When goods are imported into the United States they are required to be valued correctly. It is the value of the goods to which United States Customs and Border Protection calculates the duty rate. Generally, the “dutiable value” is a calculation based on the price actually paid or payable for the goods when sold for export to the United States. Improper valuation of goods affects the duty liability. If the value of the goods is in excess of its proper value, the importer will pay a greater amount than necessary.
Conversely, under-declaring the value of goods may result in costly penalties. If you are the “importer of record” (the owner or purchaser of the goods, or when designated by the owner, purchaser, or consignee, a licensed Customs broker) you are responsible to “exercise reasonable care” in all aspects of the importing process, including valuation. Our firm assists importers in evaluating all relevant documentation and accurately appraising the value of goods.
The first step in customs compliance valuation is determining the value of goods that are being traded. The value of the goods serves as the basis for the calculation of customs duties, taxes, and fees. The value can be determined in several ways, including the transaction value method, the computed value method, and the residual value method. The most commonly used method is the transaction value method, which is based on the price actually paid or payable for the goods being traded.
Another important aspect of customs compliance valuation is the documentation process. Proper documentation is necessary to be able to establish the value of goods being traded. It is important to keep all records of transactions, such as invoices, bills of lading, and purchase orders, in a consistent manner to ensure accuracy. Incomplete or inconsistent documentation may lead to inaccurate customs valuation and potential penalties.
Customs compliance valuation also involves the concept of transfer pricing. Transfer pricing refers to the pricing of goods or services between affiliated companies in different countries. These transactions must be conducted at arm’s length, meaning the prices agreed upon reflect the market value of the goods or services being traded. Proper transfer pricing is crucial to ensure accurate customs valuation and avoid potential penalties from customs authorities.
It is also important to note that customs compliance valuation is not a one-time process. Valuation methods and documentation must be reviewed and updated regularly to ensure they are still accurate and consistent. Any changes in the way goods are traded, such as changes in supplier or market conditions, must also be taken into account and documented.