could be deducted. Why would we want to do this? Why can't we just take the value on the sheet of paper and use it? The short explanation is that the price paid may not include items that must be included in order for the value to be reported according to CBP requirements. If we fail to add these required items, then the value is understated and CBP will not collect the correct amount of duties. Undervaluing merchandise means CBP collects LESS duty than required and being cheated out of monies will not make CBP happy. Then again, you probably wouldn't be too happy if your employers didn't pay you the proper amounts. Many of the valuation components fall into the categories of dutiable or non-dutiable. Some of these components fall into only one category, while others may fall into both, depending on how the transaction is structured. This article introduces you to the concepts of dutiable and non-dutiable components to value. Over the next few weeks, the articles will cover some of these components in more detail.

Dutiable Components

What costs are considered dutiable? Although transaction value may seem to be the price actually paid or payable for the merchandise, there are often arrangements between the buyer and seller that include supplementary agreements which can affect transaction value. Take a close look at the invoice to determine if dutiable components have been properly included. If not, then their values must be added. What are some of these dutiable components?

· Assists provided by the buyer
· Packing costs incurred by the buyer
· Selling commissions incurred by the buyer
· Repairs and warranties
· Proceeds of any subsequent resale, disposal, or use of the imported merchandise that accrue, directly or indirectly, to the seller


Non-Dutiable Components

Transaction value of imported merchandise should not include any of the following if identified separately from the price actually paid or payable. We refer to these items as the non-dutiable components.

• International transportation costs
• Cost of transporting the goods after they have been imported
• International insurance
• Cost of any prepaid customs duties and other federal taxes
• Costs of constructing, erecting, assembling, maintaining, or providing technical assistance for goods after importation into the U.S.
• Buying Commissions

Next Monday we will start to explore the dutiable components. Join us tomorrow as we start a new series called "Trade Term Tuesdays."