Meaning
International trade rules mandate that the value of imported goods be based on the actual price paid or payable. The wto customs valuation agreement prevents governments from using arbitrary or fictitious values to increase the amount of duty collected at the border. It provides a hierarchy of five alternative methods if the primary transaction value cannot be determined.
Global Standard
Uniformity across borders ensures that exporters face the same rules regardless of the destination country. While the wto customs valuation agreement allows for certain adjustments like shipping and insurance costs, it forbids the use of the domestic price of the same goods in the importing country. This neutrality protects the fairness of the global market.
Transaction Value
Price documentation serves as the primary evidence for the declaration of worth to the authorities. Under the wto customs valuation agreement, the relationship between the buyer and seller is scrutinized to ensure it did not influence the price. If the customs office rejects the invoice price, they must move to the next method in the sequence, which is the value of identical goods.
This step by step process removes the subjective power of individual officers. It creates a predictable environment for international investment and the movement of industrial equipment.
Administrative Right
Local authorities retain the power to ask for more information when they doubt the accuracy of the declared amount. This check balances the ease of trade with the need for tax compliance.
