Valuating Service Supply Chain Parts: What Are Your Options?

In the previous video in this series, we discussed why you can’t assign a zero or drastically reduced valuation to service supply chain parts when importing them into another country.

Why not?

Because everything has a value. And it’s illegal not to accurately value goods crossing the border.

So, how do you value service supply chain parts in accordance with the principles set out in the General Agreement on Tariffs and Trade (GATT)?

And how do you ensure that your service supply chain complies with valuation legislation and guidelines set by the World Trade Organization (WTO) and World Customs Organization (WCO)?

Normally, you’d use the transaction value as the goods value. But since there is no transaction, because the goods aren’t being sold, this valuation methodology is typically inapplicable to the service supply chain.

What are your other options?

There are a number of valuation methodologies you could use, in descending order:

  • The transaction value of identical goods;
  • The transaction value of similar goods;
  • The deducted method;
  • The computed method; and lastly

You’ll need to decide which is the best option to accurately valuate your goods.

But, as is often the case in the service supply chain, you’ll need to go right to the bottom of the hierarchy – to fallback – because the former valuation methodologies tend to be inapplicable to the service supply chain.

This is also where a number of challenges come into play.

We’ll look at those in more detail, in the <next video>. If you’re unsure which valuation methodology is right for your business, please get in touch.

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