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Before SARS can charge a cent of duty or VAT, it must put a rand value on your goods. That value — the customs value — is the base everything else is calculated from. Get the valuation method right and your declaration sails through; get it wrong and SARS uplifts the value, back-charges duty, and may add penalties. This guide explains the six valuation methods South Africa applies, in the strict legal order SARS must follow.
Why valuation matters
South Africa applies the WTO Valuation Agreement (the GATT Valuation Code), given effect in sections 65 to 74A of the Customs & Excise Act No. 91 of 1964. South Africa expresses the customs value on an FOB basis (the goods plus the cost of loading them at the export port) — unlike many countries, it does not add the international ocean freight and insurance to the customs value. Duty is charged on that FOB value, and import VAT at 15% is charged on the added-tax value (ATV) — broadly the customs value plus duty plus a 10% upliftment on the customs value for goods imported from outside the SACU (BLNS) area (the uplift stands in for the excluded freight and insurance).
The six methods — applied in strict order
SARS cannot pick a method that suits it. The methods must be tried in sequence; each one is only reached if the previous method cannot be applied.
| Order | Method | Basis of value |
|---|---|---|
| 1 | Transaction value | Price actually paid or payable for the goods when sold for export to SA |
| 2 | Transaction value of identical goods | Value already accepted for identical goods exported at about the same time |
| 3 | Transaction value of similar goods | Same, but for similar (not identical) goods |
| 4 | Deductive value | SA resale price less local costs, profit and post-import charges |
| 5 | Computed value | Cost of production + profit + expenses in the country of export |
| 6 | Fall-back method | Reasonable means consistent with the Agreement, using data available in SA |
The importer may, on request, ask SARS to reverse the order of methods 4 and 5.
Method 1: Transaction value (used 90%+ of the time)
For almost every commercial import, the customs value is simply the price actually paid or payable on your commercial invoice — expressed on an FOB basis (South Africa does not add the ocean freight or insurance). To use it, four conditions must be met:
- There are no restrictions on your use of the goods (other than those imposed by law)
- The sale or price is not subject to conditions whose value cannot be determined
- No part of the resale proceeds flows back to the seller (unless an adjustment is made)
- The buyer and seller are not related, or if they are, the relationship did not influence the price
Additions to the price (section 67)
These must be added to the invoice price if not already included:
- Commissions and brokerage (except buying commission)
- Cost of containers and packing
- Royalties and licence fees you must pay as a condition of sale
- "Assists" — tooling, dies, moulds or materials you supplied to the manufacturer free or at reduced cost
- Transport, loading and handling costs up to the port of export (to reach the FOB value) — but not the international ocean freight or insurance to South Africa, which SA excludes from the customs value
Related-party transactions
If you import from a company you own, are owned by, or share ownership with, SARS will scrutinise whether the relationship pushed the price down. You can still use transaction value if you show either that the price is consistent with how the seller prices to unrelated buyers, or that it closely approximates a "test value" (an identical/similar goods value, a deductive value or a computed value). Keep transfer-pricing documentation ready.
When SARS rejects your declared value
SARS may doubt a declared value if it is far below reference prices for comparable goods. The Customs & Excise Act gives SARS the power to call for proof, and to determine a value under sections 65 to 74A if it is not satisfied. The proper response is documentary, not argumentative:
- Supplier's commercial invoice and proof of payment (TT swift, bank statement)
- Purchase order, contract and price list
- Freight and insurance invoices
- A signed DA 55 valuation declaration where required
Pro tip: declare the true price, every time
Transaction value is the cheapest method to defend and the easiest to clear. Under-declaring to save duty exposes you to value upliftment, the full duty, penalties and possible criminal liability — and your duty is a deductible business cost anyway. Declare correctly and keep your paper trail.
Related guides & tools
- How to clear customs with SARS — where valuation fits in the clearance process
- Incoterms explained — how your Incoterm sets the costs your agent adds or strips out to reach the FOB customs value
- KB: Customs valuation (transaction value)
- Duty & VAT Calculator — turn your customs value into a landed cost
Frequently asked questions
What customs value does SARS use to calculate import duty?
South Africa applies the WTO Valuation Agreement (sections 65–74A of the Customs & Excise Act) and expresses the customs value on an FOB basis — the price of the goods plus the cost of loading them at the export port. Unlike many countries, SARS does not add international ocean freight and insurance to the customs value; a statutory 10% upliftment on the customs value (for goods from outside SACU) stands in for them in the VAT base only.
What is the transaction value method?
Method 1 of six, used for well over 90% of commercial imports: the customs value is simply the price actually paid or payable on your commercial invoice, on an FOB basis. It applies provided there are no disqualifying restrictions or conditions, no resale proceeds flowing back to the seller, and no related-party relationship that influenced the price. The six methods must be tried in strict sequence — SARS cannot pick one that suits it.
What must be added to the invoice price for customs valuation?
Section 67 additions include commissions and brokerage (except buying commission), the cost of containers and packing, royalties and licence fees payable as a condition of sale, "assists" such as tooling or moulds you supplied to the manufacturer free or at reduced cost (apportioned across the units), and transport and handling up to the port of export — but not the international freight or insurance to South Africa.
What can I do if SARS rejects my declared customs value?
Respond with documents, not argument: the supplier's invoice and proof of payment, purchase order and price list, freight and insurance invoices, and a signed DA 55 where required. If SARS still issues a value determination you disagree with, you can pursue internal administrative appeal and then the High Court — and usually clear the goods against a provisional payment in the meantime so they do not rack up demurrage.