6 methods of determining customs value: how do you move on to the next one if the first does not work, and does it affect the cost of the goods?

Customs value is the value of goods used to calculate customs payments (Customs Code, Article 301). The method used to determine it is set out in strict order in Article 302.

1. There are six methods and they have an order. Article 302 lists them: transaction value of the imported goods; transaction value of identical goods; transaction value of similar goods; the deductive method; the computed method; the fallback method. The first is the main method. You move on to the next only if the previous one cannot be applied. The only exception: the deductive and computed methods may be applied in reverse order.

1. The main method: the price actually paid or payable for the goods (Article 303). This is the total of all payments the buyer makes to the seller or to another person for the seller's benefit, adjusted under Articles 304 and 305. If part of a large consignment under one transaction is declared, the price is allocated in proportion to quantity.

1. When is the contract price unsuitable? Article 306 lists six cases: the buyer's right to use or dispose of the goods is restricted (except restrictions set by law, geographical restrictions and those that do not significantly affect value); the transaction has no value basis; the price depends on conditions whose effect cannot be calculated (barter, contract farming and processing agreements); part of the proceeds from resale passes to the seller and cannot be adjusted under Article 304; the information used by the declarant or customs broker is not supported by documents; the parties are related, and the declarant or broker cannot prove that this did not affect the price.

1. The second and third methods: another importer's price. Identical goods are the same in physical characteristics, quality and market reputation, and are produced in the same country by the same manufacturer (Article 309). Similar goods, while not alike in every respect, perform the same function and are commercially interchangeable (Article 310). In both cases the comparable import must have taken place within ninety calendar days before the goods being valued. If several suitable transactions are found, the one with the lowest price is taken (Article 309).

1. The fourth method: counting back from the domestic market price (Article 311). The basis is the unit price at which the goods, in unchanged condition, were sold in Uzbekistan in the greatest quantity to a person not related to the seller (a sale within ninety calendar days before the goods being valued were brought in; if there is no such sale, the nearest sale no later than ninety days from the date of importation); the price of the first resale after import is used. Three groups of costs are deducted from it: the intermediary's commission or profit margin and general costs of selling on the domestic market; customs payments and other payments payable in Uzbekistan; costs of carriage, insurance, loading and unloading within the customs territory.

1. The fifth method: counting forward from cost (Article 312). The value is built up from three parts: materials and production (processing) costs; general expenses and the profit the exporter usually earns on sales of this kind of goods to Uzbekistan; costs of carriage to the place of importation, loading and unloading, and insurance (Article 304, item "a").

1. The fallback method: a last resort, but not a free choice (Article 313). The requirements of the previous methods are applied with a certain flexibility. It is prohibited to use as a basis: the selling price of similar goods produced in Uzbekistan; a system that takes the higher of two alternative values; the domestic market price of the exporting country; production costs not used in the computed method; the price of goods supplied from the country of export to third countries; minimum customs values; an arbitrarily set or improperly supported price. If customs applies the fallback method on the basis of its own information, it discloses the source at the declarant's request.

1. Customs value is not cost. In the accounts goods are recorded at the purchase price (the amount payable to the supplier) and all costs related to the purchase (NAS No. 4, paragraph 14), and customs duties and fees are also included in that cost (paragraph 15). So customs value is not written into cost directly: even if another method sets it higher, it affects cost only through the customs duties and fees calculated from that value and actually paid.

Example (hypothetical). "Mohir Asbob" LLC imports power tools from a related foreign company and cannot prove that the relationship did not affect the price, so under Article 306 the contract price cannot serve as the basis. No imports of identical or similar tools were found in the last 90 days. The turn comes to the deductive method. The unit price of this tool at its first resale in Uzbekistan to unrelated buyers is 1 200 000 soum.

Each deducted line must be supported by a document. If there is no document supporting the costs incurred within the territory, an expert valuation may be used in the deductive method (Article 313). In the accounts, however, the tools are still recorded at the contract price and the customs payments actually paid.