Valuation of the Import Entry
Importers should look at more than just the bottom line, or price, on their commercial invoices. It is important to review all the data on the invoice for both accuracy and usefulness. It is also beneficial to understand the Valuation of your invoice for entry purposes. What is included in that amount? Is this the amount that should be reported to U. S. Customs and Border Protection?
As a sharp business person, you review your invoices to ensure you are being charged the amount you negotiated with your seller. The amount you paid, or agreed to pay for your goods to be exported to you in the United States is the Transaction Value.
As an importer, you know that the Valuation reported at the time of entry determines your duties and taxes. You should also know that the regulations provide for additions to and deductions from the invoice amount that raise or lower the Transaction Value. No one wants to pay too much duty; of course, you don’t want to understate your Entry Value and have to pay penalties!
What can be deducted from the invoice value? If your seller is including the cost of the international freight and insurance in your invoice value, those amounts can be deducted from the invoice total. This will lower the Transaction Value, and therefore the amount of duties owed. However, you must be able to back up the deductions with supporting documents.
What about additions to the invoice value? Packing costs, selling commissions, assists, royalties, and license fees are examples of what must be added to your invoice value to calculate the Transaction Value.
Transaction Value is a legal term codified in the regulations and is used by CBP to determine duties and taxes you owe to the Treasury. There are other valuation methods set forth in the regulations if Transaction Value cannot be determined. We discussed only Transaction Value in this article since it is so widely used. If you think this method does not reflect your import transactions, or if you have any other questions about Valuation, please contact C J so we can discuss your situation in detail.