What is Customs Value and How Is It Calculated?
Customs value is the cost of the goods plus all additional expenses incurred by the buyer up to the border of the Customs Union. Additional expenses include: transportation costs, cargo insurance, and any logistics expenses specifically up to the Customs Union border.
The customs value of the goods is the base for calculating and paying duties and other charges. In other words, you will pay duties and taxes based on the customs value amount.
If we don’t go too deep into calculation methods, here’s a simple example ↓
- Cost of goods: $10,000
- Logistics up to CU border: $500
- Logistics after CU border: $300
- Insurance: $10
- Permit or license: $100
- Broker services: $120
Customs value = 10,000 + 500 + 10 = $10,510
Duties and taxes will be calculated from the amount of $10,510:
- Duty (example rate 15%): $1,576.5
- Fee (20,000 KZT, average rate 420 KZT/USD): $47.61
- VAT (also called “Cumulative tax”): (10,510 + 1,576.5 + 47.61) × 12% = $1,456.09
Total:
- Goods cost – $10,000
- End-to-end logistics – $1,030
- Taxes, fees, and budget payments – $3,080.2
Bank commissions and transfer fees are not included — the key is to understand the logic without getting lost in details.
Important note for distributors: royalties are also included in the customs value. We will explain how to account for royalties in upcoming articles.
What happens if customs value is calculated incorrectly?
The reason for an error may be as simple as the declarant’s inattention or lack of competence. However, the most common case is when the client fails to provide documents for some expenses or deliberately conceals information.
When such facts “come up” (and they always do) during a post-customs audit, the client will face additional charges, administrative fines, and penalties. Penalties are calculated based on the amount of unpaid duties and taxes.
Under what circumstances can customs authorities reject the declared value?
If the import price of your goods is below the average import price of similar goods.
A simple example:
You purchased a batch of metal fittings in Italy at €2.5 per piece and declared this in your customs declaration. Customs may reject this price if similar (essentially equivalent by several criteria) goods were previously imported at €2.8 or €3.0 per piece.
If you are ready to prove that you purchased the goods at the price declared, you will need:
- SWIFT copy (100% payment confirmation)
- Exporter’s electronic customs declaration
- Supplier’s price list
- All documents confirming expenses up to the CU border
Our strong recommendation: always follow your broker’s advice and never conceal information from customs authorities. This approach will save you both nerves and money — today and in the future.
