由 caicai8478 In international trade, declaring goods value to customs is a highly strategic process. The declared value directly determines the amount of import duties and VAT, but it also carries corresponding risks. Overdeclaring means paying unnecessary taxes and weakening product competitiveness; underdeclaring may be considered fraudulent by customs, leading to fines, product seizures, and even legal risks.
The essence of this “art” lies in optimizing tax costs by utilizing reasonable rules and methods within the framework of strict compliance with laws and regulations.
I. Core Principle: Truthful Declaration is the Bottom Line
First, it must be made clear that “reasonable declaration” does not mean “underdeclaration or misrepresentation.” Any deliberate or malicious underdeclaration of value constitutes smuggling and is illegal. All our strategies must be based on the fundamental bottom line of “truthful declaration.”
Customs’ core goal is to ensure national tax and trade security. They possess robust databases and risk assessment systems, and have highly professional judgment on commodity values. Challenging this judgment is a high-risk act.
II. How does customs determine the dutiable value?
According to the Valuation Agreement of the World Trade Organization (WTO), customs determine the dutiable value of goods based on the following six bases and methods, which must be used in the following order:
Transaction Value: This is the primary and preferred method. It refers to the price actually paid or payable by the buyer when the goods are actually exported to the importing country. This is not just the invoice amount, but typically also includes:
Goods price
Packaging costs borne by the buyer
Commissions and brokerage fees borne by the buyer
Royals (such as patent and trademark fees)
Proceeds received by the seller from the resale, disposal, or use of the goods
Identical goods transaction value method: If the first method is not available, the transaction value of identical goods exported to the same country at or approximately the same time is used.
Similar goods transaction value method: The transaction value of similar goods is used.
Deducted price method: The price of the imported goods or identical or similar imported goods sold in the importing country is used as the basis for the calculation, after deducting relevant taxes, fees, and profit.
Calculated Price Method: Calculate the cost of raw materials, production and processing fees, profit, and general expenses required to produce the goods.
Reasonable Method: If none of the above methods are available, customs may use other reasonable methods to estimate the value.
For the vast majority of normal trade transactions, customs assess the value based on the first factor—the “transaction value.”
III. The Strategies and Art of “Reasonable Declaring”
Within the framework of the “transaction value,” the following compliance strategies can help balance taxes and risks:
- Understand and properly apply the composition of the “transaction value”
Clarify the price terminology: Commonly used price terms in international trade (such as FOB, CIF, and EXW) directly determine which costs are included in the declared value.
EXW Price: Ex-factory price (excluding freight and insurance).
FOB Price: Cost of goods + domestic freight + local customs clearance fees + loading charges.
CIF Price: FOB Price + international freight + insurance.
Strategic Recommendations:
If the destination country’s customs uses CIF as the basis for tax calculation, declaring FOB and CIF values will result in different taxes (with CIF being higher).
It’s important to understand the destination country’s customs tax calculation regulations. Most countries use CIF for tax calculation, but a few, such as the United States, use FOB.
Be sure to confirm with the buyer which terminology should be used for the declared value, and clearly indicate it on the commercial invoice (e.g., “Value on FOB Shanghai Basis”) to avoid misunderstandings and false declarations.
- Differentiate the transaction type and prepare supporting documents.
Normal commercial transactions: Provide a genuine and clear commercial invoice and contract. The value should be consistent with the payment history.
Related-party transactions: If the buyer and seller are related entities, such as a parent company or subsidiary, the transaction price must comply with the “arms-length principle.” Customs may examine whether the price is manipulated. Further documentation is required to justify the price.
Non-buyout transactions: Examples include consignment, trial sales, samples, and exhibits. These items are not sold directly, so you must clearly declare their nature to customs and provide an explanation. Their taxable value is typically not the invoice value but is determined based on other methods.
- Utilizing Free Trade Agreement (FTA) Benefits
If your products meet the rules of origin of a free trade agreement signed between China and the destination country (such as the RCEP, the China-ASEAN FTA, the China-Australia FTA, etc.), applying for a Certificate of Origin (COO/COR) allows buyers to enjoy reduced or even zero tariffs during customs clearance.
This is the most legal and effective way to save taxes. It allows you to declare the normal value but pay lower tariffs, fundamentally eliminating the risk of understating the value.
- Declaring Samples, Promotional Materials, and Gifts
Many countries have tax exemptions for low-value samples and gifts (for example, the EU exempts imported goods valued under €45 from VAT).
Compliant practice: truthfully declare the item as a “Commercial Sample” or “Gift” and declare its true value. If the value is below the tax-free threshold, you can legally avoid tax.
Risky practices: Falsely declaring high-value goods as “gifts” to evade tax is a key focus of customs inspections and is extremely easy to detect.
Fourth, High-Risk “Minefields” Avoided
“Double-Sided Invoices”: Submitting a set of low-value invoices to customs, but then transacting at the actual value. This is a clear case of smuggling.
Splitting Packages: Intentionally splitting a shipment of high-value goods into multiple low-value packages to exploit the personal effects tax exemption threshold. Customs X-ray machines can easily detect related packages from the same consignor and consignee, declared at the same time, resulting in combined tax calculations and potential penalties.
Ambiguous Product Names: Using ambiguous product names such as “Parts,” “Gift,” and “Equipment” to minimize customs attention. This, in turn, increases inspection rates, as customs cannot determine the value.
Summary: The art lies in the details and compliance.
Strategies, Compliance Practices, Risk Management
Control declared value: Declare based on FOB or EXW prices (if permitted by the destination country). Directly understate the price of the goods themselves.
Exploit duty-free policies: Accurately declare “samples” and “gifts” and ensure their value is low. Falsely declare higher-value goods as gifts.
Fundamental tax savings: Apply for a certificate of origin and enjoy the free trade agreement rate.
Dealing with audits: Prepare complete transaction proof (contract, payment receipt, bank statements). Unable to provide any documentation proving the value.
Final advice:
Work with professionals. When unsure, consult a professional customs broker or international logistics consultant. They are familiar with the latest customs regulations and enforcement standards in different countries and can provide you with the safest and most cost-effective declaration solution. Remember, the highest cost is not the customs duty, but the delays, fines, and loss of reputation caused by customs clearance failures. Honest declaration is the most reliable “shortcut” in international trade.