THE PURPOSES OF CUSTOMS VALUATION

WHAT IS CUSTOMS VALUATION?

Governments have collected customs duties since the beginnings of international trade. It is recorded that Athens applied 20 percent import duties on corn and other goods, while the Romans, from well before the time of Julius Caesar, depended upon customs revenues to support the expansion and maintenance of their empire. And, where a tax must be collected, there will be disputes over rates and methods – the Roman customs collector was accused of “unfair conduct and vexatious proceedings” against the Roman merchants who, in all fairness, were said to have been commonly engaged in smuggling to avoid customs duties.

Customs valuation – the subject of this book – becomes an issue where import duties are calculated on an “ad valorem” basis. An “ad valorem” duty rate is one that is expressed as a percentage of the value of the imported goods. Duties may also be assessed on “specific” basis, where a fixed amount is charged on the quantity of goods imported – such as 0.2 cents per liter of imported alcohol. Or, a duty rate on a particular import might be a combination of ad valorem and specific rates (a “compound rate”). Nevertheless, ad valorem rates are the most prominent in international trade, as they are used by WTO Members against all but a small percentage of goods in their tariff schedules.