What Is Customs Value and How Is It Determined for Imports?

Executive Summary

The customs asset is the value used in the calculation of particularly precious-based customs duties, determined in the relevant legislation of imported goods.

In Türkiye, customs value is determined under Customs Law No. 4458 and the Customs Regulation.

There are six methods of determining assets in the legislation. The basic method is based on the actual paid or paid price under certain conditions sales price method.

In the implementation of this method, the elements that shall not be included in the value added and value prescribed by law in the necessary cases are taken into account.

The most important control areas in terms of companies are the consistency of accounting records with commercial bills, contracts, royalty and license payments, production contributions, freight and insurance expenses.

1. What is the customs value?

Customs clearance is the value determined in the basis of the customs legislation of the imported goods.

Articles 23 to 31 of Customs Law No. 4458 and the relevant provisions of the Customs Regulation form the basic legal framework for customs valuation.

The customs clearance is essential in determining the matrah of customs duties calculated over the asset in import. The matrahs of other tax and financial obligations are determined according to their own legislation.

While the cost of commercial invoices with customs clearance is often associated, these two amounts do not need to be the same in each transaction.

For example, the value of a mold that is used in the production of imported goods and provided without the buyer can be a element that the goods must be added to the customs value of the goods in certain conditions.

In this case, commercial invoice can reflect the corrections required to be made by the relevant legislation of the customs asset while only indicates the sale price of the goods.

2. How to Determine the customs value?

There are six methods in determining the customs value.

These methods are applied in a certain order as a rule.

First of all, the price of the sale is evaluated whether the method is applied and implemented.

If it is unable to be determined by this method, it is passed to the method in the row. As long as it can be determined by a method, the next method is not passed.

The application order of the valuable method calculated with the reduction method can be changed if the owner's written request is appropriate in the customs administration.

This system is based on the rules aimed at avoiding the keyfî determination of the customs asset.

3. Sales Mattress Method

The price method of sale is the method of determining the value to be evaluated first in import operations.

The main point of movement in this method is the actual paid or paid price for goods in the sale made for export to Turkey.

However, it is necessary to meet the conditions prescribed in the legislation to be considered directly to the customs value.

These terms do not depend on the conditions that may not be determined by the value of the sale or price, the absence of unacceptable restrictions on the use of the goods and the effect of the relationship between the associated persons on the price.

In the price method of sale, there are also necessary corrections in the framework of the 27 and 28 of the Customs Code.

Important point: The application of the sale price method does not mean that the amount of commercial invoice is accepted without any inspection.

4. Unsurers that can be added to the Customs Iznik

27 Article of the Customs Law regulates the additions to the actual paid or paid price while the asset is determined according to the price method of sale.

These attachments are not unlimited. You need to have the specified elements and related conditions in the legislation.

4.1. Commissions and packaging expenses

Certain commissions that are undertaken by the buyer and not included at the price, wired, container costs and packaging costs can be added to the asset.

Purchase commissions are dealt differently with the evaluation of other terms.

4.2. Goods and services provided to the production

Specific goods and services provided directly or indirectly by the buyer to be used in the production of imported goods are important in terms of value.

Samples:

• Molds and tools used in production.
• Material and parts participating in goods.
• Specific inputs consumed in production.
• Engineering, development and design works that are carried out outside Turkey and carry out relevant conditions.

Proper margin and objective, measurable data is important when determining the valuable effect of these elements.

4.3. Royalty and license fees

Royalty and license fees are one of the areas that require special assessment in terms of customs value.

The conditions prescribed in the legislation are taken into consideration, such as being linked to the imported goods of the relevant payment and as the sale condition of the goods.

As every royalty payment is automatically not correct to add to the customs value, it is not correct to accept all of these payments outside of the asset.

4.4. The amount transferred to the seller from the next sales harvest

If a certain part of the harvest arises as a result of the resale, use or removal of imported goods, the value correction in the relevant legislation may come to the agenda.

4.5. Navlun and insurance expenses

Shipping, insurance and certain loading-scaling expenses related to the entry port or transportation of goods in Turkey are included in the customs asset with the conditions prescribed in the legislation.

It should also be checked if these expenses are already included in the amount of commercial invoice.

It is one of the basic control points of the correct asset calculation, not to add value to the same expense in a way.

5. No Expenses Included in the customs value

Some expenses are not included in customs value if they can be distinguished by the conditions prescribed in the legislation and the actual paid or paid price.

As an example for them;

• shipping and insurance expenses from the corresponding entry,
• certain assembly, maintenance and technical assistance expenses made after import,
• interest expenses on financing agreements that provide the necessary conditions,
• purchasing commissions,
• Specific import taxes to be paid in Turkey

showable.

The scope and separation conditions of these expenses should be assessed through concrete processing.

For example, the installation service after import with the cost of goods in the invoice may be shown separately, it may be important in the asset assessment. However, separate views per single are not enough in any case; it is necessary to provide the relevant legal conditions.

6. customs value Calculation Example

The following example was prepared to show how valuable elements can be assessed in the method of sale.

