Import planning guide
How customs value works
Duty is not always charged on the number shown at the bottom of a supplier invoice. Customs valuation rules decide the amount to which an ad valorem duty rate is applied.
Official source links checked 5 August 2026.
Short answer
Transaction value—the price paid or payable for goods sold for export—is the primary method in the international valuation framework. Customs rules then require specified additions and exclusions. Freight and insurance treatment must be checked for the importing country.
Start with the transaction, not a retail resale price
For a normal arm’s-length sale, the first method starts with the price actually paid or payable for the imported goods. It is not normally the expected selling price after import. The transaction must still meet the conditions in the destination’s valuation law.
Related-party sales, free-of-charge goods, consignments, leases and transactions with restrictions may need closer review. If transaction value cannot be used, the international framework provides later methods based on identical goods, similar goods, deductive value, computed value and a fall-back method. They are considered in a defined order, subject to the applicable law.
Identify additions and separately stated costs
The invoice price can need additions for matters such as packing, selling commissions, assists, certain royalties and proceeds returned to the seller. The exact tests are legal tests, not labels chosen for the invoice.
- Confirm the Incoterm and which transport stage the quoted price covers.
- Separate international freight and insurance on the records where possible.
- Record buyer-supplied tooling, designs or materials used to make the goods.
- Check commissions, licence fees and payments made as a condition of sale.
- Use the customs exchange rate and valuation date required by the destination.
Why the calculator asks for shipping and insurance
A planning calculator needs those values because many destinations include costs to the border in customs value, and import VAT or GST often uses a broader base. The treatment is not universal. For example, US transaction value generally excludes separately identified international freight and insurance, while the Australian GST base adds international transport and insurance after customs value and duty are established.
Treat the calculated customs value as an estimate until you have applied the destination’s rules to the invoice, Incoterm and route.
Keep an audit trail
Retain the purchase contract, invoice, proof of payment, freight and insurance documents, royalty agreements and any valuation calculation. Those records explain why an amount was included or excluded and make a broker’s review much faster.
Official sources
- World Customs Organization: WTO Valuation Agreement
Official overview of transaction value and the later valuation methods.
- HMRC: Method 1 transaction value
A detailed national example of the transaction-value tests and adjustments.
- CBP: value on the commercial invoice
Current US guidance on price paid, additions, freight and insurance.
Next step
Use the import duty calculator for an early estimate, then open the destination’s authority in the source register. Read the estimator limitations before making a buying decision.