How do you verify the accuracy of transaction value in import valuation audit?

1 Understand the valuation methods

The first step is to understand the different valuation methods that can be applied to imported goods, and the order of preference according to the World Trade Organization (WTO) Agreement on Customs Valuation. The primary method is the transaction value method, which is based on the actual price paid or payable for the goods. However, if the transaction value cannot be determined or accepted by the customs authorities, then alternative methods can be used, such as the transaction value of identical or similar goods, the deductive value, the computed value, or the fallback method. You should be familiar with the criteria and conditions for each method, and be able to justify your choice of method if challenged by the auditors.

2 Review the invoice and the contract

The second step is to review the commercial invoice and the contract of sale for the imported goods, and make sure they contain all the relevant information and documents required by the customs authorities. The invoice and the contract should clearly indicate the price paid or payable for the goods, as well as any adjustments that affect the transaction value, such as freight, insurance, commissions, royalties, discounts, rebates, subsidies, warranties, or other payments. You should also check if there are any related party transactions, transfer pricing arrangements, or other conditions that may influence the price or the valuation method. You should be able to provide evidence of the accuracy and authenticity of the invoice and the contract, such as bank statements, payment receipts, correspondence, or third-party valuations.

3 Compare the transaction value with other sources

The third step is to compare the transaction value of the imported goods with other sources of information that can indicate the market value or the cost of production of the goods. These sources can include databases, publications, websites, or reports that provide data on the prices, costs, or margins of similar or identical goods in the same or comparable markets or countries. You should also consider the factors that may affect the comparability of the sources, such as the date, the currency, the quantity, the quality, the terms of trade, or the level of trade. You should be able to explain any significant differences or discrepancies between the transaction value and the other sources, and justify why your transaction value is fair and reasonable.

4 Cooperate with the auditors

The fourth step is to cooperate with the customs auditors and provide them with all the information and documents they request during the import valuation audit. The auditors may ask you to submit a valuation declaration form, a questionnaire, or a self-audit report that details how you determined the transaction value of the imported goods. They may also conduct interviews, site visits, or verification tests to check the accuracy and consistency of your valuation data and methods. You should be prepared to answer their questions, clarify any doubts, or resolve any issues that may arise during the audit. You should also keep a record of all your communications and interactions with the auditors, and follow up on any findings or recommendations they may issue.

5 Seek professional advice

The fifth step is to seek professional advice from a qualified and experienced import valuation consultant or lawyer if you encounter any difficulties or disputes with the customs authorities or the auditors regarding the transaction value of your imported goods. A professional can help you understand the import valuation rules and regulations, review your valuation documentation and methods, represent your interests and rights, negotiate with the customs authorities or the auditors, or appeal against any adverse decisions or penalties. A professional can also help you improve your import valuation compliance and management, and avoid any future risks or errors.

6 Update your valuation policies and procedures

The sixth step is to update your valuation policies and procedures based on the outcome and feedback of the import valuation audit. You should review your valuation practices and systems, and identify any gaps or weaknesses that need to be corrected or improved. You should also implement any changes or recommendations suggested by the customs authorities or the auditors, and monitor their effectiveness and impact. You should also train your staff and partners on the import valuation rules and requirements, and ensure they follow them consistently and accurately. You should also conduct regular internal audits and reviews of your valuation records and reports, and keep them updated and accessible.