The assumptional information on the part of a company imported machine is as follows:

In this example, all elements must be included in the value according to the legislation, the amount is determined by objective and measurable data, and there is no addition to the decier.

The sample does not contain currency exchange or tax calculation.

The nature, sales conditions, related documents and regulations of valuable elements in real transactions should also be reviewed.

7. customs value Between Associated Companies

Import operations in international company groups are often carried out among companies associated.

This condition also requires evaluation in terms of customs clearance.

However, a relationship between the buyer and seller does not in itself require rejection of the transaction value.

It is important that you do not affect the price of the relevant relationship and evaluate the conditions of the application of the sale price method.

In-house pricing policies, group contracts, year-end price corrections and transfer pricing documents can take care of these reviews.

With the approach of tax transfer pricing, it should be noted that the customs asset rules may have different purpose and methods.

Therefore, the work of a transfer pricing prepared from the corporate tax direction should not be seen as a sufficient document that proves that the customs value is correct alone.

8. Payments and Price Fixes Made After

Additional payment within the scope of the same commercial relationship after the import process is completed, the price difference or end correction may occur.

The effect of such transactions on customs clearance is not automatic.

The relationship of the payment or correction with imported goods should be examined with contractual basis, nature and related provisions.

In particular, it is important to provide information flow among foreign trade and financial units for end-to-end price corrections and in-group payments in multinational companies.

9. Frequent Comparing Control Deficiency in Customs Contracting

The main control deficiencies required to evaluate in the valuable processes of companies are:

1. Accepting commercial invoice as a single source of value.
2. Royalty and license contracts are not reviewed by the foreign trade unit.
3. Non-alcoholic mold and production additives are not followed.
4. Evaluation of missing or deductible expenses of Navlun and insurance expenses.
5. Not documenting the basis of the associated company prices.
6. The price corrections made from then are not associated with customs clearances.
7. No regular consensus between accounting records and customs declarations.

Each of these shortcomings does not mean direct legislation breach. But when there is no effective control, it can increase the likelihood of error and incompatible.

10. What Documents Are Important in customs value?

According to the scope of the audit and the characteristics of the process, the following documents may take importance:

• Customs declarations and commercial bills.
• Sales and supply contracts.
• Transport and insurance documents.
• Payment records and bank documents.
• Royalty and license contracts.
• Mold, design and engineering agreements.
• Associated company pricing policies.
• Accounting records and related account movements.
• Documents for price corrections.

It is also important that documents are not only stored, but can be matched with related import operations.

C-INSPEC Perspective

The customs value is More Than A Billing Control

An important part of the risks relating to the customs asset can be caused by the assessment of the same commercial process of different departments within the company.

The purchasing department focuses on product price, financial currency payments, accounting unit cost and registration layout, foreign trade department customs declaration.

Each of these functions can lead to the lack of adequate information flow between departments, even if the right movement in the field of own responsibility can lead to the missing evaluation of the customs asset.

For example, a license fee paid by the financial department may not be able to evaluate this payment in terms of customs value when reported to the foreign trade unit.

A mold that provides similarly to the supplier of the purchasing department may not be known by those who prepare for the import declaration.

Only accurate calculation on the basis of the customs clearance compliance, the company combines the information that consists of different processes.

Therefore, in the C-INSPEC approach, only the execution of precious controls is not enough.

Contract management, purchasing, finance, accounting and foreign trade processes must be evaluated together.

11. Five Stage customs value Control Program for Companies

Phase 1 — Partial risk inventory

Imported products, suppliers, associated companies, payment types and contracts are classified.

Step 2 — Analysis of the elements of jealousymet

Navlun, insurance, royalty, licensing, mold and other related elements are evaluated.

Step 3 — Declaration and accounting consensus

Import declarations, payment records, contracts and financial accounts are compared to risk-based.

Phase 4 — Evaluation of Results

Legal basis of specified differences, affected transactions and possible financial results are analyzed.

Step 5 — Continuous control system

Responsibilities, information sharing processes, control periods and reporting mechanisms are created.

This approach is aimed at managing valuable risks not only during audit periods, but while still maintaining transactions.

Frequently Asked Questions

Conclusion

The correct determination of the customs asset is one of the basic elements of the execution of import operations in accordance with the legislation.

The correct implementation of the price method of sale is critical importance in terms of determining the elements that are included and not to be included in the value, evaluation of associated company transactions and consistency of customs declarations with financial records.

The systematic execution of precious controls in companies with particularly high trading volume, supports early detection of increased risks.

Sustainable compliance in the customs asset requires accurate data management and effective control between departments besides the right declaration.

Legislation and Official Sources

1. No. 4458 Customs Law, especially 23–31 substances.
2. Customs Regulation, provisions on customs valuation.
3. Ministry of Commerce — customs value, Frequently Asked Questions.
4. General Directorate of Customs — 2012/29 dated customs value.
5. General Directorate of Customs — 2012/21 The Detection of the Customs Contract.

Verified resmî source links

• Ministry of Commerce — customs value
• 2012/29 No customs value Chart
• 2012/21 dated General — Determination of Customs Partiality