Fact Sheet 15 - Customs value of imported goods - New Zealand ...

ISSN 1175-396X
15
CUSTOMS FACT SHEET » IMPORTANT INFORMATION
CUSTOMS VALUE OF
IMPORTED GOODS
Importers of goods have a legal obligation to specify the Customs value of their imported goods
on the import entry or clearance document.
This fact sheet outlines the basis of Customs valuation and the methods of valuation that must be
used to establish the Customs value of goods imported into New Zealand.
BASIS OF CUSTOMS VALUATION
The Customs value (often referred to
as the value for duty –— or VFD) of
goods imported into New Zealand must
be determined in accordance with the
provisions set out in Schedule 2 of the
Customs and Excise Act 1996. These
provisions follow the provisions of
the World Trade Organization (WTO)
Customs Valuation Agreement, an
international system of valuation that is
applicable to all WTO members.
A key purpose of determining the
Customs value of imported goods is to
ensure that the correct amount of tariff
duty is imposed on the goods.
The Customs value also forms an
essential part of the calculation of the
amount of goods and services tax
(GST) payable in respect of the
imported goods.
A Customs value must be specified for
all goods imported into New Zealand
regardless of whether the goods are the
subject of a sale, are supplied free of
charge, are personal possessions, or are
temporarily imported into New Zealand.
Note: The determination of the Customs
value of imported goods and the assessment
of the value of the goods for the purposes
of calculating GST are different matters.
The GST value of goods is the total of the
Customs value, plus the duty (if any), plus
the freight and insurance costs incurred in
transporting the goods to New Zealand.
For more information about importing
goods please refer to fact sheet 28.
THE PRIMARY METHOD FOR
DETERMINING THE CUSTOMS VALUE
Under Schedule 2 of the Customs and
Excise Act 1996, there are six methods
of customs valuation prescribed - the
primary method and five alternative
methods of valuation, which must be
applied in strict hierarchical order.
Whenever possible, the primary method
— called the transaction value method —
must be used to determine the Customs
value of imported goods.
The transaction value of imported
goods is calculated by taking the price
paid or payable for the imported
goods (which is generally shown on
the invoice), and adding any of the
following amounts (to the extent that
the amount is not already included in the
price paid or payable):
» commissions and brokerage incurred
by the buyer (other than fees paid or
payable by the buyer to the buyer’s
agent for the service of representing
the buyer overseas in respect of the
purchase of the goods)
» packing costs and charges incurred
by the buyer
» the value, apportioned as
appropriate, of any goods and
services supplied by the buyer free
of charge or at a reduced cost
for use in connection with the
production and sale for export of
the imported goods (commonly
referred to as ‘assists’)
» royalties and licence fees that the
buyer must pay (directly or indirectly)
as a condition of the sale of the
goods for export to New Zealand
» the value of any part of the proceeds
of any subsequent resale, disposal or
use of the goods by the buyer that
accrues or is to accrue (directly or
indirectly) to the seller
Issue date August 2012

CUSTOMS FACT SHEET 15
» the value of any materials,
components parts, and other
goods incorporated in the imported
goods for the purpose of repair
to, or refurbishment of, those goods
prior to export of the goods to
New Zealand, and the price paid
for the service of repair
or refurbishment
» costs of transportation and
insurance of, and the loading,
unloading, and handling charges etc
associated with the transportation of,
the imported goods until the goods
have left the country of export that
are paid or payable by the buyer to
the seller or for the seller’s benefit, as
a condition of the transaction.
However, if the following charges are
included in the price paid or payable
for the imported goods and the amount
is identified separately, the charges
can be deducted when establishing the
transaction value:
» the costs of transportation and
insurance of, and the loading,
unloading, and handling charges etc
associated with the transportation of,
the imported goods from the time
the goods have left the country of
export
» any reasonable cost, charge, or
expense that is incurred for the
construction, erection, assembly,
or maintenance of, or technical
assistance provided in respect of, the
goods after the goods are imported
into New Zealand
» any reasonable cost, charge, or
expense that is incurred in respect of
the transportation or insurance of
the goods within New Zealand
» any Customs duties or other taxes
payable in New Zealand by reason of
the importation or sale of the goods.
WHEN THE TRANSACTION VALUE
METHOD CANNOT BE USED
The acceptance of the transaction
value method as the applicable method
of valuation is subject to a number of
requirements. The main requirements
include:
» the imported goods must be subject
to a sale between a buyer and a seller
» the particular sale must be made
with a view to export the goods
to New Zealand
» there are no restrictions respecting
the disposition or use of the goods
by the buyer, other than restrictions
that:
› are imposed by law; or
› limit the geographic area in
which the goods may be resold;
or
› do not substantially affect the
value of the goods.
