Meaning
Valuation methodology established by the General Administration of Customs of China defines the legal taxable base for imported goods subject to ad valorem duties. The duty paid value constitutes the primary metric to calculate customs duties, import value-added taxes, consumption taxes, and municipal surcharges on commercial shipments. This value includes the transaction value of the goods plus any freight, insurance, and handling costs incurred prior to arrival at the port of entry.
Valuation Method
Determination of the taxable amount relies primarily on the transaction value method where customs officials accept the price paid by the domestic buyer. When the reported transaction value does not meet legal requirements, customs authorities reconstruct the duty paid value using comparative pricing of identical goods or deductive calculation methods. If there is a dispute over the calculation, the importer must pay the assessed duties before contesting the decision.
Customs Audit
Regulatory audits conducted by local customs branches verify the completeness of price declarations up to three years after importation. If an audit reveals that a foreign joint venture underdeclared its transaction value, officials adjust the duty paid value retroactively to collect outstanding taxes and impose administrative fines. This adjustment process involves an extensive review of transfer pricing records, licensing contracts, and royalty payments to ensure all mandatory additions are included in the taxable base.
Appeal Mechanism
Legal recourse for disputing a valuation decision requires filing an administrative review before litigation is permitted. Foreign entities submit evidence to the provincial customs bureau to challenge the adjusted duty paid value. Successful administrative appeals result in tax refunds.
