en
How is the cost price calculated when there are differences between the customs (statistical) value and the invoice value of the goods?
How is the cost price calculated when there are differences between the customs (statistical) value and the invoice value of the goods?
It is possible that the customs authority may not agree with the import value of goods declared by the taxpayer. In such a case, the customs authority has the right to perform calculations in accordance with the requirements of customs legislation.
Example: The taxpayer has imported 500 units of goods, each valued at 3 USD. The customs authority claims that the actual value of the goods is not 3 USD, but 5 USD. In this case, the customs-related calculations for the imported goods would be as follows:
Customs value of goods: 2,500 USD (5 USD × 500) × 1.7 AZN (exchange rate) = 4,250 AZN, Customs duty: 4,250 AZN × 10% = 425 AZN, Customs fee: 120 AZN, Customs value subject to VAT: 4,250 + 425 + 120 = 4,795 AZN, VAT amount: 4,795 AZN × 18% = 863.10 AZN, Assuming the transportation cost is 600 AZN.
To determine the cost price of the goods, the invoice value — not the customs value — will be taken as the basis:
Unit cost price = (2,550 AZN (invoice value – 3 USD × 500 units × 1.7 exchange rate) + 425 AZN (customs duty) + 120 AZN (customs fee) + 600 AZN (transportation cost)) / 500 (units) = 7.39 AZN, If the customs value were used instead, the unit cost price would be different:
Unit cost price = (4,250 AZN (customs value) + 425 AZN (customs duty) + 120 AZN (customs fee) + 600 AZN (transportation cost)) / 500 (units) = 10.79 AZN
As shown, calculating based on customs value versus invoice value leads to a difference of 3.40 AZN per unit (10.79 AZN – 7.39 AZN), which results in a total difference of 1,700 AZN (3.40 AZN × 500 units) in deductible expenses from the taxpayer’s income. If the importer is not a VAT payer, then the cost of the goods will be calculated as follows:
Unit cost price = (2,550 AZN (invoice value) + 425 AZN (customs duty) + 120 AZN (customs fee) + 600 AZN (transportation cost) + 863.10 AZN (VAT)) / 500 = 9.116 AZN
The tax authority's approach to this matter is based on Article 139.2 of the Tax Code. According to this article, when accounting for inventory, the taxpayer is obliged to record the value of manufactured or purchased goods based on their production costs or purchase prices. The taxpayer must also include expenses related to the storage and transportation of these goods in their cost. Therefore, the tax authority requires the taxpayer to record the imported goods based on the invoice value, not the customs value.
It is possible that the customs authority may not agree with the import value of goods declared by the taxpayer. In such a case, the customs authority has the right to perform calculations in accordance with the requirements of customs legislation.
Example: The taxpayer has imported 500 units of goods, each valued at 3 USD. The customs authority claims that the actual value of the goods is not 3 USD, but 5 USD. In this case, the customs-related calculations for the imported goods would be as follows:
Customs value of goods: 2,500 USD (5 USD × 500) × 1.7 AZN (exchange rate) = 4,250 AZN, Customs duty: 4,250 AZN × 10% = 425 AZN, Customs fee: 120 AZN, Customs value subject to VAT: 4,250 + 425 + 120 = 4,795 AZN, VAT amount: 4,795 AZN × 18% = 863.10 AZN, Assuming the transportation cost is 600 AZN.
To determine the cost price of the goods, the invoice value — not the customs value — will be taken as the basis:
Unit cost price = (2,550 AZN (invoice value – 3 USD × 500 units × 1.7 exchange rate) + 425 AZN (customs duty) + 120 AZN (customs fee) + 600 AZN (transportation cost)) / 500 (units) = 7.39 AZN, If the customs value were used instead, the unit cost price would be different:
Unit cost price = (4,250 AZN (customs value) + 425 AZN (customs duty) + 120 AZN (customs fee) + 600 AZN (transportation cost)) / 500 (units) = 10.79 AZN
As shown, calculating based on customs value versus invoice value leads to a difference of 3.40 AZN per unit (10.79 AZN – 7.39 AZN), which results in a total difference of 1,700 AZN (3.40 AZN × 500 units) in deductible expenses from the taxpayer’s income. If the importer is not a VAT payer, then the cost of the goods will be calculated as follows:
Unit cost price = (2,550 AZN (invoice value) + 425 AZN (customs duty) + 120 AZN (customs fee) + 600 AZN (transportation cost) + 863.10 AZN (VAT)) / 500 = 9.116 AZN
The tax authority's approach to this matter is based on Article 139.2 of the Tax Code. According to this article, when accounting for inventory, the taxpayer is obliged to record the value of manufactured or purchased goods based on their production costs or purchase prices. The taxpayer must also include expenses related to the storage and transportation of these goods in their cost. Therefore, the tax authority requires the taxpayer to record the imported goods based on the invoice value, not the customs value.