» the price paid or payable for the
goods has not been influenced by
any relationship between the buyer
and seller of the goods.
Where the imported goods have not
been sold for export to New Zealand,
or where the transaction value is not
acceptable as the Customs value because
the price paid or payable for the goods
is affected by certain conditions, the
Customs value of the goods cannot be
valued for Customs purposes using the
transaction value method. Examples
of such goods are - gifts, free samples,
goods imported on consignment, goods
imported by branches which are not
separate legal entities, goods imported
under a hire or leasing contract.
ALTERNATIVE METHODS OF
DETERMINING THE CUSTOMS VALUE
When imported goods cannot be valued
under the transaction value method,
the Customs value of the goods must
be determined using the first possible
method out of the five alternative
methods of valuation set out in clauses
4 to 8 of Schedule 2.
The alternative methods of valuation, in
sequential order of consideration, are:
» Transaction value of identical goods
(‘identical goods method’) — the
basis of the identical goods method
is to use the transaction value of
identical goods that had previously
been sold for export to New Zealand
as a benchmark to determine the
Customs value. This method would
generally be applicable if there
was a recent importation into
New Zealand of goods that are the
same in all respects as the goods
being valued
» Transaction value of similar goods
(‘similar goods method’) — the
basis of the similar goods method
is to use the transaction value of
similar goods that had previously
been sold for export to New Zealand
as a benchmark to determine the
Customs value. This method would
generally be applicable if there
was a recent importation into
New Zealand of goods that closely
resemble the goods being valued
» Deductive value — the basis of the
deductive value method is to take
the resale price of the goods in
New Zealand and reduce it to what
is effectively the Customs value that
would likely have existed between
a buyer and seller had there been a
sale for export to New Zealand in
the first place. This method would
generally be applicable in situations
where the imported goods are sold
in New Zealand within 90 days of
their importation
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CUSTOMS FACT SHEET 15
» Computed value — the computed
value method is based on the
production cost of the imported
goods, plus an amount for profit and
general expenses generally reflected
in sales for export to New Zealand
by the producers of the goods. Use
of this method is generally restricted
to situations where the importer has
access to the producer’s accounts in
relation to the costs of production
of the goods
» Residual basis of valuation —
if none of the above methods
of valuation are suitable, the
Customs value of the imported
goods will need to be determined
using information available in
New Zealand, based on a flexible
interpretation of one of the
previous methods.
Note:
Where applicable, importers can request that
the order of consideration of the deductive
value method and the computed value method
be reversed when determining the Customs
value of their goods.
METHODS OF VALUATION THAT
CANNOT BE USED
A Customs value cannot be determined
on the basis of:
» the selling price in New Zealand of
goods produced in New Zealand; or
» a basis which provides for the
acceptance of the higher of two
alternative values; or
» the price of goods on the domestic
market of the country
of exportation; or
» the cost of production, other than
computed values that have been
determined for identical or similar
goods in accordance with the
provisions of clause 7 of Schedule
2; or
» the price of goods for export to a
country other than New Zealand,
unless the goods were imported into
New Zealand; or
» minimum customs values; or
» arbitrary or fictitious values.
RATE OF EXCHANGE
The Customs value is required to be
specified in New Zealand dollars. If the
invoiced amount (or some other amount
needed to be taken into consideration
to determine the Customs value) is not
in New Zealand dollars, the amount
must be converted to New Zealand
dollars at the Customs exchange rate
in force on the day the import entry or
clearance document is lodged with the
New Zealand Customs Service. The
exchange rates are set for two-week
periods, and are published fortnightly
in Customs Release as well as in the
New Zealand Customs Service website
www.customs.govt.nz
EVIDENCE OF THE CUSTOMS VALUE
To verify the correctness of the Customs
value declared by importers or their
Customs agents, the New Zealand
Customs Service carries out a programme
of post-entry audits.
The New Zealand Customs Service
does not require documents evidencing
the Customs value to be presented at
the time of clearance. Nevertheless,
importers must keep records of all
relevant information relating to the
transaction for seven years after the
goods have been entered, and to produce
these documents to the New Zealand
Customs Service, as and when required.
The records of information must be
kept in New Zealand.
It is an offence to make an entry or
declaration that is false or erroneous, or
to fail to keep the relevant records for
at least seven years, and administrative
penalties and fines may apply.
FOR FURTHER INFORMATION
Contact your nearest office of the
New Zealand Customs Service, visit the
Customs website www.customs.govt.nz
or call Customs on 0800 428 786
(0800 4 CUSTOMS).
Office of the Comptroller of Customs, PO Box 2218, Wellington
Phone: +64 4 901 4500 » Fax: +64 4 901 4555 » www.customs.govt.nz
ISSN 1175-396X
Customs Value of Imported Goods
Issue date August 2012 3