Decoding Customs Value: An Importer's Guide to Transaction Value and Compliance

What is "transaction value" and how is it calculated?

The transaction value is the actual price the buyer pays to the seller for the imported goods. To calculate it, start with the price on the invoice (excluding international shipping and insurance) and add certain costs if they aren't already included. These additions include packing costs, selling commissions paid to the seller’s agent, the value of any "assists" (materials or equipment provided to the manufacturer at no cost to aid in production), royalties needed to be paid, and any profit the foreign seller gets when the buyer resells the items.

What costs are excluded from the transaction value?

The buyer can subtract certain costs from the final transaction value as long as they are written separately on the invoice. These excluded costs include the price of international shipping and insurance, any duties or federal taxes paid on the goods, and the cost of assembling or transporting the products after they arrive in the United States.

What is an "assist" and how do you value it?

An assist is anything the buyer gives to the manufacturer for free or at a discount to help make their products. This includes items like parts, tools, molds, or design work done outside the U.S.. To figure out its value, you look at what it cost you to buy or make the assist, add the cost to ship it to the factory, and adjust for any wear and tear. You then spread this value reasonably over your imported goods (for example, adding a portion of the cost to each item in your first shipment).

What happens if transaction value cannot be used?

If you cannot use transaction value, such as when a buyer and seller are related and the relationship artificially lowered the price, customs uses five backup methods in a strict order. First, they look at the approved value of identical goods , and if those don't exist, similar goods. If those fail, they use deductive value (working backward from the U.S. selling price by subtracting profits, transport, and taxes) or computed value (building the price up by adding together foreign manufacturing costs, profit, and packing). The last resort is a fallback method that reasonably adjusts any of the prior methods.

What are your legal duties as an importer?

Under the law, you (the importer of record) must use reasonable care to declare the true and accurate value of your goods to Customs. You are also legally required to keep all related business records, including purchase orders, bills, and shipping logs, for up to five years. Failing to report values correctly or failing to produce these records when asked can lead to shipping delays and expensive fines.

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