What is a transaction value?

Determining Transaction Value for Import Valuation

Introduction

When importing goods, it is crucial to establish their transaction value, which forms the basis for calculating duties and taxes. This article explores the concept of transaction value and its significance in import valuation.

Definition of Transaction Value

The transaction value is the price actually paid or payable for goods when sold for export to the United States. It includes the following components:

• The cost of the goods
• The cost of freight, insurance, and other expenses incidental to sale and delivery to the United States

Importance of Transaction Value

Transaction value is essential for import valuation because it:

• Determines the amount of duty and taxes owed
• Facilitates accurate recordkeeping for importers and customs authorities
• Ensures uniformity and fairness in the application of duties and taxes

Determining Transaction Value

Customs authorities rely on documentation to determine the transaction value. This documentation may include:

• Commercial invoices
• Contracts
• Purchase orders
• Bills of lading
• Insurance policies

In cases where the transaction value cannot be easily determined, customs authorities may resort to alternative methods of valuation, such as:

• Deducting profit from the selling price in the United States
• Comparing prices of similar goods imported from the same source
• Using constructed value based on production costs and profit

Exceptions to Transaction Value Rule

There are certain exceptions to the transaction value rule, including:

• Goods sold at less than the fair market value
• Goods imported by a related party at a lower price
• Goods subject to special duty treatment

In such cases, customs authorities may consider other factors to determine the appropriate transaction value.

Conclusion

Transaction value plays a pivotal role in import valuation by establishing the basis for calculating duties and taxes. By understanding the definition, importance, and methods of determining transaction value, importers can ensure accurate and consistent import valuation practices.