Transaction Value

Transaction value is the primary method for determining the customs value of imported goods under WTO rules. It equals the price actually paid or payable for goods when sold for export to the importing country, subject to certain adjustments.

Transaction Value Basics

Definition

The total payment made or to be made by buyer to seller for imported goods, including:

• Direct payments
• Indirect payments
• Payments to third parties

Core Principle

Transaction Value = What you actually pay
                   + Required additions
                   - Allowed deductions

Components of Transaction Value

Base: Price Paid or Payable

What’s included:

• Invoice price
• Additional payments to seller
• Payments on behalf of seller
• Debt forgiveness to seller

Required Additions

Permitted Deductions

Transaction Value Calculation

Example 1: Simple Purchase

Invoice price: $50,000
Freight (included): $3,000
Insurance: $500

Transaction Value: $50,000
(FOB price - freight and insurance included)

Example 2: With Assists

Invoice price: $50,000
Molds provided by buyer: $10,000
(Used to make 1,000 units, importing 200)

Assist value: $10,000 × (200/1,000) = $2,000

Transaction Value: $52,000

Example 3: With Royalties

Invoice price: $100,000
Royalty: 5% of resale price
Estimated resale: $200,000
Royalty: $10,000

Transaction Value: $110,000

When Transaction Value Can’t Be Used

Disqualifying Conditions

1. Restrictions on buyer’s disposition
2. Price subject to conditions with unascertainable value
3. Seller receives proceeds that can’t be determined
4. Buyer and seller related (unless acceptable)

Restrictions That Disqualify

• Can only resell in certain territory
• Must wait before selling
• Other limits on use or disposition

Acceptable Restrictions

• Legal requirements (safety, labeling)
• Limits geographic area of resale
• Don’t substantially affect value

Related Party Transactions

Determining “Arms Length”

If buyer and seller are related:

Question: Would unrelated parties
          pay the same price?

Methods to prove acceptable:
1. Compare to unrelated party sales
2. Use identical/similar goods value
3. Computed value supports price
4. Deductive value supports price

CBP Review

• Heightened scrutiny
• May request documentation
• Compare to other transactions
• Challenge if appears manipulated

Transaction Value vs. Other Values

Not the Same As

Relationship to FOB/CIF

Most common approach:

• Use FOB invoice price
• Add required additions
• Result = transaction value

Documentation Requirements

What to Keep

• Commercial invoices
• Purchase orders
• Payment records
• Contracts
• Assist agreements
• Royalty agreements
• Related party documentation

How Long

• 5 years minimum
• Available for CBP review
• Organized and accessible

Best Practices

Calculating Transaction Value

1. Start with price paid/payable
2. Identify all additions
3. Properly apportion assists
4. Include required royalties
5. Document everything
6. Review related party issues
7. Seek ruling if uncertain

Common Mistakes

• Omitting assists
• Missing royalties
• Ignoring related party rules
• Not documenting properly
• Using incorrect invoice
• Failing to add all payments