Methods of determining customs value
Customs value is the base on which duty, VAT and excise are calculated. The Customs Code sets six methods of determining it, which are applied strictly in sequence. Let us break down what each method means and why customs sometimes refuses the main one.
Why customs value matters
It is the customs value that determines how much an importer pays at customs. It is not always equal to the invoice price: transport costs, insurance, commissions and royalties may be added to it. So a correct calculation is not just the figure from the contract.
Six methods and their order
| Method | Basis |
|---|---|
| 1. Transaction value (main) | Art. 58 — value of the operation |
| 2. Identical goods | Art. 59 |
| 3. Similar goods | Art. 60 |
| 4. Deductive value | Art. 62 |
| 5. Computed value | Art. 63 |
| 6. Fallback | Art. 64 |
Each subsequent method is applied only when the value cannot be determined by the previous one.
Method 1: transaction value
The main method is the price actually paid or payable for the goods under the contract, taking into account permissible additions. Most shipments are cleared exactly by it. This requires reliable documents confirming the price and its components.
What is included in customs value
Under the first method, transport costs to the border of Ukraine, loading, insurance, commissions, license payments and royalties are added to the price of the goods. The size of the additions depends on the Incoterms basis. This is exactly why customs requires documents to confirm customs value.
Methods 2 and 3: identical and similar goods
If the contract price cannot be applied, customs takes the value of operations with identical goods (method 2), and if there are none — with similar goods (method 3). Goods imported around the same time and on similar terms are compared.
Methods 4 and 5: deduction and addition
The deductive method starts from the sale price of the goods in Ukraine, from which the trade markup and costs are deducted. The additive method (computed value) adds up the cost of materials, production and the manufacturer’s profit. The order of these two methods can be changed at the declarant’s request.
Method 6: fallback
If none of the first five methods fits, the fallback method is applied: the value is determined on the basis of available data with reasonable flexibility, but without arbitrary or fictitious prices. This is most often the method customs uses when adjusting value.
Why customs refuses the first method
Customs may doubt the declared price if it is below the levels known to it, there are signs of a relationship between the parties or documents are missing. Then it requests additional documents, and in their absence moves to other methods and adjusts the value.
How to confirm the value
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Document setWe prepare the invoice, contract, payment orders, price lists and transport documents.
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Value calculationWe calculate the customs value taking into account additions and Incoterms.
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SubstantiationIn case of customs doubts we add price expertise.
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ClearanceWe declare the value by the main method.
Frequently asked questions
Help with customs value
Trans-Hope helps determine the customs value by the main method, prepares the set of supporting documents and defends it during control. The amount of payments is shown by the calculation of customs payments, and clearance is handled by the customs broker.
