WORLD TRADE
ORGANIZATIONG/VAL/N/1/GEO/1
22 April 2002
(02-2251)
Committee on Customs Valuation Original:  English
NOTIFICATION UNDER ARTICLE 22 OF THE AGREEMENT ON
IMPLEMENTATION OF ARTICLE VII OF THE GENERAL
AGREEMENT ON TARIFFS AND TRADE 1994
GEORGIA
The following communication, dated 8 April 2002, has been received from the Permanent
Mission of Georgia.
_______________
As approved by the Ministry of Justice on
May 31, 1999
Regulations
Concerning Order of Determ ining the Customs Value
of Goods Imported to Georgia
Part I
General Provisions
Article 1
The present Instructions are based on the Cust oms Code of Georgia and the Law on Customs
Tariff and Customs Duty. The provisions of these Instructions shall determine the customs value ofgoods being imported to Georgia. Customs valuation involves classifying and valuing imports for the
purpose of levying tariffs, imposing taxes and collecting statistics. 
Article 2
Basis of the Customs Valuation of Goods
These Regulations for defining the customs value of goods are based upon the Agreement on
Implementation of Article VII of the Genera l Agreement on Tariffs and Trade 1994 ("Customs
Valuation Agreement") of the World Trade Organi zation, including the Decision on the treatment of
interest charges in the customs value of impor ted goods (VAL/6/Rev.1) and the Decision on the
valuation of carrier media bearing software  for data processing equipment (VAL/8).
The notes at Annex I to that Agreement form an integral part of these Regulations and the
Articles of these Regulations are to be read and applied in conjunction with the respective notes in
Annex I.G/VAL/N/1/GEO/1
Page 2
Part II
General Rules for Determining the Customs Value
Article 3
1. The customs value of imported goods shall be th e transaction value, that is the price actually
paid or payable for the goods when sold for e xport to Georgia adjusted in accordance with the
provisions of Articles 10,12, and 13, provided:
(a) that there are no restrictions as to the di sposition or use of the goods by the buyer other
than restrictions which:
(i) are imposed or required by Ge orgian laws or  authorities;
(ii) limit the geographical area in which the goods may be resold; or(iii) do not substantially affect the value of the goods;
(b) that the sale or price is not subject to so me condition or consideration  for which a value
cannot be determined with respect  to the goods being  valued;
(c) that no part of the proceeds of any subseque nt resale, disposal or use  of the goods by
the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in
accordance with the  provisions of Article 10; and
(d) that the buyer and seller are not related, or where the buyer and seller  are related, that
the transaction value is acceptable for customs purposes under the provisions of paragraph 2 of this
Article.
2. (a) In determining whether the transaction value is acceptable for the purposes of
paragraph 1 of this Article, the fact that the buyer and the seller are related within the meaning of Article
16 shall not in itself  be grounds for regarding the tr ansaction value as unacceptable.  In such case the
circumstances surrounding the sale shall be exam ined and the transaction value shall be accepted
provided that the relationship did not influence the pri ce.  If, in the light of information provided by the
importer or otherwise, the customs administration has grounds for considering that the relationship
influenced the price, it shall communicate its grounds to the importer and he shall be given a reasonable
opportunity to respond.  If the importer so requests, the communication of the grounds shall be inwriting.
(b) In a sale between related persons, the transaction value shall be accepted and the goods
valued in accordance with the provisions of para graph 1 of this Article whenever the importer
demonstrates that such value closely approximates to  one of the following occurring at or about the
same time:
(i) the transaction value in sales to unrelated buyers of identical or similar goods
for export to Georgia;
(ii) the customs value of identical or similar goods as determined  under the
provisions of Article 7;G/VAL/N/1/GEO/1
Page 3
(iii) the customs value of identical or similar goods as determined  under the
provisions of Article 8;
In applying the foregoing tests, due account sh all be taken of demonstrated differences in
commercial levels, quantity levels, the elements enumerated in Article 10 and costs incurred by theseller in sales in which he and the buyer are not rela ted that are not incurred by the seller in sales in
which he and the buyer are related.
(c) The tests set forth in paragraph 2(b) of this Article are to be used at the initiative of the
importer and only for comparison purposes. Substitute values may not be established under the
provisions of paragraph 2(b) of this Article.
Article 4
1. (a)  If the customs value of the imported goods cannot be determined under  the provisions
of Article 3, the customs value shall be the transa ction  value of identical goods sold for export to
Georgia and exported at or about the same time as the goods being  valued.
(b) In applying this Article, the transaction va lue of identical goods in a sale at the same
commercial level and in substantially the same quan tity as the goods being valued shall be used to
determine the customs value.  Where no such sale is  found, the transaction value of identical goods sold
at a different commercial level and/or in different  quantities, adjusted to take account of differences
attributable to commercial level and/or to quantity, shall be used, provided that such adjustments can be
made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy
of the adjustment, whether the adjustment lead s to an increase or a decrease in the value.
2. An adjustment shall be made to take account of  significant differences in the costs and charges
referred to in subparagraphs 1(a)(iv), (v), and (vi) of Article 10 between the imported goods and the
identical goods in question arising from differences in distances and modes of transport.
3. Adjustments shall be made, if necessary, to a llow for the provisions of Articles 10 12 and 13.
4. If, in applying this Article, more than one tr ansaction value of identical goods is found, the
lowest such value shall be used to determ ine the customs value of the imported goods.
Article 5
1. (a) If the customs value of the imported goods cannot be determined under  the provisions
of Articles 3 and 4, the customs value shall be the  transaction value of similar goods sold for export to
Georgia and exported at or about the same time as the goods being valued.
