Customs value is not the purchase price

Import duty is usually a percentage of the customs value. Importers often assume that means the price on the invoice. It rarely does, for two reasons: every jurisdiction defines which costs belong in the value, and your Incoterm decides which of those costs are already inside the price.

Two families of valuation basis

All ten jurisdictions LandedGrid covers start from the WTO Valuation Agreement’s transaction value — the price actually paid or payable, adjusted. They split on transport costs. The United States, Australia and New Zealand use an FOB-type value: costs up to the place of export are in, international freight and insurance are out. The United Kingdom, European Union, Japan, South Korea, Singapore, Türkiye and India use a CIF-type value: transport and insurance to the place of importation are added.

Incoterms decide what is inside the price

An EXW price contains no transport at all, so a CIF jurisdiction needs inland costs, freight and insurance added — and even an FOB jurisdiction may need the inland leg. A CIF price already contains freight and insurance, so an FOB jurisdiction needs them deducted, which requires you to know their amounts. A DDP price contains the destination’s own duties and taxes, which must come out before duty is calculated on it.

LandedGrid asks for exactly the amounts the combination of your Incoterm and the destination’s basis requires, and refuses to guess. If a deduction is needed and you do not know the figure, the customs value stays unresolved.

Statutory additions

Beyond transport, the transaction value includes packing, selling commissions, assists (tools, moulds or designs you supplied to the seller), royalties paid as a condition of sale and any proceeds of resale that go back to the seller. Buying commissions are not included. Discounts count only if they are earned unconditionally by the time of import.

When transaction value is not available

Gifts, free samples, leased goods and consignment stock have no sale for export. Related-party sales are acceptable only if the relationship did not influence the price. In these cases customs value is determined under the subsequent methods — identical goods, similar goods, deductive, computed and fall-back. LandedGrid does not attempt those; it reports “valuation review required” and accepts a value you or your broker have determined, labelled as such.

Use the landed cost calculator to see the valuation steps applied to your own invoice.