What Customs Valuation Determines and Why It Matters
The customs value of goods is the base from which import duty and other customs amounts are calculated. Article 37 of the Georgian Customs Code provides that customs value is determined in accordance with this Code and the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade — meaning the Georgian valuation system is built on internationally recognized principles. On declaration, the customs value is determined by the declarant, and the customs authority controls the correctness of the value determined. A valuation error or an omitted addition leads to additional assessments and review of the declaration, so knowledge of the valuation methods is the importer's everyday interest.
The Hierarchy of Valuation Methods
Part six of Article 37 names six methods for determining the customs value of imported goods: the transaction value method (first), the transaction value of identical goods (second), the transaction value of similar goods (third), the unit price method (fourth), the computed value method (fifth) and the fallback method (sixth). Each subsequent method is applied only where the previous one cannot justifiably be used. This sequence has one important exception: the declarant has the right to reverse the order of application of the fourth and fifth methods. The transaction value is the primary method and in practice nearly all valuations of imported goods rest on it; the other methods operate where reliance on the transaction price is impossible — for instance, because of the goods' use in a third country after their sale for export to Georgia.
Transaction Value and Related Persons
For valuation purposes, the price actually paid or payable is the total sum paid or payable by the buyer to the seller — a price covering all direct and indirect payments that are conditions of the sale of the goods. The Code also defines a catalogue of related persons: they include persons managing each other's business, business partners connected by entrepreneurial interest, employer and employee, persons whose voting shares are held by a third person to the extent of 5 percent or more, persons controlling one another or controlled by the same third person, and members of the same family. Relatedness does not mean automatic rejection of the price, but it raises customs scrutiny: in such transactions the structure and documentary proof of payments are particularly important. Note also that an indirect tax paid in the country of origin or export of the goods is not included in the customs value.
What Is Added to the Price and What Is Excluded
Article 44 lays down the value elements. Added to the transaction price, where not already included, are: commissions and brokerage (except the buying commission), the value of containers, packing costs; goods and services supplied by the buyer to the seller free of charge or at reduced cost in connection with production and sale for export — materials, tools, engineering and design work performed abroad; author's royalties and licence fees where their payment is a condition of the sale; the part of the proceeds of any subsequent resale accruing to the seller; and the costs of transport, loading, handling and processing incurred up to the place of introduction of the goods onto the customs territory of Georgia, together with insurance where incurred by the declarant. At the same time, the value does not include, where shown separately from the price: taxes and fees provided for by Georgian legislation, transport costs incurred after crossing the customs border, and similar post-importation costs. Additions are possible only on the basis of documented data.