(b) In applying this Article, the transaction value of similar goods in a sale at the same
commercial level and in substantially the same quan tity as the goods being valued shall be used to
determine the customs value.  Where no such sale is  found, the transaction value of similar goods sold at
a different commercial level and/or in different quantities, adjusted to take account of differences
attributable to commercial level and/or to quantity, shall be used, provided that such adjustments can be
made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy
of the adjustment, whether the adjustment lead s to an increase or a decrease in the value.
2. An adjustment shall be made to take account of  significant differences in the costs and charges
referred to in subparagraphs 1(a)(iv), (v), and (vi) of Article 10 between the imported goods and the
identical goods in question arising from differences in distances and modes of transport.G/VAL/N/1/GEO/1
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3. Adjustments shall be made, if necessary, to allow for the provisions of Articles 12 and 13.
4. If, in applying this Article, more than one tran saction value of similar goods is found, the lowest
such value shall be used to determine the customs value of the imported goods.
Article 6
 If the customs value of the imported goods cannot be determined under the provisions of
Articles 3, 4 and 5, the customs value shall be determined under the provisions of Article 7 or, when the
customs value cannot be determined under that Article , under the provisions of Article 8 except that, at
the request of the importer, the order of application of Articles 7 and 8 shall be reversed.
Article 7
1. (a) If the imported goods or identical or similar imported goods are sold  in Georgia in the
condition as imported, the customs  value of the im ported goods under the provisions of this Article
shall be based on the unit price at which the imported goods or identical  or similar imported goods areso sold in the greatest aggregate quantity, at or about the time of the importation of the goods being
valued, to  persons who are not related to the persons from whom they buy such  goods, subject to
deductions for the following:
(i) either the commissions usually paid or agreed to be paid or the additions
usually made for profit and general expenses in connection with sales in
Georgia of imported goods of the same class or kind;
(ii) the usual costs of transport and insura nce and associated costs  incurred within
Georgia;
(iii) where appropriate, the provisions of Articles 12 or 13; and(iv) the customs duties and other national ta xes payable in Georgia by reason of the
importation or sale of  the goods.
(b) If neither the imported goods nor identical nor similar imported goods are sold at or
about the time of importation of the goods being va lued, the customs value sh all, subject otherwise to
the provisions of paragraph 1(a) of this Article, be based on the unit price at which the imported goods
or identical or similar imported goods are sold in Ge orgia in the condition as imported at the earliest date
after the importation of the goods being valued but before the expiration of ninety days after such
importation.
2.  If neither the imported goods nor identical nor similar imported goods are sold in Georgia in
the condition as imported, then, if the importer so requests, the customs value shall be based on the unit
price at which the imported goods, after further proce ssing, are sold in the greatest aggregate quantity to
persons in Georgia who are not related to the persons from whom they buy such goods, due allowancebeing made for the value added by such processing and the deductions provided for in paragraph 1(a) of
this Article.
Article 8
1.  The customs value of imported goods under the provisions of this Article shall be based on a
computed value. Computed value shall consist of the sum of:G/VAL/N/1/GEO/1
Page 5
(a) the cost or value of materials and fa brication or other processing employed in
producing the imported goods;
(b) an amount for profit and general expenses equal to that usually reflected in sales of
goods of the same class or kind as the goods being valued which are made by producers in the countryof exportation for export to Georgia; and
(c) the costs or charges referred to in subpar agraphs 1(a)(iv), (v), and (vi) of Article 10.
2. The provisions of Article 13 shall be applied if appropriate.3. The customs authority may not require or compel  any person not resident in Georgia to produce
for examination, or to allow access to, any account or  other record for the purposes of determining a
computed value. However, information supplied by  the producer of the goods for the purposes of
determining the customs value under the provisions of this Article may be verified in another country by
Georgian authorities with the agreement of the pr oducer and provided they give sufficient advance
notice to the government of the country in question and the latter does not object to the investigation.
Article 9
1. If the customs value of the imported goods cannot be determined under the provisions of
Articles 3 to 8, inclusive, the customs value shall be  determined using reasonable means consistent with
the principles and general provisions of th ese Regulations, Article VII of the GATT 1994, The
Agreement on Implementation of Article VII of GATT 1994 and on the basis of data available in
Georgia.
2. No customs value may be determined under the provisions of this Article on the basis of:
(a) the domestic selling price of goods produced in Georgia;(b) a system which provides for the acceptance for customs purposes of  the higher of two
alternative values;
(c) the price of goods on the domestic market of the country of exportation;(d) the cost of production other than computed values which have been  determined for
identical or similar goods in accordance with the provisions of Article 8;
(e) the price of the goods for export to a country other than Georgia;(f) minimum customs values; or(g) arbitrary or fictitious values.
3. If he so requests, the importer shall be info rmed in writing of the customs value determined
under the provisions of this Article and the method used to determine such value.G/VAL/N/1/GEO/1
Page 6
Article 10
1. In determining the customs value under the provisions of Article 3, there shall be added to the
price actually paid or payable for the imported goods:
(a) the following, to the extent that they are incurred by the buyer but not included in the
price actually paid or payable for the goods:
(i)  commissions and brokerage, except buying commissions;(ii) the cost of containers which are trea ted as being one for  customs purposes with
the goods in question;
(iii) the cost of packing whether for labour or materials;(iv) the cost of transport of the imported goods;(v) loading, unloading and handling charges associated with the transport  of the
imported goods  to the place of importation into Georgia; and
(vi) the cost of insurance.
