Customs valuation (determination of customs value) is one of the most controversial and complex aspects of the import process. Customs value is the base upon which import duty and VAT are calculated. Georgian legislation, in accordance with the GATT agreement, establishes 6 valuation methods, with the first method — transaction value — being the priority. However, in practice, customs authorities often question the invoice price and attempt to use backup methods (e.g., price of similar goods), significantly increasing taxes. This is particularly common in transactions between related parties (e.g., parent and subsidiary companies). Legal services in this area involve protecting the importer's right to clear goods at the actual transaction price rather than an artificially inflated value set by customs.
What Does Customs Valuation Service Cover?
Our lawyers offer strategic defense in determining customs value:
- Defense of Method 1: Justifying the transaction value (invoice price) with additional documentation (bank transfers, contracts, price lists).
- Justification of Related Party Transactions: Proving that the relationship between buyer and seller did not influence the price (transfer pricing documentation).
- Customs Disputes: Appealing customs decisions that increase the customs value and impose sanctions.
- Value Declaration: Assisting in correctly filling out the customs value declaration (D.V.1) and accurately reflecting incidental costs (transport, insurance).
- Pre-import Consultation: Analyzing contracts before import to avoid customs suspicions regarding price accuracy.
- Control of Backup Methods: If Method 1 cannot be used, ensuring that alternative methods are applied fairly and legally.
Common Scenarios and Needs
Importers often face issues when buying goods at a discount or from stock, resulting in a price lower than the average market price. Customs views this as a "suspicious transaction" and requests a price adjustment. Disputes over the inclusion of transport costs are also frequent, especially with EXW or FCA terms. Another problem involves reflecting royalties and license fees in the customs value, which is a complex calculation issue.
Georgian Legislation and Regulations
Customs valuation is regulated by the "Customs Code of Georgia" (Title IV) and the Minister of Finance's instruction "On Determination of Customs Value of Goods". The legislation is fully based on the WTO Customs Valuation Agreement. Disputes are reviewed within the Ministry of Finance system and courts.
The Process: How a Specialist Works
When customs refuses to accept the invoice price, the lawyer requests a written explanation. Evidence is collected: transfer receipts, export customs declarations from the country of origin, correspondence with the supplier. If goods are detained, it is possible to submit a customs guarantee to release the goods while pursuing the dispute in parallel. The lawyer prepares a qualified complaint pointing out procedural violations by customs.
Why Legal.ge?
Artificial inflation of customs value causes huge losses to businesses. Legal.ge allows you to hire lawyers who know how to defend your "transaction value." Specialists on our platform will help you save on taxes legally and avoid bureaucratic arbitrariness. Protect your import with Legal.ge.
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