The basic principles of customs valuation set out that the customs value of goods is based on six hierarchical rules. Each rule must be applied to the import concerned and if a customs value can be arrived at under that rule, then no further action is taken, although rules 4 and 5 are interchangeable. The six rules in order are:

1. transaction value
2. identical goods imported within a reasonable time limit of other goods imported under a transaction value
3. similar goods imported within a reasonable time limit to other goods imported at a transaction value
4. the selling price in the Community less certain deductions
5. the built up price, and
6. fallback rule applying all reasonable principles.

This is clearly not a simple matter. Valuation is complicated by such things as royalties, licences, goods or services including raw materials, component and tooling supplied free of charge to the overseas seller, commissions, profit sharing, etc. There are costs that can be excluded from the customs value such as buying commissions, discounts and interest charges. In general it is necessary to consider each case on its own merits taking individual circumstances into account.

Transfer pricing and the value of goods for Custom's purposes
Customs duty is generally due on a percentage of the value of the goods. The percentage rate to be applied depends on the detailed description of the goods. Savings can be made if the customs value can be reduced, or if a lower rate can be applied. In many cases, a lower value for customs purposes can be established, without affecting the commercial transaction.