(b) the value, apportioned as appropriate, of  the following goods and services where
supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with
the production and sale for export of the imported goods, to the extent that such value has not  been
included in the price actually paid or payable:
(i)  materials, components, parts and si milar items incorporated in the imported
goods;
(ii) tools, dies, molds and similar items used in the production of the imported
goods;
(iii) materials consumed in the production of the imported goods;
(iv)  engineering, development, artwork, design work, and plans and sketches
undertaken outside Georgia and necessary for the production of the imported
goods;
(c) royalties and license fees related to the goods being valued that the  buyer must pay,
either directly or indirectly, as a condition of sale of  the goods being valued, to the extent that such
royalties and fees are  not included in th e price actually paid or payable; and
(d) the value of any part of the proceeds of an y subsequent resale, disposal or use of the
imported goods that accrues directly or indirectly to the  seller.
2.  Additions to the price actually paid or paya ble shall be made under this Article only on the
basis of objective and quantifiable data.
3.  No additions shall be made to the price actu ally paid or payable in determining the customs
value except as provided in this Article.G/VAL/N/1/GEO/1
Page 7
Article 11
When determining the customs value, foreign currency shall be converted into the national
currency of Georgia at the rate established by the National Bank of Georgia on the date of the customs
declaration registration.
(a) Article 12
1. Charges for interest under a financing arrangement entered into by the buyer and relating the
purchase of imported goods shall not be regarded as part of the customs value provided that:
(a) the charges are distinguished from the price actually paid or payable for the goods;
(b) the financing arrangement was made in writing;(c) where required, the buyer can demonstrate that:
 Such goods are actually sold at the price declared as the price actually paid or
payable, and
 the claimed rate of interest does not exceed the level for such transactions
prevailing in the country where, and at the time when the finance was provided.
This Article shall apply regardless of whether the finance is provided by the seller, a bank or
another natural or legal person.  It shall also apply, if appropriate, where goods are valued under a
method other than the transaction value.
Article 13
In determining the customs value of imported ca rrier media bearing data or instructions, only
the cost or value of the carrier medium itself sha ll be taken into account.  The customs value shall not,
therefore, include the cost or value of the data or in structions, provided that this is distinguished from the
cost or the value of the carrier medium.
For the purposes of this Article, the expression carrier medium shall not be taken to include
integrated circuits, semiconductors and similar devices or articles incorporating such circuits or devices;the expression data or instructions shall not be taken to include sound, cinematic or video
recordings.
Article 14
All information which is by nature confidential or which is provided on a confidential basis for
the purposes of customs valuation shall be treated as  strictly confidential by Georgian authorities, who
shall not disclose it without the specific permi ssion of the person or government providing such
information, except to the extent th at it may be required to be disclosed in the context of judicial
proceedings.
Article 15
2. Any disputes connected with the use of these Regulations shall be subject to judicial
review.G/VAL/N/1/GEO/1
Page 8
 Article 16
 Laws, regulations, judicial decisions and admi nistrative rulings of general application giving
effect to these Regulations shall be published in the newspaper Phinansebi.
Article 17
In these Regulations:
(a) "customs value of imported goods" means the value of goods for the  purposes of
levying ad valorem duties of customs on imported goods;
 (b) "country of importation" means Georgi a or the customs territory of Georgia;
(c)  "produced" includes grown, manufactured and mined;(d) "identical goods" means goods which are the same  in all respects, including physical
characteristics, quality and reputation.  Minor diff erences in appearance would not preclude goods
otherwise conforming to the definition from being regarded as identical;
(e) "similar goods" means goods which, although not  alike in all respects, have like
characteristics and like component  materials which en able them to perform the same functions and to
be  commercially interchangeable. The quality of the goods, their reputation and the existence of a
trademark are among the factors to be consider ed in determining whether goods are similar;
(f) The terms "identical goods" and "similar goods" do not include, as the  case may be,
goods which incorporate or reflect engineering,  development, artwork, de sign work, and plans and
sketches for which  no adjustment has been made under paragraph 1(b)(iv) of Article 10  because such
elements were undertaken in Georgia;
 (g) goods shall not be regarded as "identical goods" or "similar goods" unless they were
produced in the same country as the goods being  valued;
(h) goods produced by a different person shall be  taken into account only when there are no
identical goods or similar goods, as the case may  be, produced by the same person as the goods being
valued.
(i) "goods of the same class or kind" means goods which fall within a group or range of
goods produced by a particular indus try or industry sector, and incl udes identical or similar goods.
(j) the term "price actually paid or payable" includes all payments actually made or to be
made as a condition of sale of the imported goods, by the buyer to the seller, or by the buyer to a third
party to satisfy an obligation of the seller.
2. For the purposes of these Regulations, persons  shall be deemed to be related only if:
(a) they are officers or directors of one another's businesses;(b) they are legally recognized partners in business;(c) they are employer and employee;G/VAL/N/1/GEO/1
Page 9
(d) any person directly or indirectly owns, c ontrols or holds 5 per cent or more of the
outstanding voting stock or shares of both of them;
(e) one of them directly or indirectly controls the other;
(f) both of them are directly or indi rectly controlled by a third person;
(g) together they directly or indirectly control a third person; or(h) they are members of the same family.
3. Persons who are associated in business with one  another in that one is the sole agent, sole
distributor or sole concessionaire, however described, of the other shall be deemed to be related for the
purposes of these Regulations if they fall within the criteria of paragraph 2 of this Article.
