Methods (Techniques) for Determination of a Customs Value

There are six methods (techniques) for determination of a customs value (a customs cost) of the commodities that are imported onto the customs territory of Ukraine within the «import» regime.

The main method is the determination of the customs cost on the price of the agreement (contract) on the goods that are imported (it is the cost of the operation) (Article 58 of the Customs Code of Ukraine). This technique is applied in the following cases listed below, if:

  • 1) there are no restrictions regarding the rights of a customer (importer) for using the evaluated commodities, on the exception of the following restrictions that:
    • а) are established by the Law or introduced by the State Authorities of Ukraine;
    • b) limit a geographical region where the cоmmodities can be resold (alienated repeatedly);
    • c) do not make a substantial impact on the cost of the goods;
  • 2) there are no conditions or warnings in relation to sail of the evaluated goods or their price, which make impossible the determination of the cost of these goods;
  • 3) noone part of the further sail proceeds obtained by the customer will not come, directly or indirectly, to the vendor, unless the appropriate corrections made;
  • 4) the customer and the vendor are not related persons or, even if they are the related persons, however, these relations have not effected the price of the goods.

The persons are considered as related only if:

  • 1) they are employees or directors of the each other’s enterpises;
  • 2) they are legally acknowledged business partners;
  • 3) they are an employer and an employee;
  • 4) one person directly or indirectly owns, controls or holds 5 % or more of stocks issued into circulation, that gives the right to vote to the both of them;
  • 5) оne of them directly or indirectly controls the other one;
  • 6) the both are directly or indirectly controlled by a third party;
  • 7) together, they directly or indirectly control a third party;
  • 8) they are the members of one family.

In accordance with the Customs Code of Ukraine, the persons, оne of which is a single agent, a single distributor or a single commissioner of the other one, whatever it is called, are considered as the related persons, if they are subject of at least one of the criteria mentioned above.

The customs value of goods that are imported onto the customs territory of Ukraine in accordance with the import customs regime is a price that has been actually paid or should be paid for the goods, if they are sold for export in Ukraine, corrected if required.

The correction is made through the addition to the price that has been actually paid or should be paid for the evaluated goods, of the following expenses, unless they have not been included into the price that has been actually paid or should be paid:

  • 1) expenditures made by the customer:
    • а) commission and remuneration to a broker, except of the commissions for the purchase that is a payment of the customer to his/her agent for the provision of services associated with the presentation of his/her interest abroad, for the purchase of the goods evaluated;
    • b) сosts of packing cases (containers) in which the goods are packed or costs of another package that, for the customs purposes, are considered as making a whole commodity with the related goods;
    • c) сosts of package and packing operations;
  • 2) a properly distributed cost of the below mentioned goods and services, if they are directly or indirectly supplied by the customer for free or under the reduced price for use in relation to the production and sale for export of the evaluated goods in Ukraine, if this cost is not included into the price that has been actually paid or should be paid:
    • а) raw materials, materials, parts, semiproducts, complementary parts, etc. that comprise the evaluated goods;
    • b) tools, dies, patterns and similar items that have been used in the process of production of the evaluated goods;
    • c) materials that have been spent in the process of production of the evaluated goods (lubricants, fuel, etc.);
    • d) engineering, testing and designing works, design, product styling, layouts and drawings that have been made outside of Ukraine and are directly required for the production of the evaluated goods;
  • 3) royalty and other license payments associated with the evaluated goods and that the customer should pay directly or indirectly as the precondition for the sale of the evaluated goods, if such fees are not included into. These payments can include the fees associated with the property rights for the literary works and pieces of arts, inventions, useful models, industrial designs, trade marks and other intellectual property right objects. Expences for acquiring the righ of reproduction (replication) of the goods evaluated in Ukraine should not be added to the price that has been actually paid or should be paid for these evaluated goods;
  • 4) a relevant part of proceeds from the further sale, disposal or use of the evaluated goods, their use or disposal on the customs territory of Ukraine, which directly or indirectly counts for the benefit of the vendor;
  • 5) costs for transportation of the evaluated goods to the airport, port or other point of their entry to the customs territory of Ukraine;
  • 6) costs for loading, uploading and processing of the evaluated goods associated with their transportation to the airport, port or other point of their entry onto the customs territory of Ukraine;
  • 7) costs for insurance of these goods.

In case when the customs value of goods can not be identified upon the main technique, the secondary methods should be apllied:

1. A method of determining a customs value upon the cost of an agreement associated with the identical goods (Article 59 of the Customs Code of Ukraine) is applied if it is impossible to determine the customs value of evaluated goods in the framework of the main technique. It is considered that identical goods are the goods having all identical properties with the evaluated goods, which are the following:

  • 1) physical properties;
  • 2) quality and reputation on the market;
  • 3) country of origin;
  • 4) producer.

Minor external differences can not be the argument for denial in consideration of the goods as identical ones, if in general these goods comply with the requirements mentioned above.

As а basis for the determination of the customs value, the cost of the operation with identical goods is used, for the goods that are sold for the export in Ukraine from the same country and the time of their exportation is the same or maximally close to the time of exportation of the evaluated goods.

