Customs Valuation

What is Customs valuation?

Customs valuation is the process/procedure appliedin determining value of imported goods, which is used for the purpose of levying ad-valorem duties (duties as a percentage of value)

What is Customs value?

Customs value is the value of goods which is used for the purpose of levying ad valorem duties of customs”

How Customs value is determined?

1. Customs value is determined based on international principles under the World Trade Organization Agreement on Customs Valuation. The principles were adopted in the East African Community Customs Management Act, 2004 in section 122 and the fourth schedule to the Act.
2. The Agreement and the East African Customs Law require customs value to be the transaction value. That is, the price actually paidor payable (PAPP) for goods when sold for export to the country of importation, with adjustments and provided certain conditions are met.
3. The law provides six methods of valuation, which should be applied in a sequential order. The basic method is the Transaction value method, followed with five alternative methods, which are used where there is no transaction value and when a transaction has not complied with the conditions under the transaction value method.
4. It is important to know the cost elements which constitute the price actually paid or payable as provided under Article 1 and 9 of the WTO Agreement and sub- paragraph 2 and 9 of the Fourth Schedule to the East African Community Customs Management Act 2004.

What are the sources of information on price actually paid or payable?

The information if found on the documents related to the consignment. As an importer you should know the various documents and type of information necessary for effective customs valuation.

Can discounts be deducted from the Price Actually aid or Payable?

Yes, but deduction of discounts is subject to fulfillment of certain conditions. It is important to know the various types of discounts and the associated conditions for their deduction.

Methods of Customs Valuation

It is important to know the basics of the six methods of customs valuation and the conditions for their application as provided under Article 1 to 7 of the agreement on customs valuation and sub-paragraph 2 to 8 of the EAC CMA

Prohibited Practices in Determining Customs Value

Article 8.2 of the WTO Agreement on customs Valuation and sub-paragraph 9 of the Fourth Schedule to the EAC CMA prohibit use of methods other than those provided in the agreement and the EAC Customs law. It is necessary to know the prohibited methods and adhere to the law.

How duties are computed?

According to the EAC CMA, value for import duty is the CIF value of the imported goods. Since imported goods are also subject to all applicable domestic taxes, it is necessary to know how to determine value for each tax.