Determining the value to be declared to Customs for imported goods is generally very straightforward – it’s the price you pay to your shipper for the goods. However, in a number of transactions the declared value must be increased by any amounts provided by or on behalf of the buyer to the producer – these additions are referred to as “Assists”.
Customs Valuation regulations into Canada and the USA vary slightly, but are based upon the World Trade Organization (WTO) requirements. As the dollar value amounts of Assists are generally not provided to the producer, these amounts will not be stated on import invoices resulting in imports being under valued.
What Is an Assist?
In basic terms, an assist occurs when an importer of foreign merchandise provides something of tangible value to the producer or supplier of that merchandise. The effect of providing this something makes the cost of production less than what it would have been had the producer obtained the something from third-party sources.
The following are treated as Assists:
- Materials, components, parts, and similar items incorporated in the imported merchandise.
- Tools, dies, molds, and similar items used in the production of the imported merchandise.
- Merchandise consumed in the production of the imported merchandise.
- Engineering, development, artwork, design work, and plans and sketches that are undertaken elsewhere than in the country of import and are necessary for the production of the imported merchandise.
How Are Assists Declared?
Generally speaking, assists must be apportioned in accordance with Generally Accepted Accounting Principles (GAAP). In cases where the entire value of the assist is for a single importation, the entire assist is declared on that importation. In cases where it is for several importations, it can be declared on the first importation, or it can be apportioned over all the imports.
In cases where the total volume of imports is unknown when the importation begins, then a method of apportionment must be decided upon and followed until the entire value of the assist has been declared. As with valuing the assist, the method of apportioning the assist must be legally correct and must be available to Customs upon request.
Determination of Assists is a very complicated process and requires consultation with your customs broker in order to ensure you will not be subject to any fines or penalties in the event of a Customs Audit for undervaluation of imported goods.
For more information, contact Brian Rowe, Director – Customs Compliance & Regulatory Affairs.