The cost of the operation with identical goods is used as the basis for the determination of the value of goods if these goods were imported approximately in the same quantities and at the same commercial levels as the evaluated goods. If such sale did not take place, the cost of operation with identical goods is used, regarding the goods that have been sold in Ukraine in other quantities and/or on the other commercial levels. At that, their cost should be corrected with consideration of the noticed differences, irrespective of increasing or decreasing of the cost of the evaluated goods caused by this consideration. The information that is used for this correction should be proved with the relevant documents.

2. A method of determining a customs value upon the cost of an agreement associated with the similar (identical) goods (Article 60 of the Customs Code of Ukraine) is applied in the case if it is impossible to determine the customs value of evaluated goods in the framework of the main technique and the method of determining a customs value upon the cost of an agreement associated with the identical goods.

It is considered that similar (analogic) goods are the goods that in spite of being non analogic in all their properties with the evaluated goods, have similar characteristics and consist of similar components, and due to these they fulfill the same functions in comparison to the evaluated goods, and the both goods are considered commercially replaceable. For the identification, whether the goods are the similar (analogic), the quality of the goods, a trade mark and reputation of these goods on the market is taken into account.

The price of the contract associated with the similar (analogic) goods is taken for the determination of the customs value of the evaluated goods on the condition that these goods were imported approximately in the same quantities and at the same commercial levels as the evaluated goods. If such sale did not take place, the cost of operation with the similar (analogic) goods is used, regarding the goods that have been sold in Ukraine in other quantities and/or on the other commercial levels. At that, their cost should be corrected with consideration of the noticed differences, irrespective of increasing or decreasing of the cost of the evaluated goods caused by this consideration. The information that is used for this correction should be proved with the relevant documents.

3. A method of determining a customs value on the basis of the cost deduction (Article 62 of the Customs Code of Ukraine) is applied in the case if it is impossible to determine the customs value of the evaluated goods in the framework of the main technique and the method of determining a customs value upon the cost of an agreement associated with the identical goods, and the technique of determining a customs value upon the cost of an agreement associated with the similar (analogic) goods.

In the case when the evaluated or identical, or similar (analogic) imported goods are sold (alienated) on the customs territory of Ukraine in the unchanged state, for the determination of the customs value of goods upon this method, the basis is the cost of an article (one item of a commodity) upon which the evaluated or identical, or similar (analogic) imported goods are sold on the territory of Ukraine in the largest total quantity, to a customer who is not a person related to a vendor, at the same time or at the time close to the date of entry of the evaluated goods, on the condition of deduction of the following components, if they can be sorted out:

  • 1) expences for payment of commissions that are usually paid or should be paid, or usual trade surcharges that are made to get a profit and provide a coverage of general costs associated with the sail goods of the same class and type on the customs territory of Ukraine;
  • 2) usual costs incurred in Ukraine for loading, unloading, transportation, insurance and other expences associated with such operations;
  • 3) sums of taxes to be paid in Ukraine associated with the entry (importation) or sail (alienation) of goods.

In the case when neither the evaluated goos, nor identical or similar (analogic) goods are sold in Ukraine at the same time or maximally close time to the date of entry of the evaluated goods to Ukraine, the customs value of such goods is determined on the basis of a cost of an article (one item of a commodity) upon which the evaluated or identical, or similar (analogic) imported goods are sold on the territory of Ukraine in the quantity that is adequate for determination of a price for one item of this commodity, in the same state that they were imported, on the more earlier date after the importation of the evaluated goods, but before the expiration of a 90-day term.

If the sales of the evaluated, identical or similar (analogic) goods in the same state that they were on the day of their importation to Ukraine, did not take place, on the request of the declarant or a person authorised by him/her, the customs value of such goods should be determined on the basis of the price for an item of the commodity upon which the noticed goods are sold in Ukraine after further treatment (processing), in the largest lot of goods, to the persons that are not related with the vendors. At that, the appropriate corrections should be made, to take into account the surcharges added to the cost of these goods due to this treatment (processing), and deductions envisaged in Points 1) — 3).

4. A method of determining a customs value of goods on the basis of the cost supplement (an estimated cost) (Article 62 of the Customs Code of Ukraine).

For the determination of the customs value of goods on the basis of the cost supplement (an estimated cost), the information provided by the producer of the evaluated goods or on his/her behalf, is taken as the foundation, about their cost that should contain the sums of the following:

  • 1) the соst of materials and costs for the production of the evaluated goods, for the producer. This information should be based on commercial invoices, on the condition that those invoices are compatible with the generally accepted principles of accounting applied in a country where these goods are produced;
  • 2) the scope of the profit and the gross expenditure that is equal to the sum that is usually reflected while selling the goods of the same class or type as the evaluated goods which are manufactured by the producers in the country of the export and for the exportation to Ukraine;
  • 3) total expenditure when selling in Ukraine from the country of export the goods of the same class or type i.e. the costs for loading, unloading and treatment of the evaluated goods, ther transportation to an airport, a port or other point of entry onto the customs territory of Ukraine, and costs for insurance of these goods.

5. A fall back method (Article 64 of the Customs Code of Ukraine) is applied when it is impossible to determine the customs cost of evaluated goods upon the techniques presented above in this text. The customs cost of evaluated goods is determined with the means that do not contradict the Laws of Ukraine and are compatible with the relevant principles and provisions of the General Agreement on Tariffs and Trade (GATT).