Article 18
Upon written request, the importer shall have the right to an explanation in writing from the
Customs Department of Georgia as  to how the customs value of his imported goods was determined.
Article 19
Nothing in these Regulations shall be construed as  restricting or calling into question the rights
of the customs authorities of Georgia to satisfy them selves as to the truth or accuracy of any statement,
document or declaration presented for customs valuation purposes.G/VAL/N/1/GEO/1
Page 10
ANNEX I
INTERPRETATIVE NOTES
to
Regulations Concerning Order of Determining the Customs Value
of Goods Imported into Georgia
General Note
These Interpretive Notes follow exactly the Inte rpretive Notes Issued as Annex I to the WTO
Agreement on the Implementation of Article VII of the GATT 1994 (the “Customs Valuation
Agreement”, except that references and cross-references  to Articles are to the relevant Articles in the
Georgian Regulations Concerning Order of Determining the Customs Value of Goods Imported into
Georgia, approved May 31, 1999, rather than to the corresponding articles in the Customs Valuation
Agreement.
Sequential Application of Valuation Methods1. Articles 3 through 9 define how the customs value of imported goods is to be determined
under the provisions of this Agreement.  The methods of valuation are set out in a sequential order of
application.  The primary method for customs valuation is defined in Article 3 and imported goods are
to be valued in accordance with the provisions of this Article whenever the conditions prescribedtherein are fulfilled.
2. Where the customs value cannot be determined under the provisions of Article 3, it is to be
determined by proceeding sequentially through the succeeding Articles to the first such Article under
which the customs value can be determined.  Except as provided in Article 6, it is only when thecustoms value cannot be determined under the provisions of a particular Article that the provisions of
the next Article in the sequence can be used.
3. If the importer does not request that the order of Articles 7 and 8 be reversed, the normal
order of the sequence is to be followed.  If the importer does so request but it then proves impossible
to determine the customs value under the provisions of Article 8, the customs value is to be
determined under the provisions of Article 7, if it can be so determined.
4. Where the customs value cannot be determined under the provisions of Articles 3 through 8 it
is to be determined under the provisions of Article 9.
Use of Generally Accepted Accounting Principles1. "Generally accepted accounting principles" refers to the recognized consensus or substantial
authoritative support within a country at a particular time as to which economic resources and
obligations should be recorded as assets and liabilities, which changes in assets and liabilities should
be recorded, how the assets and liabilities and changes in them should be measured, what informationshould be disclosed and how it should be disclosed, and which financial statements should be
prepared.  These standards may be broad guidelines of general application as well as detailed
practices and procedures.
2.  For the purposes of this Agreement, the customs administration of each Member shall utilize
information prepared in a manner consistent with generally accepted accounting principles in the
country which is appropriate for the Article in question.  For example, the determination of usual
profit and general expenses under the provisions of Article 7 would be carried out utilizing
information prepared in a manner consistent with generally accepted accounting principles of theG/VAL/N/1/GEO/1
Page 11
country of importation.  On the other hand, the determination of usual profit and general expenses
under the provisions of Article 8 would be carried out utilizing information prepared in a manner
consistent with generally accepted accounting principles of the country of production.  As a further
example, the determination of an element provided for in paragraph 1(b)(ii) of Article 10 undertaken
in the country of importation would be carried out utilizing information in a manner consistent withthe generally accepted accounting principles of that country.
Note to Article 3
Price Actually Paid or Payable
1. The price actually paid or payable is the total payment made or to be made by the buyer to or
for the benefit of the seller for the imported goods.  The payment need not necessarily take the form
of a transfer of money.  Payment may be made by way of letters of credit or negotiable instruments.
Payment may be made directly or indirectly.  An  example of an indirect payment would be the
settlement by the buyer, whether in whole or in part, of a debt owed by the seller.
2. Activities undertaken by the buyer on the buyer's own account, other than those for which an
adjustment is provided in Article 10, are not considered to be an indirect payment to the seller, even
though they might be regarded as of benefit to the seller.  The costs of such activities shall not,
therefore, be added to the price actually paid or payable in determining the customs value.
3. The customs value shall not include the following charges or costs, provided that they are
distinguished from the price actually paid or payable for the imported goods:
(a) charges for construction, erection, assembly, maintenance or technical assistance,
undertaken after importation on imported goods such as industrial plant, machinery or
equipment;
(b) the cost of transport after importation;(c) duties and taxes of the country of importation.
4. The price actually paid or payable refers to the price for the imported goods.  Thus the flow of
dividends or other payments from the buyer to the seller that do not relate to the imported goods are
not part of the customs value.
Paragraph 1(a)(iii )
Among restrictions which would not render a price actually paid or payable unacceptable are
restrictions which do not substantially affect the value of the goods.  An example of such restrictions
would be the case where a seller requires a buyer of au tomobiles not to sell or exhibit them prior to a
fixed date which represents the beginning of a model year.G/VAL/N/1/GEO/1
Page 12
Paragraph 1(b )
1. If the sale or price is subject to some condition or consideration for which a value cannot be
determined with respect to the goods being valued, the transaction value shall not be acceptable forcustoms purposes.  Some examples of this include:
(a) the seller establishes the price of the imported goods on condition that the buyer will
also buy other goods in specified quantities;
(b) the price of the imported goods is dependent upon the price or prices at which the
buyer of the imported goods sells other goods to the seller of the imported goods;
(c) the price is established on the basis of a form of payment extraneous to the imported
goods, such as where the imported goods are semi-finished goods which have been
provided by the seller on condition that the seller will receive a specified quantity of
the finished goods.
