Determination of Customs Value Regarding Internal Consumption Tax Exempted in the Exporting Country Released

If the internal consumption tax of the exporting country was exempted upon export and the commercial invoice reflects the amount after this deduction, the customs value for import clearance is generally determined based on that invoice price. This interpretation is rooted in the principle of 'Actual Price Paid or Payable,' which is the fundamental basis for customs valuation.

The Principle of Actual Price Paid or Payable

Under Article 30 of the Customs Act, the customs value of imported goods is, in principle, the transaction value—specifically, the price actually paid or payable by the buyer for the goods when sold for export to the country of importation. However, this price does not include taxes that are reduced, exempted, or refunded in the exporting country due to the exportation of the goods.

Requirements for Tax Deduction Recognition

As in your case, if the internal consumption tax is exempted by the exporting country, it falls under the category of 'taxes reduced or refunded upon export.' A critical prerequisite is that such a reduction or refund must be clearly distinguishable and verifiable. If the catalog price originally included the tax, but the actual export transaction clearly shows that the tax was deducted and excluded from the invoice, the deducted invoice price is recognized as the actual price paid or payable for customs purposes.

Alignment with Global Standards (WTO Agreement)

This principle is supported by the WTO Customs Valuation Agreement. The value of goods should be determined based on their value 'at the border.' Including internal taxes that are refunded or exempted by the exporting country could lead to double taxation or distort international trade flows. Therefore, even if the initial price included the tax, it is reasonable to determine the customs value based on the final amount paid by the buyer, excluding the exempted tax.

Essential Documentation for Verification

To support this claim during the customs process, the following documentation is vital:

• Purchase Contracts or Purchase Orders: Documents specifying whether the price includes internal consumption tax and the provisions for export tax exemption.
• Export Country Regulations: Evidence of laws or regulations in the exporting country that mandate the exemption or refund of internal taxes upon export.
• Commercial Invoice: A clear indication of the price with the tax amount explicitly deducted.
• Supporting Financial Documents: Additional evidence such as Credit Notes issued by the seller can further substantiate the fact.

Compliance and Risk Management

If the tax exemption or refund is not clearly distinguishable or is difficult to prove, customs authorities may not allow the deduction from the price actually paid. It must be clearly confirmed that the tax was exempted through an official system of the exporting country, rather than being an arbitrary price reduction by the seller. Furthermore, if a tax is levied in the exporting country but is not exempted upon export, it must remain included in the customs value.

Conclusion

In conclusion, if the exemption of the internal consumption tax is executed according to official regulations and can be objectively proven, it is correct to determine the customs value based on the invoice price excluding said tax. Thorough preparation of evidentiary documents is essential for accurate and smooth customs clearance.