ACV - PGDT - IV - Method 2. Goods Valuation Methods

INFORMATION SYSTEMS MATTERS
TRA
LESSON IV.
OTHER METHODS OF
VALUATION
1

TANZANIA REVENUE AUTHORITY
TRA
Objectives
At the end of this course you should
be able to;
• Define terms used in other methods
of valuation.
• State the requirements for
transaction value of identical goods.
OTHER METHODS OF
VALUATION
2

TRA
• State the requirement s for transaction
value of similar goods method
• State the requirements for deductive
value method
• State the requirements for computed
value method
• Explain the application for fallback
method
Objectives Cont…
3

TRA
• Introduction
• Definition of terms used in other
methods of valuation.
• Transaction value of identical goods
• Transaction value of similar goods
method
• Deductive value method
Content
4

TRA
Content cont …
Content cont........
• Computed value method
• Fallback method
5

TRA
Introduction
Where the customs value cannot be
determined under Article
1(Transaction value method), the
customs value will be determined
under Article 2 through Article 7.
6

TRA
(If the customs value of the imported goods cannot be
established using Method 1)
The customs value shall be the
transaction value of identical goods
sold for export to country of importation
and exported at or about the same
time as the goods being valued.
The Transaction Value of Identical Goods
(Method 2)
7

TRA
Introduction Cont……
“The value of identical goods must
be a previously accepted
transaction value”.
8

TRA
Definition of Identical goods
These are goods, which are the same
in all respects, including physical
characteristics, quality and reputation.
9

TRA
Definition of identical goods cont…..
Minor differences in appearance shall not
preclude goods otherwise conforming to
the definition from being regarded as
identical. The minor differences in
appearance would include the following ;
10

TRA
THE SAME IN
PHYSICAL
CHARACTERISTICS
MINOR DIFFERENCES
COLOUR
QUALITY
LABEL
SIZE
PATTERN
REPUTATION
IDENTICAL GOODS
11

TRA
Requirements for transaction value of
identical goods method
 Goods must have been exported at
or about the same time as the goods
being valued.
 Goods were sold at the same
commercial level and same quantity.
 Where costs and charges under
Article 8(2) are included, appropriate
adjustments should be made.
12

TRA
Requirements Cont’
 Goods must be from the same country
of export as the goods being valued
and preferably by same manufacturer
 If two or more values are found, the
lowest of such values should be
considered
 Must be a transaction by unrelated
parties
13

TRA
Conditions for transaction value of
identical goods method
 A sale at the same commercial level but
in different quantities
 A sale at a different commercial level
but in the same quantities;
If more than one transaction value of identical
goods is found, the lowest should be used.
14

TRA
Conditions Cont’
 A sale at a different commercial level
and in different quantities is exported
at or about the same time as the
goods being valued.
15

TRA
ADJUSTMENTS
QUANTITY
LEVEL
COMMERCIAL
LEVEL
BOTH
16

TRA
Hierarchical Order
 Identical – Same Level
 Identical Goods – Different Level
17

TRA
COMMERCIAL LEVELS
3. PETROL STATION (Retail) 4. TRUCK DRIVER (End Use)
18
2. OIL INSTALLATION (Wholesale)
1. REFINERY (Producer)

TRA
EXAMPLE
ASSEMBLED
UNASSEMBLED
ARE THESE BICYCLES IDENTICAL ?
19

TRA
The answer is;
Yes
Commentary 1.1
Example No 3.
20

TRA
THE METHODS
1. Transaction Value
2. Transaction Value of identical goods
3. Transaction Value of similar goods
Each method must be tried in sequential order
21

TRA
(If the customs value of the imported goods
cannot be established using Method 1 - 2 )
The customs value shall be the
transaction value of similar goods sold
for export to country of importation and
exported at or about the same time as
the goods being valued.
The Transaction Value of Similar
Goods (Method 3)
22

TRA
Similar goods Cont’
“The value of similar goods must be
a previously accepted transaction
value”.
23

TRA
Definition of similar goods
“Similar goods’’ means goods which,
although not alike in all respect, have like
characteristics and like component
materials which enable them to perform
the same functions and to be
commercially interchangeable (Article 15
(2)(b))
24

TRA
The quality of the goods, their reputation
and the existence of a trademark are
among the factors to be considered in
determining whether goods are similar.
In that regard, similar goods will be like
the imported goods in the following
respects:
Definition of similar goods cont’
25

TRA
Definition of “similar goods” cont’
(Goods which are not alike in all respects)
BUT,
Must have like characteristics
 Must have like component materials
 Must be able to perform the same functions
Must be commercially interchangeable
 Must be produced in the same country
26

TRA
Definition of ‘’similar goods’’Cont’
Must be of similar quality and
reputation
Trademarks must be considered
27

