Transaction value: the price paid or payable, adjusted

What counts as the price payable

It is the total payment made or to be made by the buyer to or for the benefit of the seller, whether direct or indirect, for the imported goods. Settlement of a debt the seller owed to a third party, payments routed through an intermediary, and amounts paid to a related company of the seller can all form part of it. The form and the timing of payment are irrelevant, which is why an arrangement structured as several separate transfers still produces one price.

Four conditions that have to hold

The method is available only where there are no restrictions on the buyer's disposal or use of the goods beyond those the law imposes or that do not substantially affect value; where the sale or the price is not subject to a condition whose value cannot be determined; where no part of any resale proceeds accrues to the seller unless a proper adjustment can be made; and where the parties are not related, or, if they are, the relationship did not influence the price. Failing any of these takes the trader down to the next method in the order.

The sale for export test

The valuation attaches to a sale that causes the goods to be exported to the country of import. Where goods pass through a chain of traders before arriving, identifying which sale in that chain is the relevant one determines the value, and administrations differ in their approach to chain transactions. This is a live question for businesses buying through group trading companies, and the position should be established with the authority rather than assumed from the invoice presented at the frontier.

Conditions and considerations that break the method

A price set on the basis that the buyer will also purchase other goods, a price contingent on the buyer supplying the seller with finished products, or goods provided at a nominal price because the buyer will perform services for the seller all attach a condition of unknown value to the sale. Where the value of the condition can be quantified it becomes an adjustment; where it cannot, the primary method fails. Barter and set-off arrangements are the everyday examples.

Provisional prices and later adjustments

Commodity-linked pricing, retrospective volume rebates and year-end intercompany true-ups all mean the final price is unknown when the goods cross. Several administrations provide for provisional or simplified value arrangements that allow a later reconciliation, usually under an authorisation with conditions. Handling this openly through such a mechanism is materially safer than declaring a figure and quietly booking a difference to the accounts.

Frequently asked questions

Are all sales between related companies rejected?

No. Relationship alone does not disqualify the primary method; the question is whether it influenced the price. The importer can support the price by comparison with values already accepted for identical or similar goods, or by showing the price was arrived at in a manner consistent with how the industry prices, and the administration decides on the evidence.

Does a discount reduce the customs value?

A genuine discount available at the time of valuation and reflected in what is actually payable generally does. A rebate granted after import, or a discount conditional on future behaviour, is treated differently and may not be deductible, so it is worth establishing the treatment before relying on it.

What if payment is made in a different currency from the invoice?

Conversion is done using the rate prescribed by the importing administration for the relevant period rather than the rate the buyer actually obtained. That means the customs value and the accounting entry will not tie exactly, which is normal and should be explainable in the reconciliation.