Constructed Price

Constructed Price

Summary of Constructed Price

A value for customs purposes that ignores the invoice price of the merchandise but is derived by computing the cost inputs of the product (materials plus reasonable manufacturing expenses in the country of origin plus a profit factor), to which are added the normal costs associated with preparing the goods for export. Constructed prices are used by customs authorities when there is reason to believe that the invoice price does not reflect the true value of the goods. As a practical matter, most trading nations have adopted the transaction value method of applying duties, i.e., the invoice value, as provided in the Customs Valuation Agreement (read this and related legal terms for further details); however, the constructed price method may be used when the transaction value method is inappropriate or cannot be applied.

(Main Author: William J. Miller)


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