2. However, conditions or considerations relating to the production or marketing of the imported
goods shall not result in rejection of the transact ion value.  For example, the fact that the buyer
furnishes the seller with engineering and plans undertaken in the country of importation shall not
result in rejection of the transaction value for the purposes of Article 3.  Likewise, if the buyer
undertakes on the buyer =s own account, even though by agreement with the seller, activities relating
to the marketing of the imported goods, the value of these activities is not part of the customs value
nor shall such activities result in rejection of the transaction value.
Paragraph 21. Paragraphs 2(a) and 2(b) provide different means of establishing the acceptability of a
transaction value.
2. Paragraph 2(a) provides that where the buyer and the seller are related, the circumstances
surrounding the sale shall be examined and the transaction value shall be accepted as the customs
value provided that the relationship did not influence the price.  It is not intended that there should be
an examination of the circumstances in all cases where the buyer and the seller are related.  Suchexamination will only be required where there are doubts about the acceptability of the price.  Where
the customs administration have no doubts about the acceptability of the price, it should be accepted
without requesting further information from the im porter.  For example, the customs administration
may have previously examined the relationship, or it may already have detailed information
concerning the buyer and the seller, and may already be satisfied from such examination orinformation that the relationship did not influence the price.
3. Where the customs administration is unable to accept the transaction value without further
inquiry, it should give the importer an opportunity to supply such further detailed information as may
be necessary to enable it to examine the circumst ances surrounding the sale.  In this context, the
customs administration should be prepared to examine relevant aspects of the transaction, including
the way in which the buyer and seller organize their commercial relations and the way in which theprice in question was arrived at, in order to determine whether the relationship influenced the price.
Where it can be shown that the buyer and seller, although related under the provisions of Article 17,
buy from and sell to each other as if they were not related, this would demonstrate that the price had
not been influenced by the relationship.  As an example of this, if the price had been settled in a
manner consistent with the normal pricing practices of the industry in question or with the way theG/VAL/N/1/GEO/1
Page 13
seller settles prices for sales to buyers who are not related to the seller, this would demonstrate that the
price had not been influenced by the relationship.  As a further example, where it is shown that the
price is adequate to ensure recovery of all costs plus a profit which is representative of the firm's
overall profit realized over a representative period of time (e.g. on an annual basis) in sales of goods
of the same class or kind, this would demonstrate that the price had not been influenced.
4. Paragraph 2(b) provides an opportunity for the importer to demonstrate that the transaction
value closely approximates to a "test" value previously accepted by the customs administration and is
therefore acceptable under the provisions of Article 3.  Where a test under paragraph 2(b) is met, it is
not necessary to examine the question of influence under paragraph 2(a).  If the customs
administration has already sufficient information to be satisfied, without further detailed inquiries,
that one of the tests provided in paragraph 2(b) has been met, there is no reason for it to require theimporter to demonstrate that the test can be met.  In paragraph 2(b) the term "unrelated buyers" means
buyers who are not related to the seller in any particular case.
Paragraph 2(b )
A number of factors must be taken into consideration in determining whether one value
"closely approximates" to another value.  These factors include the nature of the imported goods, the
nature of the industry itself, the season in which the goods are imported, and, whether the difference
in values is commercially significant.  Since these factors may vary from case to case, it would be
impossible to apply a uniform standard such as a fixed percentage, in each case.  For example, a smalldifference in value in a case involving one type of goods could be unacceptable while a large
difference in a case involving another type of goods might be acceptable in determining whether the
transaction value closely approximates to the "test" values set forth in paragraph 2(b) of Article 3.
Note to Article 4
1. In applying Article 4, the customs administration shall, wherever possible, use a sale of
identical goods at the same commercial level and in substantially the same quantities as the goods
being valued.  Where no such sale is found, a sale of identical goods that takes place under any one of
the following three conditions may be used:
(a) a sale at the same commercial level but in different quantities;
(b) a sale at a different commercial level but in substantially the same quantities;  or(c) a sale at a different commercial level and in different quantities.
2. Having found a sale under any one of these three conditions adjustments will then be made, as
the case may be, for:
(a) quantity factors only;(b) commercial level factors only;  or(c) both commercial level and quantity factors.
3. The expression "and/or" allows the flexibility to use the sales and make the necessary
adjustments in any one of the three conditions described above.G/VAL/N/1/GEO/1
Page 14
4. For the purposes of Article 4, the transaction value of identical imported goods means a
customs value, adjusted as provided for in paragraphs 1(b) and 2, which has already been accepted
under Article 3.
5. A condition for adjustment because of different commercial levels or different quantities is
that such adjustment, whether it leads to an increa se or a decrease in the value, be made only on the
basis of demonstrated evidence that clearly establishes the reasonableness and accuracy of the
adjustments, e.g. valid price lists containing prices referring to different levels or different quantities.
As an example of this, if the imported goods being valued consist of a shipment of 10 units and the
only identical imported goods for which a transaction value exists involved a sale of 500 units, and it
is recognized that the seller grants quantity discounts, the required adjustment may be accomplished
by resorting to the seller's price list and using that price applicable to a sale of 10 units.  This does notrequire that a sale had to have been made in quantities of 10 as long as the price list has been
established as being bona fide through sales at other quantities.  In the absence of such an objective
measure, however, the determination of a customs value under the provisions of Article 4 is not
appropriate.
