Transaction Value Method Of Valuation
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Customs Act, Paragraph 3 of the Schedule to Section 19
This procedure outlines the method of valuation contained in Paragraph 3 of the schedule to the section 19 of the Customs Act.
Guidelines and General Information
Transaction Value Defined
As set out in Paragraph 3 of the Schedule to Section 19 of the Customs Act, the transaction value is determined by: ascertaining the price paid or payable for the goods when they are sold for export to Jamaica and adjusting that price paid or payable in accordance with Paragraph 8 or 9 where appropriate.
Sold for Export
In order to apply Paragraph 3 of the schedule, the goods being appraised must be the subject of a sale. For the purposes of valuation the term ‘sale’ will be interpreted as the transfer of ownership of goods for a consideration from a foreign supplier to an importer, which directly causes the goods to be exported to Jamaica. Goods that are not subject of a sale cannot be valued under Paragraph 3 of the schedule to the Customs Act.
In a sale, the seller must have title to the goods before he can transfer ownership to the buyer. If the seller does not own the goods being transferred to the buyer, then for valuation purposes, there is no sale and hence, no transaction value. There may be instances (especially in the sale of motor vehicles) where evidence of title transfer is necessary to prove that a sale took place.
In addition, importers will be required to provide documentation such as commercial invoices, contracts, bills of lading to substantiate that the sale of the goods was a sale for export to Jamaica. A manufacturer or seller’s invoice must be submitted if the parties to the sale include consolidator, agent or freight forwarders.
Where the goods are sold more than once prior to the importation into Jamaica, the LAST sale that occurs before the imported goods arrive under Customs control is the relevant sale for valuation purposes.
Price Paid or Payable
Paragraph 3 (7) of the Schedule to the Customs Act defines
‘price paid or payable’ as:
The total payment made, or to be made for the imported goods by the buyer to or for the benefit of the seller.
Payment may be by way of letter of credit or negotiable instruments and may be directly or indirectly. The term ‘price paid or payable’ refers to the price of the imported goods. Therefore, the flow of dividends or other payments from the buyer to seller that do not relate to the imported goods are not part of the value for duty.
Activities such as warranty or advertising undertaken by the buyer on his own account other than those for which an adjustment is provided for in Paragraphs 3 and 8 of the Schedule to Section 19 of the Customs Act will not be deemed an indirect payment to the seller, even though they might be regarded as a benefit to the seller. The cost of these activities therefore, will not be added to the price paid or payable for the imported goods. However, it must be noted that these activities do not include modification, upgrade or reconditioning of the imported item undertaken by the buyer. The cost of such activities must form part of the value for the imported item.
Having ascertained the price paid or payable, the next step in determining the transaction value involves making any of the adjustments described in Paragraph 8 or 9 of the Schedule to Section 19 of the Customs Act.
To the extent that they are not already included in the price
paid or payable, amounts representing the following are to be added:
a. All commissions and brokerage (except buying commission)
b. All packing costs and charges
c. The value of certain goods and services provided free of charge or at a reduced cost by the buyer directly or indirectly for use in the production and sale for export of the imported goods to the extent that such value has not been included in the price actually paid or payable
d. Royalties and license fees
e. The value of any proceeds from the subsequent resale disposal or use of the goods which accrue directly or indirectly to the seller and
f. The cost of transportation for the imported goods to the Jamaican port. You must include in the customs value all inland transport and associated costs in the country of export.
g. The cost of insurance to the Jamaican port. If there is no insurance, meaning the imported goods were not insured, then regulation 27 of the Customs regulations will apply. That is, an amount for insurance will be calculated. For goods imported by air the insurance will be 1% of the cost and international freight charges and for goods imported by sea 1½% of the cost and international freight. If the insurance covers more than one importation or relates to other goods as well as the goods being valued, the cost of that insurance must be apportioned and the appropriate amount included in the customs value of the goods currently being appraised.