Meaning
International treaties establish a uniform system for determining the value of imported goods for the purpose of levying customs duties. The wto valuation agreement mandates that the primary basis for valuation is the transaction value, which is the price actually paid or payable for the goods. This prevents customs authorities from using arbitrary or fictitious values to increase tax revenue.
It does not apply to non commercial shipments or goods that are not subject to a sale.
Hierarchy Application
Alternative methods must be used in a specific order if the transaction value cannot be determined. Under the wto valuation agreement, these methods include the value of identical goods, similar goods or a calculated value based on production costs. This structured approach provides transparency and predictability for international traders.
When the relationship between the buyer and seller influences the price, the authority may reject the transaction value in favor of a deductive valuation.
Customs Verification
Authorities have the right to satisfy themselves as to the truth or accuracy of any statement or document. Compliance with the wto valuation agreement ensures that a firm avoids penalties and delays at the border. It facilitates the smooth flow of goods across international lines.
Price Fairness
Protecting both the importer and the local government requires a neutral and objective valuation process. The wto valuation agreement is a cornerstone of the modern global trading system.