Note to Article 5
1. In applying Article 5, the customs administration shall, wherever possible, use a sale of
similar goods at the same commercial level and in substantially the same quantities as the goods beingvalued.  Where no such sale is found, a sale of similar goods that takes place under any one of the
following three conditions may be used:
(a) a sale at the same commercial level but in different quantities;
(b) a sale at a different commercial level but in substantially the same quantities;  or
(c) a sale at a different commercial level and in different quantities.
2. Having found a sale under any one of these three conditions adjustments will then be made, as
the case may be, for:
(a) quantity factors only;
(b) commercial level factors only;  or(c) both commercial level and quantity factors.
3. The expression "and/or" allows the flexibility to use the sales and make the necessary
adjustments in any one of the three conditions described above.
4. For the purpose of Article 5, the transaction value of similar imported goods means a customs
value, adjusted as provided for in paragraphs 1(b) and 2, which has already been accepted under
Article 3.
5. A condition for adjustment because of different commercial levels or different quantities is
that such adjustment, whether it leads to an increase or a decrease in the value, be made only on thebasis of demonstrated evidence that clearly establishes the reasonableness and accuracy of the
adjustment, e.g. valid price lists containing prices referring to different levels or different quantities.
As an example of this, if the imported goods being valued consist of a shipment of 10 units and the
only similar imported goods for which a transaction value exists involved a sale of 500 units, and it isG/VAL/N/1/GEO/1
Page 15
recognized that the seller grants quantity discounts, the required adjustment may be accomplished by
resorting to the seller's price list and using that pri ce applicable to a sale of 10 units.  This does not
require that a sale had to have been made in quantities of 10 as long as the price list has been
established as being bona fide through sales at other quantities.  In the absence of such an objective
measure, however, the determination of a customs value under the provisions of Article 5 is notappropriate.
Note to Article 7
1. The term "unit price at which ... goods are sold in the greatest aggregate quantity" means the
price at which the greatest number of units is sold in sales to persons who are not related to thepersons from whom they buy such goods at the first commercial level after importation at which such
sales take place.
2. As an example of this, goods are sold from a price list which grants favourable unit prices for
purchases made in larger quantities.
Sale quantity Unit price Number of salesTotal quantity
sold at each price
1-10 units 100 10 sales of 5 units
 5 sales of 3 units65
11-25 units 95  5 sales of 11 units 55
over 25 units 90  1 sale of 30 units
 1 sale of 50 units80
The greatest number of units sold at a price is 80;  therefore, the unit price in the greatest
aggregate quantity is 90.
3. As another example of this, two sales occur.  In the first sale 500 units are sold at a price of 95
currency units each.  In the second sale 400 units are sold at a price of 90 currency units each.  In thisexample, the greatest number of units sold at a particular price is 500;  therefore, the unit price in the
greatest aggregate quantity is 95.
4. A third example would be the following situation where various quantities are sold at various
prices.
(a)   Sales
Sale quantity Unit price
40 units 100
30 units 90
15 units 100
50 units 95
25 units 105
35 units 90G/VAL/N/1/GEO/1
Page 16
 5 units 100
(b) Totals
Total quantity sold Unit price
65 90
50 95
60 100
25 105
In this example, the greatest number of units sold at a particular price is 65;  therefore, the
unit price in the greatest aggregate quantity is 90.
5. Any sale in the importing country, as described in paragraph 1 above, to a person who
supplies directly or indirectly free of charge or at reduced cost for use in connection with the
production and sale for export of the imported goods any of the elements specified in paragraph 1(b)
of Article 10, should not be taken into account in establishing the unit price for the purposes ofArticle 7.
6. It should be noted that "profit and general expenses" referred to in paragraph 1 of Article 7
should be taken as a whole.  The figure for the purposes of this deduction should be determined on the
basis of information supplied by or on behalf of the importer unless the importer's figures are
inconsistent with those obtained in sales in the country of importation of imported goods of the same
class or kind. Where the importer's figures are inconsistent with such figures, the amount for profitand general expenses may be based upon relevant information other than that supplied by or on behalf
of the importer.
7. The "general expenses" include the direct and indirect costs of marketing the goods in
question.
8. Local taxes payable by reason of the sale of the goods for which a deduction is not made
under the provisions of paragraph 1(a)(iv) of Article 7 shall be deducted under the provisions of
paragraph 1(a)(i) of Article 7.
9. In determining either the commissions or the usual profits and general expenses under the
provisions of paragraph 1 of Article 7, the question whether certain goods are "of the same class or
kind" as other goods must be determined on a case-by-case basis by reference to the circumstances
involved.  Sales in the country of importation of the narrowest group or range of imported goods of
the same class or kind, which includes the goods being valued, for which the necessary informationcan be provided, should be examined.  For the purposes of Article 7, "goods of the same class or
kind" includes goods imported from the same country as the goods being valued as well as goods
imported from other countries.
10. For the purposes of paragraph 1(b) of Article 7, the "earliest date" shall be the date by which
sales of the imported goods or of identical or similar imported goods are made in sufficient quantity to
establish the unit price.
11. Where the method in paragraph 2 of Article 7 is used, deductions made for the value added by
further processing shall be based on objective and quantifiable data relating to the cost of such work.G/VAL/N/1/GEO/1
Page 17
Accepted industry formulas, recipes, methods of construction, and other industry practices would
form the basis of the calculations.
