Transaction Value

What Is Transaction Value?

Transaction value is the price actually paid or payable for goods when sold for export to the country of importation. It is the primary and preferred method for determining customs value, established under Article 1 of the Agreement on Implementation of Article VII of the GATT 1994 (WTO Valuation Agreement). Over 90% of world trade is valued using this method.

The 6 WTO Valuation Methods

• Method 1 — Transaction value: price actually paid or payable, adjusted per Article 8 (freight, insurance, commissions, assists, royalties)
• Method 2 — Transaction value of identical goods: price of goods identical in all respects (physical characteristics, quality, commercial reputation), exported to the same country at approximately the same time
• Method 3 — Transaction value of similar goods: price of goods resembling the imported goods in characteristics and function, though not identical
• Method 4 — Deductive value (resale price): selling price in the importing country, minus post-importation costs (commissions, transport, duties, usual profit)
• Method 5 — Computed value: cost of production + general expenses + usual profit in the exporting country
• Method 6 — Fall-back method: flexible application of previous methods, or reasonable criteria based on available data

Adjustments to transaction value (Article 8)

Certain elements must be added to the price paid to arrive at customs value: freight and transport costs to the port of importation, insurance during international carriage, selling commissions and brokerage charges, cost of containers and packing, and the value of assists (materials, tools, engineering, or design supplied by the buyer to the seller). Royalties and license fees that the buyer must pay as a condition of sale are also added.