In determining the value or the acceptability of a declared value for customs duty purposes, the Jamaica Customs Agency must be guided by the provisions of the Customs Act, Customs Regulations and the principles of the World Trade Organization (WTO) Agreement on Customs Valuation.
The Valuation Verification Unit is mandated to ensure that there is Customs control in the valuation process.
This process is divided into two categories:
- The control of the declaration of values prior to clearance, and
- A thorough follow-up verification on the customs value, whether through desk reviews or field audits.
Valuation Methodology
Customs valuation is a procedure applied to determine the customs value of imported goods. If the rate of duty is ad-valorem (could state what ad-valorem means), the customs value is essential to determine the duty to be paid on imported goods.
Customs valuation procedure is based on the principles and guidelines of the WTO agreement on implementation of article vii of the General Agreement of Trade and Tariff (GATT) 1994.
This agreement is intended to reduce or eliminate non-tariff trade barriers by introducing a more flexible and uniformed system of valuation.
The agreement provides a customs valuation system that primarily bases the customs value on the Transaction Value of imported goods, which is the price actually paid or payable for the goods when sold for export to the country of importation with certain adjustments.
The price actually paid or payable is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods, and includes all payments made as a condition of sale of the imported goods by the buyer to the seller, or by the buyer to a third party to satisfy an obligation of the seller.
Basic principle: Transaction Value
The Agreement stipulates that customs valuation shall, except in specified circumstances, be based on the actual price of the goods to be valued. This price, plus adjustments for certain elements listed in Article viii, equal the transaction value, which constitutes the first and most important method of valuation referred to in the Agreement.
Customs Valuation in Jamaica
Under the Jamaican Legislation, it is the importer’s responsibility to make a declaration of the value for the goods he imports. He is therefore, required to be fully aware of all the circumstances of the transaction that eventually causes importation of goods, particularly of how the value of such goods was determined. The evidence he supplies to customs to support his declared value will form the base of any verification necessary.
Valuation methods
Value for duty must be established using one of the six methods of valuation
The Six (6) Methods
Method 1: Transaction Value
This is the price actually paid or payable on goods sold for export to Jamaica.
Requirements for the use of the Transaction Value Method:
- There must be a sale
- The sale must be for export
- The price actually paid or payable can be determined/ascertained
The requirements listed above are compulsory in order for the Transaction Value Method (Method 1) to be applied. The absence of any of the requirements renders Method 1 unusable and the goods/commodity will be assessed under the other five (5) methods applying each in sequential order.
Conditions to be fulfilled
- Evidence of sale
- No restriction on the disposition or use
- Price not subject to additional conditions
- Sufficient information for adjustments
- Buyer and seller not related
Other factors influencing transaction value (Specific Adjustments – Article 8 of the GATT)
Commissions and brokerage, except buying commission
- Packing and container costs and charges
- Assists(anything that will add value to the final product)
- Royalties and license fees
- Subsequent proceeds
- The cost of transport, insurance and related charges up to the place of importation (CIF Value)
NB: Costs incurred after importation (duties, transport, construction or assembly are not to be included.
The following classes of goods cannot be valued under transaction value:
- Goods invoiced without any charge
- Goods received on consignment
- Leased goods
- Trade-ins
- Barter transactions
- Credits in respect of earlier transaction
- Interest for deferred payment
Method 2: Transaction Value of identical goods
If the Transaction Value method cannot be applied, consideration is given to the value of identical goods. The characteristics of identical goods are:
- the same in all respects including physical characteristics, quality, and reputation;
- produced in the same country as the goods being valued;
- and produced by the producer of the goods being valued.
For this method to be used, the goods must be sold for export to the same country of importation as the goods being valued at or about the same time as the goods being valued.
Previously accepted Customs value under Method 1 accepted within 45 days before or after the goods being valued.
Method 3: Transaction Value of similar goods
When the Transaction Value of identical goods cannot be applied, consideration must then be given to the Transaction Value of similar goods.
The Transaction Value is calculated in the same manner on similar goods if:
- goods closely resembling the goods being valued in terms of component materials and characteristics
- goods which are capable of performing the same functions and are commercially interchangeable with the goods being valued
- goods which are produced in the same country as and by the producer of the goods being valued.
- For this method to be used, the goods must be sold to the same country of importation as the goods being valued.
- The goods must be exported at or about the same time as the goods being valued. (Previously accepted under Method 1, 45 days before or after.
Method 4: Deductive Method
When customs value cannot be determined using previous methods, it will be determined on the basis of the unit price at which the imported goods or identical or similar goods are sold to an unrelated buyer in the greatest aggregate quantity in the country of importation.