12. It is recognized that the method of valuation provided for in paragraph 2 of Article 7 would
normally not be applicable when, as a result of the further processing, the imported goods lose theiridentity. However, there can be instances where, although the identity of the imported goods is lost,
the value added by the processing can be determined accurately without unreasonable difficulty.  On
the other hand, there can also be instances where the imported goods maintain their identity but form
such a minor element in the goods sold in the coun try of importation that the use of this valuation
method would be unjustified.  In view of the above, each situation of this type must be considered on
a case-by-case basis.
Note to Article 8
1. As a general rule, customs value is determined under this Agreement on the basis of
information readily available in the country of importation.  In order to determine a computed value,
however, it may be necessary to examine the costs of producing the goods being valued and otherinformation which has to be obtained from outside the country of importation.  Furthermore, in most
cases the producer of the goods will be outside the jurisdiction of the authorities of the country of
importation.  The use of the computed value method will generally be limited to those cases where the
buyer and seller are related, and the producer is prepared to supply to the authorities of the country of
importation the necessary costings and to provide facilities for any subsequent verification which maybe necessary.
2. The "cost or value" referred to in paragraph 1(a) of Article 8 is to be determined on the basis
of information relating to the production of the goods being valued supplied by or on behalf of the
producer.  It is to be based upon the commercial accounts of the producer, provided that such accountsare consistent with the generally accepted accounting principles applied in the country where the
goods are produced.
3. The "cost or value" shall include the cost of elements specified in paragraphs 1(a)(ii) and (iii)
of Article 10.  It shall also include the value, apportioned as appropriate under the provisions of the
relevant note to Article 10, of any element specified in paragraph 1(b) of Article 10 which has been
supplied directly or indirectly by the buyer for use in connection with the production of the importedgoods.  The value of the elements specified in paragraph 1(b)(iv) of Article 10 which are undertaken
in the country of importation shall be included only to the extent that such elements are charged to the
producer.  It is to be understood that no cost or value of the elements referred to in this paragraph shall
be counted twice in determining the computed value.
4. The "amount for profit and general expenses" referred to in paragraph 1(b) of Article 8 is to
be determined on the basis of information supplied by or on behalf of the producer unless the
producer's figures are inconsistent with those usually reflected in sales of goods of the same class or
kind as the goods being valued which are made by producers in the country of exportation for export
to the country of importation.
5. It should be noted in this context that the "amount for profit and general expenses" has to be
taken as a whole.  It follows that if, in any partic ular case, the producer's profit figure is low and the
producer's general expenses are high, the producer's profit and general expenses taken together may
nevertheless be consistent with that usually reflected in sales of goods of the same class or kind.  Sucha situation might occur, for example, if a product were being launched in the country of importation
and the producer accepted a nil or low profit to offset high general expenses associated with the
launch.  Where the producer can demonstrate a low profit on sales of the imported goods because of
particular commercial circumstances, the producer's actual profit figures should be taken into accountG/VAL/N/1/GEO/1
Page 18
provided that the producer has valid commercial reasons to justify them and the producer's pricing
policy reflects usual pricing policies in the branch of industry concerned.  Such a situation might
occur, for example, where producers have been forced to lower prices temporarily because of an
unforeseeable drop in demand, or where they sell goods to complement a range of goods being
produced in the country of importation and accept a low profit to maintain competitivity.  Where the
producer's own figures for profit and general expenses are not consistent with those usually reflected
in sales of goods of the same class or kind as the goods being valued which are made by producers in
the country of exportation for export to the country of importation, the amount for profit and general
expenses may be based upon relevant information other than that supplied by or on behalf of the
producer of the goods.
6. Where information other than that supplied by or on behalf of the producer is used for the
purposes of determining a computed value, the authorities of the importing country shall inform the
importer, if the latter so requests, of the source of such information, the data used and the calculations
based upon such data, subject to the provisions of Article 12.
7. The "general expenses" referred to in paragraph 1(b) of Article 8 covers the direct and
indirect costs of producing and selling the goods for export which are not included under
paragraph 1(a) of Article 8.
8. Whether certain goods are "of the same class or kind" as other goods must be determined on a
case-by-case basis with reference to the circumstances involved.  In determining the usual profits andgeneral expenses under the provisions of Article 8, sales for export to the country of importation of
the narrowest group or range of goods, which includes the goods being valued, for which the
necessary information can be provided, should be examined.  For the purposes of Article 8, "goods of
the same class or kind" must be from the same country as the goods being valued.
Note to Article 9
1. Customs values determined under the provisions of Article 9 should, to the greatest extent
possible, be based on previously determined customs values.
2. The methods of valuation to be employed under Article 9 should be those laid down in
Articles 3 through 8 but a reasonable flexibility in the application of such methods would be inconformity with the aims and provisions of Article 9.
3. Some examples of reasonable flexibility are as follows:
(a) Identical goods  - the requirement that the identical goods should be exported at or
about the same time as the goods being valued could be flexibly interpreted;  identical
imported goods produced in a country other than the country of exportation of the
goods being valued could be the basis for customs valuation;  customs values of
identical imported goods already determined under the provisions of Articles 6 and 8
could be used.
(b) Similar goods  - the requirement that the similar goods should be exported at or about
the same time as the goods being valued could be flexibly interpreted;  similar
imported goods produced in a country other than the country of exportation of the
goods being valued could be the basis for customs valuation;  customs values ofsimilar imported goods already determined under the provisions of Articles 7 and 8
could be used.G/VAL/N/1/GEO/1
Page 19
(c) Deductive method  - the requirement that the goods shall have been sold in the
"condition as imported" in paragraph 1(a) of Article 7 could be flexibly interpreted;
the "90 days" requirement could be administered flexibly.