TRA
COMMON REQUIREMENTS
PRODUCED IN THE SAME COUNTRY
EXPORTED AT OR ABOUT THE
SAME TIME AS IMPROTED GOODS
SAME COMMERCIAL AND QUANTITY LEVEL
WITH TWO OR MORE PRICES
SELECT THE LOWEST PRICE
28

TRA
Hierarchical Order
 Similar goods – same level
 Similar goods – different level
29

TRA
EXAMPLE
100% SILK
DIOR BRAND X
30

TRA
EXAMPLE
Soft wood Desk
Wood File Cabinet Metal file Cabinet
Mahogany Walnut Desk
31

TRA
EXAMPLE
X
X
32

TRA
EXAMPLE
Toyota
X
33

TRA
ARTICLE 15.2
 Goods are not identical OR similar if they
incorporate or reflect an assist under article
8.1 (b)(iv).
 Must have been produced in the same
country as the goods being valued.
 Goods from a different person are used only
where there are no identical or similar goods
produced by the same person as the goods
being valued.
34

TRA
If more than one transaction value of identical goods is found,
the lowest should be used. (Article 3.3)
Export Country 1 Export Country 2
ID ID
ID ID
Importing Country
Goods
Method 1
22 26
24 25
23
Goods shall not be regarded as identical or similar unless they were
produced in the same country as the goods being valued. (Art 15.2.d)
X X X
X
Producing Producing
35

TRA
Goods produced by a different person shall be taken into account only
where there are no identical goods or similar goods, as the case may be,
produced by the same person as the goods being valued. (Art 15.2.e)
Producing Country 1 Producing Country 2
ID ID
ID
ID
Importing Country
Goods
Method 1
24
24 25
23
Goods shall not be regarded as identical or similar unless they were
produced in the same country as the goods being valued. (Art 15.2.d)
X X X
X
22
26
ID ID
M1
M1 M1 M3
M2 M1 M4
X
X
22
36

TRA
THE METHODS
2. Transaction Value of identical
goods
4. Deductive method
37

TRA
DEDUCTIVE VALUE
THE FOURTH METHOD
38

TRA
The Deductive Method
(Method 4)
 If the customs value of goods cannot be
determined under Article 1, 2 and 3).
 The customs value shall be determined
under the provisions of Article 5.
39

TRA
Deductive value method
Cont’
 The customs value is based on the unit
selling price in country of importation,
 Of identical or similar goods,
 Sold in the greatest aggregate quantity,
 At or about the time of the importation
of the goods being valued.
40

TRA
Deductive Value
Deducted from the selling price after
importation
41

TRA
GREATEST AGGREGATE
QUANTITY
 The price at which the greatest number
of units is sold;
- To unrelated buyers
- at the first commercial level after
importation at which such sales take
place 42

TRA
Selecting the Price
Looking for sales of:
 The imported goods
or
 Identical goods or similar goods
 Occurring “at or about the time of
importation”
 in the condition as imported
43

TRA
Deductive Value
EITHER COMMISSIONS OR
PROFIT & GENERAL EXPENSE
COST OF TRANSPORT AND
INSURANCE ATER IMPORT
COSTS INCLUDED UNDER ARTICLE 8.2
CUSTOMS DUTIES AND TAXES
44
Deduct:

TRA
TIME LINE
At or about the same time
Date of Importation
Maximum of 90
days after
Importation
45

TRA
EXAMPLE
SALE NUMBER 1 SALE NUMBER 2
1,000 units
sold at a
unit price of
95 c.u each
800 units
sold at a
unit price of
90 c.u. each
46

TRA
EXAMPLE
Qty range Unit price Sales number Total Qty
1-10 100 cu 10 sales of 5
5 sales of 3
65
11-25 95 cu 5 sales of 11 55
Over 25 90 cu 1 sales of 30
1 sales of 50
80
47

TRA
EXAMPLE
SALES QUANTITY UNIT PRICE
40 UNITS 100 CU.
30 UNITS 90 CU.
15 UNITS 100 CU.
50 UNITS 95 CU.
25 UNITS 105 CU.
35 UNITS 90 CU.
5 UNITS 100 C.U.
48

TRA
IMPORTER’S COST
SALES PRICE 110 CU
LESS COMMISSION AND
GENERAL EXPENSES
11 CU
LESS INLAND FREGHT,
INSURANCE, HANDLING
5 CU
LESS CUSTOMS DUTY 15.67 CU
CUSTOMS VALUE 78.33 CU
49

TRA
‘sold in the greatest aggregate quantity’ at or about
the time of the importation of the goods.
Example
1000 units imported
Sold as follows
100 at $90
35 at $95
300 at $85
200 at $90
30 at $95
35 at $95
200 at $90
100 at $95
500 at $90
300 at $85
Valued at $90 per unit.
900
Total value = $90000 before deductions
50