The starting point in calculating Deductive Value is the sale price in the country of importation with various deductions to reduce that price to the relevant customs value including:
- commissions usually paid or agreed to be paid
- profits and general expenses
- transport cost
- customs duties and other national taxes payable in the country of importation
- value added by assembly or further processing, when applicable
Method 5: Computed Method
The customs value is determined on the basis of the cost of production of the goods being valued, plus an amount for profit and general expenses usually reflected in sales from the country of exportation to the country of importation of goods of the same class or kind.
- Production cost = value of materials plus fabrication
- Profit and general expenses
Other expenses (transport, loading unloading and handling charges)
Method 6: Fall-back Method
When the customs value cannot be determined under any of the previous methods, it may be determined using reasonable means consistent with the principles and general provisions of the agreement, and, on the basis of data available in the country of importation.
To the greatest extent possible, this method should be based on previously determined values and methods with a reasonable degree of flexibility in their application.
Prohibited Methods under Fallback
- Selling Price in the country of importation, of goods produced in such country(Jamaica)
- Higher of two alternate values
- Price of goods in domestic market of country of export
- Cost of production other than Computed Value of identical or similar goods
- Price of goods sold for export to a country other than Jamaica
- Minimum customs values
- Arbitrary or fictitious values
Rights & Obligations
The WTO agreement promotes transparency, open consultation and neutrality under a rules-based system. Hence, there is the imposition of rights and obligations on all the parties concerned with the importation of the goods.
Section 19 (2) of Customs Act – Customs has the right to doubt the truth or accuracy of information submitted for Customs valuation purposes.
Section 19 (3) – Customs has an obligation to explain to the importer how customs value was determined, if a written request is made by the importer.
Section 19(4) – If the importer is dissatisfied with how the customs value was determined, the importer may request a review of the valuation. If dissatisfied with the review an appeal may be made to the Revenue Appeals Division within thirty days of the date of receiving the Commissioner’s decision.
Section 19(5) – An importer who is dissatisfied with the decision of the Revenue Appeals Division, has the right to appeal to the Revenue Court within thirty (30) days of this decision or within such longer period of time that may be permitted by or pursuant to rules of court.
Section 19 (8) – Customs has two years within which to change a value previously accepted based on new information regarding the goods; or for any other reason.
NB: Importers are obligated to cooperate with Customs during an investigation of values.
Guidelines and General Information
The law also requires that importers maintain records of every import transaction. These records must be maintained in Jamaica normally at the importer’s place of business, where the Customs representatives may inspect them. Importers may also be required to answer questions about those records.
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Declaration of Value
In the Declaration of Particulars, the importer must state whether:
- any payment in addition to the invoice price has been or will be made, and that all relevant invoices and information included in contractual arrangements have been submitted
- the importer is related to the foreign supplier and whether the price has been influenced by this relationship
- any part of the proceeds of subsequent resale will accrue directly or indirectly to the seller, etc. (Reference: Paragraph 8(1)(d) of the Schedule).
If the imported goods are not the subject of a sale, this also has to be stated in the declaration at line seven (7) of the C85 (e.g. goods sent on consignment to an agent or transferred to a branch or samples sent free of charge).
The prescribed forms to be used when completing declarations are; the C84 if the transaction method is being used and the C85 if any other methods are being used.
Importer’s responsibilities
- For valuation purposes, the importer is required to calculate and declare a value for duty on the Customs entry documents that meet all of the requirements of the valuation provisions of the Customs Act, Regulations and Administrative Policies.
- It is the practice and a requirement under the Regulations that an importer hires a Customs Broker to transact his Customs business where the value of the imports exceeds US$5000 whether or not the consignment is personal effects or for commercial use. (See Regulations 147(c)). Note that it is the importer, and not the broker or authorized agent, who is ultimately responsible and liable for the correct declaration of the Customs value.
All documentary evidence to support the declared value may not need to accompany each entry, but should be available for Customs review when required. It is the responsibility of any person concerned with the importation of goods to maintain, in a manner that facilitates Customs review, all information and records used in the determination and declaration of the value for duty. See Regulations 26 and 147(b) and Section 223 of the Customs Act.
Who can sign the Declaration of Particulars Form?
The Declaration of Particulars form can be signed by any of the following person:
- The actual importer, if an individual
- A partner in the case of a partnership
- A director or the secretary in the case of an incorporated company
- Any employee duly authorised in writing by one of the persons mentioned above.
Note: An in-house broker can sign the declaration form (C84 or 85) only if he/she is authorised to do so on a C73. However, the authorization form (C73) must be filed with the Department.