Note to Article 10
Paragraph 1(a)(i )
The term "buying commissions" means fees paid  by an importer to the importer's agent for
the service of representing the importer abroad  in the purchase of the goods being valued.
Paragraph 1(b)(ii )
1. There are two factors involved in the apportionment of the elements specified in
paragraph 1(b)(ii) of Article 10 to the imported goods - the value of the element itself and the way in
which that value is to be apportioned to the imported goods.  The apportionment of these elements
should be made in a reasonable manner appropriate to the circumstances and in accordance with
generally accepted accounting principles.
2. Concerning the value of the element, if the importer acquires the element from a seller not
related to the importer at a given cost, the value of the element is that cost.  If the element was
produced by the importer or by a person related to the importer, its value would be the cost of
producing it.  If the element had been previously used by the importer, regardless of whether it hadbeen acquired or produced by such importer, the original cost of acquisition or production would have
to be adjusted downward to reflect its use in order to arrive at the value of the element.
3. Once a value has been determined for the element, it is necessary to apportion that value to
the imported goods.  Various possibilities exist.  For example, the value might be apportioned to thefirst shipment if the importer wishes to pay duty on the entire value at one time.  As another example,
the importer may request that the value be apportioned over the number of units produced up to the
time of the first shipment.  As a further example, the importer may request that the value be
apportioned over the entire anticipated production where contracts or firm commitments exist for that
production.  The method of apportionment used will depend upon the documentation provided by the
importer.
4. As an illustration of the above, an importer provides the producer with a mould to be used in
the production of the imported goods and contracts with the producer to buy 10,000 units.  By the
time of arrival of the first shipment of 1,000 units, the producer has already produced 4,000 units.
The importer may request the customs administration to apportion the value of the mould over
1,000 units, 4,000 units or 10,000 units.
Paragraph 1(b)(iv )
1. Additions for the elements specified in paragraph 1(b)(iv) of Article 10 should be based on
objective and quantifiable data.  In order to minimize the burden for both the importer and customsadministration in determining the values to be adde d, data readily available in the buyer's commercial
record system should be used in so far as possible.
2. For those elements supplied by the buyer which were purchased or leased by the buyer, the
addition would be the cost of the purchase or the lease.  No addition shall be made for those elementsavailable in the public domain, other than the cost of obtaining copies of them.
3. The ease with which it may be possible to calculate the values to be added will depend on a
particular firm's structure and management practice, as well as its accounting methods.G/VAL/N/1/GEO/1
Page 20
4. For example, it is possible that a firm which imports a variety of products from several
countries maintains the records of its design centre outside the country of importation in such a way as
to show accurately the costs attributable to a given product.  In such cases, a direct adjustment may
appropriately be made under the provisions of Article 10.
5. In another case, a firm may carry the cost of the design centre outside the country of
importation as a general overhead expense without allocation to specific products.  In this instance, an
appropriate adjustment could be made under the provisions of Article 10 with respect to the imported
goods by apportioning total design centre costs over total production benefiting from the design centre
and adding such apportioned cost on a unit basis to imports.
6. Variations in the above circumstances will, of course, require different factors to be
considered in determining the proper method of allocation.
7. In cases where the production of the element in question involves a number of countries and
over a period of time, the adjustment should be limited to the value actually added to that elementoutside the country of importation.
Paragraph 1(c )
1. The royalties and licence fees referred to in paragraph 1(c) of Article 10 may include, among
other things, payments in respect to patents, trade marks and copyrights.  However, the charges for the
right to reproduce the imported goods in the country of importation shall not be added to the price
actually paid or payable for the imported goods in determining the customs value.
2. Payments made by the buyer for the right to distribute or resell the imported goods shall not
be added to the price actually paid or payable for the imported goods if such payments are not a
condition of the sale for export to the country of importation of the imported goods.
Paragraph 3
Where objective and quantifiable data do not exist with regard to the additions required to be
made under the provisions of Article 10, the transaction value cannot be determined under the
provisions of Article 3.  As an illustration of this, a royalty is paid on the basis of the price in a sale in
the importing country of a litre of a particular product that was imported by the kilogram and made up
into a solution after importation.  If the royalty is based partially on the imported goods and partially
on other factors which have nothing to do with the imported goods (such as when the imported goodsare mixed with domestic ingredients and are no longer separately identifiable, or when the royalty
cannot be distinguished from special financial arrangements between the buyer and the seller), it
would be inappropriate to attempt to make an addition for the royalty.  However, if the amount of this
royalty is based only on the imported goods and can be readily quantified, an addition to the price
actually paid or payable can be made.
Note to Article 11
For the purposes of Article 11, "time of importation" may include the time of entry for
customs purposes.G/VAL/N/1/GEO/1
Page 21
Note to Article 13
1. Article 13 provides the importer with the right to appeal against a valuation determination
made by the customs administration for the goods being valued.  Appeal may first be to a higher level
in the customs administration, but the importer shall have the right in the final instance to appeal to
the judiciary.
2. "Without penalty" means that the importer shall not be subject to a fine or threat of fine
merely because the importer chose to exercise the right of appeal.  Payment of normal court costs and
lawyers' fees shall not be considered to be a fine.
3. However, nothing in Article 13 shall prevent a Member from requiring full payment of
assessed customs duties prior to an appeal.
Note to Article 17
Paragraph 4
For the purposes of Article 17, the term "persons" includes a legal person, where appropriate.
Paragraph 4(e )
For the purposes of this Agreement, one person shall be deemed to control another when the
former is legally or operationally in a position to exercise restraint or direction over the latter.
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