What is customs valuation and how is it calculated?

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Customs valuation is the process of determining the value of imported goods for calculating duties and certain taxes. Under the WTO framework, the primary method is generally the transaction value—the price paid or payable for goods sold for export to the importing country—adjusted where the applicable rules require. If that method cannot be used, other prescribed valuation methods may apply in sequence. What is customs valuation and how is it calculated? Customs valuation is the process of determining the value of imported goods for customs purposes. Customs value is used to calculate ad valorem duties and may affect other charges. An incorrect value can result in additional duties, penalties, delays, or reassessment. Start with transaction value Under the WTO Customs Valuation Agreement, the primary basis is generally the price actually paid or payable for goods when sold for export to the country of importation, provided the legal conditions are met. Check required adjustments Depending on the applicable national rules, customs value may require additions for certain commissions, packing, assists, royalties or license fees, and transport or insurance costs to the relevant point. Some costs may be excluded where the rules and documentation support the exclusion. Do not add or subtract costs automatically without checking the destination rules. Use alternative methods if necessary If transaction value cannot be accepted, customs valuation rules provide other methods, such as the transaction value of identical goods, similar goods, deductive value, computed value, and a fallback method. The sequence and implementation follow the applicable law. Keep supporting evidence Retain the contract, commercial invoice, payment records, freight and insurance documents, assists and royalty calculations, and any related-party information needed to explain the declared value. Official guidance World Trade Organization customs valuation overview: https://www.wto.org/english/tratop_e/cusval_e/cusval_e.htm | WTO Customs Valuation Agreement: https://www.wto.org/english/docs_e/legal_e/cv_e.htm The WTO framework is implemented through national customs law. Check the importing country’s rules and consult a customs broker where valuation adjustments or related-party transactions are involved.