Definition
Customs valuation is the process of determining the value of imported goods for the purpose of calculating ad valorem (percentage-based) duties. Under U.S. law, the primary valuation method is "transaction value" — the price actually paid or payable for the goods when sold for export to the United States, with specified additions like assists, royalties, and packing costs.
Why It Matters for Importers
The value you declare on your customs entry directly determines your duty liability. Undervaluation — whether intentional or through error — is one of CBP's primary enforcement targets. CBP uses sophisticated data analysis to flag entries where declared values fall below expected ranges for a given product and origin country.
Valuation becomes especially complex in related-party transactions (when buyer and seller are affiliated), when assists are provided to the manufacturer, or when royalties and license fees are involved. These situations require careful analysis to ensure the declared value is correct and defensible.
Key Details
- Transaction value: The price actually paid or payable, plus specified additions (packing, assists, royalties, proceeds of resale).
- Alternative methods: If transaction value cannot be used, five alternative methods apply in sequential order.
- Related-party transactions: Sales between affiliated companies require documentation showing that the relationship did not influence the price.
- Assists: Materials, components, tools, or engineering provided free or at reduced cost to the manufacturer must be added to the transaction value.
Valuation errors are a major enforcement focus for CBP. Learn about common customs valuation mistakes.
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