Valuation 25%😞

• Difference between GATT and WTO

  • GATT was ad hoc and provisional
  • WTO and its agreements are permanent
  • WTO has a sound legal basis
  • GATT had contracting parties
• WTO provisions and attached documents have the force and effect of law on member countries
• WTO Valuation Agreement

  Formally known as the Agreement on the Implementation of Article VII of the General Agreement on Tariffs and Trade (GATT) 1994
• Tokyo Round Valuation Code established a positive system of Customs Valuation based on the price actually paid or payable for the imported goods
• PH accession to WTO has made all the legal attachments to such agreement as part of the law of the land
• The Agreement on the Implementation of Article VII of the GATT 1994 is considered part of the laws of the Philippines
• Methods in determining dutiable value

  • Method One: The Transaction Value
  • Method Two: The Transaction Value of Identical Goods
  • Method Three: The Transaction Value of Similar Goods
  • Method Four: Deductive Value
  • Method Five: Computed Value
  • Method Six: Fallback Value
• The primary method in determining the dutiable value of imported goods shall be Method One: The Transaction Value, whenever the conditions prescribed for its use are fulfilled
• Methodology in the use of Method One - Transaction Value

  1. Ascertain whether conditions are fulfilled

  2. Determine the price actually paid or payable (PAPP)

  3. Determine applicable adjustments

  4. Determine the post importation charges
• Conditions that must be fulfilled before Method One may be used

  • There must be sale for export to the Philippines
  • No restriction as to disposition except acceptable restrictions
  • No consideration or condition for which value cannot be determined
  • There are no proceeds of subsequent sale that accrue to benefit of seller
  • Relationship must not have influenced price
• Only transactions involving an actual international transfer of goods may be used in valuing merchandise under the transaction value method
• There must be no restrictions by the seller to the buyer as to the disposition or use of the goods
• Acceptable restrictions


  • Imposed or required by law
  • Limit the geographical area in which the goods may be resold
  • Do not substantially affect the value of the goods
• The sale or price must not be subject to some conditions or considerations for which a value cannot be determined with respect to the goods being valued
• Instances when there is no sale in an international transaction

  • Free consignments
  • Goods imported by intermediaries
  • Goods imported by branch office
  • Goods imported under a hire or leasing contract
  • Goods supplied on loan
  • Goods imported on consignments
• No part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made at the time of importation
• Situations where there is relationship between buyer and seller

  • They are officers or directors of one another's businesses
  • They are legally recognized partners in business
  • They are employer and employee
  • Any person directly or indirectly owns, controls or holds five (5) per cent or more of the outstanding voting stock or shares of both of them
  • One of them directly or indirectly controls the other
  • Both of them are directly or indirectly controlled by a third person
  • Together they directly or indirectly control a third person
  • They are related by affinity or consanguinity up to the fourth civil degree
• Relationship will not automatically result to rejection of the use of Method One
• If there is relationship, the use of Method One may only be rejected if such relationship influenced price
• Proving relationship did not influence price

  1. The circumstances surrounding the transaction demonstrate that the relationship did not influence PAPP

  2. The transaction value closely approximates to one of the test values
• Test values


  • The transaction value in sales to unrelated buyers of identical or similar goods
  • The deductive value of identical or similar goods determined in accordance with Method Four
  • The computed value of identical or similar goods determined in accordance with Method Five
• Rice had been settled in a manner consistent with the normal pricing practices of the industry in question
• Price is adequate to ensure recovery of all costs plus a profit which is representative of the firm's overall profit realized over a representative period of time
• The transaction value closely approximates


  To one of the following test values occurring at or about the same time
• Test values


  • Transaction value in sales to unrelated buyers of identical or similar goods for export to the Philippines
  • Deductive value of identical or similar goods determined in accordance with Method Four
  • Computed value of identical or similar goods determined in accordance with Method Five
• The test values are to be used at the initiative of the importer, for comparison only and not as substitute values
• In applying the test value, due account shall be taken of demonstrated differences in commercial levels, quantity levels, adjustments and costs incurred by the seller in sales in which the seller and the buyer are not related
• Commercial levels

  • Wholesaler
  • Distributor
  • Retailer
  • Direct user
• Quantity levels

  • Number of units
  • Volume
  • Weight
• Adjustments


  • Volume or quantity discounts
• Costs incurred by seller if buyer not related may result to higher packing or packaging costs
• Test values provide an opportunity for the importer to demonstrate that the transaction value closely approximates to a "test" value previously accepted by the Collector of Customs
• If one of the test values has been met, the Collector of Customs has sufficient information to be satisfied there is no reason for him to make further inquiry
• Unrelated buyers


  Buyers who are not related to the seller in any particular case
• A number of factors must be taken into consideration in determining whether one value "closely approximates" to another value
• Factors determining close approximation of values

  • Nature of the imported goods
  • Nature of the industry
  • Season in which the goods are imported
  • Commercially significant differences in values
• It would be impossible to apply a uniform standard such as a fixed percentage in each case
• The price actually paid or payable (PAPP) is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods
• Transaction Value (TV)

  TV = PAPP + Adjustments
• Price Actually Paid or Payable (PAPP)


  Price actually paid by the time import entry is filed