Valuation of goods for customs purposes not always as simple as it seems

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Valuation of goods for customs purposes not always as simple as it seems

• 30 June 2026
• Customs and Excise
• Christo Theron

The Customs and Excise act contains specific rules governing the value to be placed on goods leaving and entering South Africa. Ignorance of these rules or the incorrect application thereof may have dire consequences for the importer or exporter.

This article examines some of the pitfalls.

The default position

The transaction value method is the primary method that must be applied to all goods imported into South Africa. It is essentially the actual amount charged for the goods supplied to the South African importer.

Technically it is referred to as the price actually paid or payable on a free on board (FOB) basis. This FOB basis must not be confused with the FOB basis provided for in the incoterms.

The FOB value includes all costs, charges and expenses up to the point where the goods are loaded onto a ship or other vehicle. All of these costs are subject to customs duty.

But it not all that simple …

Where goods are exported to South Africa from a country pass in transit through another country from where it is placed on the final shipment vehicle, the goods are deemed to have been exported directly from the country of origin. All costs incurred after that point are not included in the customs value on which duty is payable. If the port of departure is incorrectly identified, the valuation for customs purposes could either be grossly over or unstated.

And it does not end there …

Once the FOB value has been established, the Customs and Excise act makes provision for various deductions and additions to the FOB value to arrive at the value on which duty is payable. For example, the cost of international transport, costs incurred after the goods have been imported, the cost of transport and insurance in South Africa and various other categories of expenses.

If these costs are included in the FOB price reflected on an invoice and cannot be proved to be so included, the entire FOB value reflected on the invoice will be subject to duty in South Africa resulting in an inflated value on which duty is payable.

What if the transaction value cannot be used?

Where the transaction/invoice value cannot be used, other methods are available but are often challenging to apply in practice due to practical and technical complexities.

Other methods include the identical goods value method, the similar goods value method, the deductive value method, the computed value method and the fallback value method.

The above methods each come with unique challenges and should only be used as a last resort.

What about connected parties?

Where goods are imported from a connected party, the onus is on the importer to demonstrate that the price charged has not been influenced by the connected party relationship.

If the above cannot be done, the transaction/invoice value method cannot be used and one of the alternative methods must be used to value the goods.

Don’t go there if you can avoid it!

Conclusion

The above is a brief bird’s eye view of the valuation process. Where uncertainty exists, advice should be sought to avoid unnecessary and expensive mistakes.

If you would like to explore this topic in more detail, join our upcoming webinar where we unpack these valuation rules and common pitfalls in greater depth. Click here to register for the upcoming webinar.

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