Value for Customs Duty Purposes

The value for duty purposes (VDP) forms the basis on which you will pay any import duty and import VAT.  The VDP, as explained in the general notes for the interpretation of Schedule No.1, is defined in Section 65, 66 and 67 of the Customs and Excise Act.  These sections of the Act are based upon agreements reached during the “Tokyo Round” of the General Agreement on Tariffs and Trade (GATT), Multilateral Trade Negotiations (MTN).   

The GATT Valuation Code prescribes the “price actually paid or payable for the goods” as the basis for value for customs purposes, or the transaction value.

It is also important to ensure that your companies transfer pricing structure correlate to your value declared for Customs purposes.

The code prescribes six methods of valuation, which must be applied in strict hierarchical order.

Section 67 provides for certain costs and charges to be either included or that must be excluded from the price actually paid or payable.  Some of these are straight forward, but other charges, for example assists (assistance provided by you to your supplier) may pose a considerable risk, if not interpreted correctly. We can assist your company by reviewing both your foreign contracts and invoices to establish that you are not exposed to any risk, but to also ensure that you do not include costs and charges that could in fact be deducted and by doing so, lower your duty account.