CUSTOMS VALUATION

Tariff and Trade Affairs Directorate

Knowledge Academy 2 – 3 July 2014

World Customs Organization

WHY CUSTOMS VALUATION?

Taxable base for Customs duty revenue

Compiling trade statistics

Monitoring quantitative restrictions

Administering preferential systems

Collecting internal taxes on imports

WHY CUSTOMS VALUATION ?

SPECIFIC DUTYCalculated on

weightvolumequantity

Customs mustweighmeasurecount

Calculation isfixedrigid

AD VALOREM DUTY Calculated on value of

the goods

Customs must appraise the value

Calculation varies with price, quality etc.

VALUATIONCUSTOMS V/S COMMERCIAL

VALUATION

the process of thought which appreciates one

thing in terms of the other CUSTOMS VALUATION:

Methodology

need for standard that must be one which can be

applied equitably to all transactions.

DEFINITION OF VALUE

Key element of any Customs valuation standard

Notional vs Positive

EVOLUTION OF VALUATION SYSTEMS

DIFFERENT AND UNSTABLE VALUATION SYSTEMS

LEAGUE OF NATIONS

1950/1953 BDV

GATT 1947 - Article VII

1947 EUROPEAN CustomsUNION STUDY GROUP

1980 GATT VALUATION AGREEMENT

1995 WTO VALUATIONAGREEMENT

WTO AGREEMENT ON CUSTOMS VALUATION

PRINCIPLES OF VALUATION Customs valuation should provide greater uniformity, certainty, fairness and neutrality thus preclude use of arbitrary or fictitious Custom valuesCustoms value should be based on, to the greatest extent possible, the transaction value. Customs value should be based on simple and equitable criteria consistent with commercial practicesValuation procedures should be of general application without distinction between sources of supplyValuation procedures should NOT be used to combat dumping

ECONOMIC RATIONAL OF THE AGREEMENT

The effect of tariff concessions must not be derogated by non-tariff barriers, e.g. an arbitrary Customs valuation regime

An arbitrary valuation system has the same trade restrictive effect as an increase in the tariff

WCO’S ROLE IN THE IMPLEMENTATION OF THE VALUATION AGREEMENT

MEMBERS’ CONCERNS

Members’ concerns with regard to the consequences of implementing the Agreement relate to : • loss of fiscal revenue; • commercial fraud (under-valuation, double

invoicing…); • price used between related persons in a

commercial transaction, etc.

WCO’s ROLE

• Service the Technical Committee on Customs Valuation (TCCV)

• Provide technical assistance

• Provide capacity building to Members

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TECHNICAL COMMITTEE ON CUSTOMS VALUATION (TCCV)

The function of this Committee is to ensure, at the technical level, uniformity in the interpretation and application of the Agreement.

The TCCV meets twice a year and examines, inter alia, technical problems arising in the day-to-day administration of Members’ Customs valuation systems.

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TECHNICAL COMMITTEE INSTRUMENTS

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ADVISORY OPINIONS

(40)

COMMENTARIES(25)

EXPLANATORY NOTES (6)

STUDIES (2)

CASE STUDIES (17)Total: 90

TECHNICAL ASSISTANCE PROVIDED BY THE WCO

In the framework of the objectives identified in the WCO Strategic Plan, technical assistance comprises of :

• organizing training courses, workshops and seminars at the national and regional levels;

• formulating technical advices at the request of Members; and

• developing practical tools.

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WCO’s ROLE The WCO and the TCCV have

Developed the Revenue Package

Developed Guidelines on Post-Clearance Audit

Been reviewing the Customs Valuation Control Handbook

Partnered with other international Organizations ( WTO, OECD, ICC, etc)

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ON GOING ISSUES

Transfer pricing

Royalties and licence fees

Global Value Chain

Payment for unlocking a function after

importation

CONCLUSION

The WCO will continue to :Provide the required technical assistance for Capacity Building to those Members who need itEncourage Members to submit to the TCCV and the WCO Secretariat practical valuation issues;Organize events on valuation issues involving interested Members and relevant international organizations as well as the private sector 17

Thank you