Details of Japan Customs Valuation System

Japan has adopted a Customs Valuation System based on the WTO Valuation Agreement and stipulates provisions regarding the system in the Customs Tariff Law. The details of Japan Customs Valuation System are as follows:

1. Methods of Determining Customs Value

(1)Basic method of determining Customs value

  1. The Customs value of imported goods is the transaction price paid by the buyer to the seller (including direct payments such as all of the liability of the seller and part of repayments) plus the following fares (Customs Tariff Law, Article 4, Para. 1):

    1. transportation-related expenses, including the fare until arrival at port, insurance, etc.;
    2. commissions (excluding the buyer's commission), the cost of contents (normally used ones), and the cost of packing (including personnel costs) to be borne by the buyer;
    3. materials, parts, tools, molds, consumer goods, engineering plans and sketches (only those developed outside of Japan) and other service costs that were provided free of charge or at a discount by the buyer in the production and transaction of imported goods;
    4. the cost of the use of patent rights, design or trademark rights, or others (excluding the right to reproduce the imported goods) stipulated by a Cabinet Order which the buyer pays as a condition for import transaction;
    5. any income from disposing of or using imported goods which are considered to belong to the seller.

  2. The following expenses are not included in the Customs value if the amount is clear:

    1. duty and other surcharges that are to be discounted or repaid at the time of export;
    2. service costs required for installation, assembly, maintenance, or technical assistance on the imported goods which are to be conducted after importation into Japan;
    3. fares, insurance, and other transportation expenses required after arrival at ports;
    4. duties and other surcharges imposed in Japan;
    5. interest on deferred payments.

  3. The method of determining the duty, where there is no import transaction (for example, gratis goods or leased goods) or where they meet the following conditions, is described in Paragraph (2) and thereafter. However, in the case of (4), if the importer proves that the transaction value of imported goods is identical or similar to the inspection certified price (necessary adjustment is made by the stipulation of a Cabinet Order), the case is exempted;

    1. when there are restrictions as to the disposition or use of said imported goods by the buyer (excluding restrictions on resale areas and others stipulated by a Cabinet Order);
    2. when the transaction value of imported goods is conditioned by the quantity or price of other goods between the same buyer and seller or by any other condition which makes the determination of duty valuation difficult;
    3. when the value of proceeds of any subsequent disposition or use of the said imported goods by the buyer that accrue directly or indirectly to the seller is unknown;
    4. when a special relationship (as stipulated by laws and regulations) between the buyer and seller is considered to have influenced the transaction value.

(2)Determination of Customs value on the basis of the transaction value of identical or similar goods

  1. When the transaction value exists for identical or similar goods which do not fall under Item (1), the Customs value becomes the transaction value of the goods (when there are transaction values for goods on both sides, the transaction value of the identical goods). In this case, the transaction value of the same transaction volume and stage is applied, but if there is a substantial difference in transportation costs and others, adjustments are made by a Cabinet Order;

  2. When there is no transaction value of the identical transaction volume and stage, the adjusted value of the trading volume, stage and transportation cost is made by a Cabinet Order.

(3)Determination of the Customs value on the basis of the domestic selling price or cost of production

  1. a. In the event a Customs value cannot be determined by Items (1) and (2), and when there are domestic selling prices of identical or similar import goods, it depends on priority, or if priority is not applicable, via a request by the importer:

    1. the value of imported goods is determined by deducting the following from the domestic seller's selling price to an unrelated domestic buyer: normal commission, profit and general expenses required for the sales of similar goods; domestic transportation costs, etc.; and price exempting Customs duties, etc.;
    2. the value is determined by deducting the value added through processing and the expenses listed in 1-(1)-a, b, c from the domestic selling price of the processed import goods (after the date of determination of objects for duty assessment) .
  2. The value does not depend on the previous item, but when the manufacturing cost of the imported goods can be identified, the Customs value becomes the manufacturing cost plus normal profits and general expenses of export sales of similar goods and the transportation costs until arrival at the port.

  3. When an importer requests it, "B." above is applied prior to "A." above.

(4) Determination of the Customs value on special imported goods

If (1) through (3) above cannot be applied, the Customs value is set according to the stipulations of a Cabinet Order.

(5) Determination of the Customs value of deteriorated or damaged imported goods

The Customs value of deteriorated or damaged imported goods is the price computed applying the stipulations in Items (1) through (4), after deducting an amount equivalent to the depreciation caused by such deterioration or damage from the Customs value calculated as if such deterioration or damage had not occurred.

(6) Special rule for determination of the Customs value on air cargo

When applying the stipulations in Items (1) through (4), the transport fare and insurance of free samples (less than the value ceiling set by a Cabinet Order) and other imported goods stipulated by a Cabinet Order are calculated by the transportation fares and insurance of the transportation method other than air.

(7) Foreign exchange rate used for conversion of currency

The conversion of foreign currencies into Japanese yen is done by the exchange rate set by a Cabinet Order for the import declaration date (since Japan shifted to the floating exchange rate system, actual foreign exchange rates are used in conversion).

2. Valuation Declaration System

The valuation declaration system was implemented in 1966 as part of the self-assessment system. Under the system, when declaring imports (tax payment), importers are required to declare on a form separate from the import declaration document, all items related to the Customs value computation. This is called the valuation declaration.

(1) Contents of Valuation Declarations

In principle, a valuation declaration is to be made irrespective of the valuation method used for imported goods: when there is a special reason for the import transaction; and when the Customs value cannot be calculated by invoice only. The following items are to be declared:

  1. a special situation related to the import transaction, such as conditions which make the determination of the Customs value difficult;

  2. an influence on the Customs value by a special relationship between the buyer and seller;
  3. the base for calculating the Customs value, such as a separate payment for the goods or any other expenses, is to be included in computing the Customs value and any items relating to them.

(2) Categories of Valuation Declarations

One category is the individual declaration, which is done by submitting a valuation declaration form each time import (duty payment) declarations are made. The other is the blanket declaration, which is done prior to individual imports. Blanket declarations were adopted to help speed up Customs clearance work. Blanket declarations are applied when the same goods are traded between the same parties repetitively under the same transaction conditions. In this case, the importer can bypass the submission of a valuation declaration form each time import (tax payment) declarations are made by submitting, in advance, a blanket declaration form.

Top > Summary of Customs Procedures > Valuation System > Details of Japan Customs Valuation System