TRA
THE METHODS
2. Transaction Value of identical
goods
4. Deductive Value method
5. Computed Value method
51

TRA
COMPUTED VALUE
METHOD 5
52

TRA
Computed Value
 If customs value cannot be based on any of
the valuation methods under Article 1 to 5,
then computed value method under Article 6
is considered as alternative method of
valuation
 Is limited to cases where buyer and seller
are related
 Producer is prepared to supply necessary
costing and facilities
53

TRA
Computed value cont’
The basis of customs value is;
 the cost of production of the goods being
valued,
 plus Any amount of profit;
 and general expenses;
 usually reflected in the sales from the
country of exportation to country of
importation of goods of same class or kind
54

TRA
Computed value cont’
Goods of the same class or kind:
 Means goods which fall within the
group or range of goods produced by
a particular industry or sector and
include the identical or similar goods
55

TRA
Elements to be considered
THE SUM OF
A
B
C
cost or
value
of
materials
and
fabrication
GENERAL
EXPENSES
AND
PROFIT
cost or
Value of
expenses
Under
Article
8.2
56

TRA
COST OF MATERIALS
Raw Materials
Subassemblies
Transport of Materials
Prefabricated Components
57

TRA
FABRICATION COSTS
DIRECT
LABOUR
ASSEMBLY
COST
MACHINES
USED
TO
PRODUCE
INDIRECT
COSTS
58

TRA
MATERIALS & FABRICATION WILL
ALSO INCLUDE COSTS OF :
CO
N
TA
IN
E
RS
AR
T
IC
LE
8
.1
(a
)
(ii
)
PACKING
ARTICLE 8.1 (a) (iii)
A
S
SI
S
T
S
AR
TI
C
LE
8
.1
(b
)
59

TRA
THE METHODS
2. Transaction Value of identical goods
4. Deductive Value method
5. Computed Value method
6. Fallback method
60

TRA
FALLBACK METHOD
(METHOD 6)
61

TRA
FALLBACK METHOD
If the customs value of the imported
goods cannot be determined on the
basis of Article 1 through 6
Inclusive (method 1-5),
62

TRA
Fallback method cont’
The customs value can be determined
based on one of the five previous methods
reasonably adjusted as necessary.
63

TRA
Fallback method cont’
The determined value should be based to
greatest extent possible on previously
determined values only on the data available in
the country of importation.
64

TRA
Structure of Article 7
(Para 1 ) Reasonable Means
• Consistent with the principles and general
provisions of this Agreement and of Article VII of
GATT 1994
• Data available in the country of importation
(Para 2) Prohibited Methods
(Para 3) Decision in Writing
65

TRA
1
2
3
4
5
Principles of the Agreement
GREATEST RELIANCE ON
UNIFORMITY IN VALUATION
FAIRNESS AND NEUTRALITY
SIMPLE & EQUITABLE CRITERIA
CONSISTENT WITH
TRANSACTION VALUE
COMMERCIAL PRACTICES
66

TRA
Reasonable Means
• Be based on previously determined
customs value to the greatest
extent
• Reasonable flexibility in the
application of Article 1 through 6
67

TRA
Flexible interpretation
deductive value
Condition as imported
Flexible
interpretation
Interpretative Note to Article 7. 3(c)
68

TRA
Country of
production
BELGIUM
Could also use goods
from Netherlands or
Luxembourg
Interpretative Note to Article 7. 3(a)&(b)
Identical or similar goods
69

TRA
The 90-day rule
in Article 5.1 (b)
could be flexibly interpreted
Interpretative Note to Article 7. 3(c)
deductive value
70

TRA
When applying Article 7, hierarchical order
still needed ?
YES
Hierarchical order should be
followed.
71

TRA
When applying Article 7 can Customs use
information furnished by the importer but
obtained by him from foreign sources ?
Yes
Article 7 doesn’t mention the original
source of information.
72

TRA
Prohibited Methods
Cannot use
 The selling price in the
country of importation of
goods produced in such
country
73

TRA
Prohibited methods cont’
 A system which provides for the acceptance
for customs purposes of the higher of two
alternative values
 The price of goods on the domestic market of
the country of exportation
74

TRA
 The cost of production other than computed
values which have been determined for
identical or similar goods in accordance with
the provisions of Article 6 (Method 5)
75

TRA
 The price of the goods for export to a country
other than the country of importation
 Minimum customs values
 Arbitrary or fictitious values
76

TRA
DECISION IN WRITING
Article 7.3
77

TRA
OTHER METHODS OF
VALUATION
THANK YOU
FOR YOUR
ATTENTION
78

ACV - PGDT - IV - Method 2. Goods Valuation Methods

More Related Content

Similar to ACV - PGDT - IV - Method 2. Goods Valuation Methods

More from shabanihengo1

Recently uploaded

ACV - PGDT - IV - Method 2. Goods Valuation Methods