What law covers the Customs Valuation?

1. Section 75 to 81 of the customs and excise Duty Act 2. Regulation 53- 61

What is Customs value?

Customs value is the Value for the purpose of levying ad valorem duties

What are ad valorem Duties?

Duties expressed as a percentage of the value of goods

How do you determine Customs Value?

The Agreement on article VII of the General agreement on Tariffs and Trade (1994) also referred to as the agreement sets out some principles for customs valuation. As far is possible customs value should not be arbitrary or fictitious. It should be based on the price actually paid or payable for the goods when sold for export to the country of importation, which is Botswana or the SACU. The agreement sets out six methods for customs valuation, the primary one and five alternative methods which must be applied in strict hierarchical order safe for method 4 and 5 where whose application can be reversed upon importers request.

What is the price actually paid or payable or payable?

This represents a total of payments made or to be made by the buyer to the seller or for the benefit of the seller and includes both direct and indirect payments.

What are the six the different Valuation methods allowed under the agreement?

1. The transaction value Method/ Method 1 – Article 1 of the agreement
2. The transaction value of identical goods / Method 2 - Article 2
3. The transaction value of similar goods/ Method 3 – Article 3
4. The deductive value method/ Method 4 - Article 5
5. The computed value Method / Method 5 – Article 6
6. The fallback Method / Method 6 - Article 7

What is the primary basis for customs valuation?

transaction value is the primary method for customs valuation. This the price actually paid or payable for the goods when sold for export to the country of importation adjusted in accordance with the provisions of article 8 of the agreement. The value includes all payments to be made or to be made by the buyer for the benefit of the seller and includes both direct and indirect payments.

Are there any conditions to be met in order that the transaction method may be used?

Yes: Transaction value can be used provided:
a) There are no restrictions as to the disposition or use of goods by the buyer other than those provided for under article 1 of the agreement
b) The price is not subject to some consideration for which value cannot be determined with respect to the goods being valued
c) No part of the proceeds of any subsequent resale or disposal of the goods by the buyer accrues directly or indirectly to the buyer unless adjusted accordingly as per article 8.
d) That the buyer and seller are not related or where related, the relationship did not influence the price.

What is the transaction value of identical goods?

It is the next valuation method which can be tried if transaction value method cannot be applied. This is where the valuation is based on the price of identical goods which have already been cleared and accepted with customs.

What are identical goods?

Identical goods have goods which a are
i) The same in all respects including physical characteristics, quality and reputation
ii) Produced in the same country as the goods being valued
iii) Produced by the producer of the goods being valued.
Minor differences in appearance do not preclude the goods from conforming as identical goods. Identical goods can be considered where there are no imported identical goods produced by the same produce.

What is transaction value of similar goods?

This method can be applied only when transaction value and transaction value of identical goods fail. It is based on the transaction value of similar goods imported at or about the same time as the goods being valued.

What are similar goods?

Similar goods are goods
i) Closely resemble the goods being valued in terms of characteristics and component materials
ii) Can perform the same functions
iii) Are produced in the same country as the goods being valued
iv) Are produced by the same producer of the goods being valued

Are there are any adjustments to be made to values for identical or similar goods?

Yes where there are differences in between the goods being valued and identical or similar goods in question, adjustments have to be made to take account of differences in:
i) Commercial level e.g. Producer VS wholesaler
ii) Quantity

What if there are a number of transaction values of identical or similar goods?

if there are a number of transaction values of identical or similar goods, the lowest of such values should be used.

What is deductive value a method?

if the above three methods have been tried and but failed then the deductive value method can be used. However article 4 provides for the reversal of method 4 and 5 at the request of the importer. In this method the value determination is based on the sales in the country of importation of the goods being valued of similar or identical goods less certain specified expenses resulting from the importation of the goods.

Are there any considerations to be made in applying the deductive Value method?

Yes, the goods satisfy the following conditions
i) They must have been sold in the same condition as imported
ii) Sales of the goods should have taken place at or about the same time as the goods being valued
iii) Where there are no sales of identical or similar goods at the time of importation, the sales made at the earliest date but not later than 90 days may be used
iv) The seller and buyer must not be related

How do you determine the customs value using the deductive value method?

This is done by finding the unit price at which the number of units are sold, then deducting from such price the following:
i) Commissions or profits and general expenses paid or incurred in the country Botswana
ii) Transport and insurance charges incurred in the country in Botswana / within the SACU customs duties and taxes payable in Botswana
iii) value added in processing where the goods have been further processed.

This is the next method which can be applied after trying method 4, bearing in mind the provisions of article 8 of the agreement. The value is reconstructed basing on the sum of the following:
i) The cost of materials, fabrication and processing
ii) An amount for profit and general expenses for sales of goods of the same class or kind in the country of exportation for export to Botswana.
iii) Cost of transport, insurance, handing up to the port of export.

What is the fallback method?

If customs value cannot be determined under the any of the above five methods, the methods have to be applied in sequence flexible in a manner on the basis of information available in Botswana. The value should be based on previously determined.

Are there restrictions regarding the use of the fallback method

Yes, the following are not allowed
i) The selling price in Botswana of goods produced in Botswana
ii) The higher of the alternative values
iii) The price of goods in the domestic market of the country of exportation goods
iv) Minimum customs values
v) Arbitrary or fictitious values

What are the key roles of the Customs Division?

Collection of Customs, Excise Duty and VAT revenue, Facilitation of legitimate Trade, Collection of Trade Statistics, Protection of Society from illicit and harmful imports.

How does BURS benefit Batswana?

Revenues collected by BURS is used to fund public infrastructure needed by Batswana such as roads, hospitals, schools, and to fund expenditure for social services such as provision of police services, etc.

What is the role of BURS in relation to border posts?

The BURS Division of Customs and Excise is responsible for controlling the movement of goods through the borders and hence it has to man the border posts including responsibility for their administration.