Customs Valuation — The Six WTO Methods Applied to Zimbabwean Imports

If classification tells you the rate, valuation tells you what the rate is applied to. A 40 per cent ad valorem duty on bicycles is meaningless until you know “40 per cent of what” — and the answer is the customs value. ZIMRA needs both numbers to assess duty: classification gives the rate, valuation gives the base. Get the value wrong and you’ll either short-pay duty (and face a post-clearance audit) or overpay (and have to claim a refund). This lesson walks you through the six WTO valuation methods ZIMRA applies, in order, to every imported consignment.

Earlier in this course we established that tariff classification is the starting point of the customs system: every customs determination begins with the tariff line. Classification, however, gives only the rate — it tells us, for example, that a consignment of bicycles attracts an ad valorem rate of 40 per cent, but it does not tell us "40 per cent of what". The "what" is the customs value, and it is determined under the second pillar of the customs system: customs valuation. Tariff classification answers the question "what is being imported?"; customs valuation answers the question "what is the monetary base on which the duty is to be applied?". Together, classification and valuation produce the duty assessment, and neither operates without the other.

The economic stakes of valuation are enormous. Customs duties in Zimbabwe are predominantly ad valorem — that is, they are levied as a percentage of the customs value, rather than as a fixed amount per unit. A consignment of garments attracting a 40 per cent ad valorem rate is taxed forty cents on every dollar of customs value; a misvaluation by one dollar therefore alters the duty by forty cents, and a misvaluation across a fleet of containers can run into hundreds of thousands of United States dollars. Surtax, excise duty, and value added tax on importation are also computed by reference to the customs value (or to a base that includes it), so a single misvaluation cascades through every fiscal element of the duty assessment. For these reasons, valuation is among the most heavily-litigated areas of customs practice and the most frequent target of post-clearance audit.

Beyond its fiscal significance, valuation is the principal means by which the customs system addresses the perennial problem of valuation fraud. Under-declaration of value to evade duty, over-declaration of value to externalise foreign currency, manipulation of related-party pricing to shift profit, and concealment of dutiable charges through invoice-splitting — these schemes are the bread and butter of customs investigation work, and they all turn on the rules examined in this module.

A.1 The Advanced Stage of Valuation Practice

This lesson sits the customs course as the advanced extension of (Customs Valuation, Combined Levels 1 & 2). Where Combined Levels 1 & 2 introduced the WTO Valuation Agreement architecture, the six methods, the section 113 adjustments, and the standard CIF-based VDP determination, takes the practitioner into advanced territory where the routine cases give way to contested ones. The reader is assumed to have completed Combined Levels 1 & 2 and to be able to compute a routine VDP for an arms-length commercial importation; is concerned with the cases where that routine breaks down.

The advanced cases share a common feature: the simple application of the transaction-value method does not produce a defensible customs value, and the practitioner must engage with secondary tools — the test-value comparison, the circumstances-of-the-sale enquiry, the deductive-and-super-deductive methods, the apportionment of assists, the buying-versus-selling commission distinction, the Article 8.1.C versus 8.1.D analysis for royalties, the valuation database, and the dispute-settlement architecture. These tools are the intellectual core of the customs valuation profession.

A.2 Why Matters

valuation matters for three reasons:

• the cases that consume disproportionate enforcement and audit resources are precisely the cases that resist treatment: related-party transactions, multinational enterprise imports, royalty-bearing imports, second-hand vehicles, and informal-trade adjustments
• the Finance Bill 2026 and the progressive AfCFTA implementation are pushing more transactions into the related-party and intra-group category, where transfer-pricing analysis intersects with customs valuation in ways that require advanced handling
• the Zimbabwean valuation database — increasingly central to ZIMRA practice — must be used with discipline; misuse produces both upward-bias errors against importers and downward-bias errors against the fiscus

Customs valuation in Zimbabwe is governed by sections 105 to 113 of the Customs and Excise Act [Chapter 23:02], read with the Customs and Excise General Regulations and the ZIMRA Valuation Manual. The relevant sections are best understood as a single architecture: section 105 sets the framework, sections 106 to 111 prescribe the six methods of valuation in their hierarchical order, section 112 deals separately with private (non-commercial) importations, and section 113 prescribes the additions to and exclusions from the price actually paid or payable.

section 105 — Basis of Valuation

Section 105 establishes the fundamental rule: the basis of customs value in Zimbabwe is the cost, insurance, and freight (CIF) value of the imported goods at the place of importation. This is a critical point. Some jurisdictions use FOB (Free on Board) as the basis — meaning the value is computed at the port of export, exclusive of freight and insurance — but Zimbabwe uses CIF, meaning that freight and insurance up to the place of importation are included in the customs value. The customs value of a consignment landing at Beitbridge therefore includes not only the price of the goods at the point of export and the cost of getting them onto the means of transport, but also the cost of moving them across borders to Beitbridge and the cost of insuring them along the way.

section 106 — The Transaction Value Method

Section 106 defines the primary (transaction value) method of valuation. The transaction value is the price actually paid or payable for the imported goods when sold for export to Zimbabwe, as adjusted in terms of section 113. Section 106(1) imposes four conditions that must all be satisfied for the transaction value method to apply. Section 106(2) provides the related-parties qualification: the mere fact of relationship does not preclude use of the transaction value method, provided the relationship did not influence the price or the importer can show that the price closely approximates a test value.

Sections 107 and 108 — Identical and Similar Goods

Section 107 prescribes the second method, the transaction value of identical goods, used where transaction value cannot be applied to the goods being valued. Identical goods are goods that are the same in all respects (physical characteristics, quality, reputation), produced in the same country, and preferably by the same producer, sold for export to Zimbabwe at or about the same time as the goods being valued. Section 108 prescribes the third method, the transaction value of similar goods. Similar goods need not be identical but must closely resemble the goods being valued in terms of component materials, physical characteristics, and commercial interchangeability, and must perform the same functions.

Sections 109, 110, and 111 — Deductive, Computed, and Fallback

Section 109 prescribes the fourth method, the deductive value method, in which the customs value is derived from the unit price at which the imported goods (or identical or similar imported goods) are sold in Zimbabwe in the greatest aggregate quantity to unrelated buyers, with appropriate deductions for costs incurred after importation. Section 110 prescribes the fifth method, the computed value method, in which the value is built up from the cost of materials and fabrication employed in producing the goods, plus an amount for profit and general expenses usual in sales of goods of the same class or kind. Section 111 prescribes the sixth and last method, the fallback method, in which the value is determined using reasonable means consistent with the principles and general provisions of the WTO Valuation Agreement.

The Inversion Proviso — Sections 109 and 110

A critical procedural provision concerns the order in which the fourth and fifth methods are applied. Section 109(1) contains a proviso that, at the request of the importer made before valuation begins, the order of methods 4 and 5 may be reversed: the computed value method may be applied before the deductive value method. This is the only departure permitted from the strict hierarchical order. The reason is practical — for goods produced abroad by a manufacturer who maintains audited cost records, the computed value method may produce a more reliable result than the deductive method, which depends on Zimbabwean re-sale data that the importer may not control.

section 112 — Private Importations

Section 112 deals separately with private (non-commercial) importations: goods imported by individuals not in the course of trade. The valuation of private importations is conducted on a different basis, recognising that there may be no commercial transaction at all in the orthodox sense, or that the transaction may be too small or too irregular to support the application of the commercial valuation methods. Section 112 will be examined in detail in (Travellers’ Clearance).

section 113 — Adjustments

Section 113 is the longest and most operationally significant section in the valuation suite. It prescribes the adjustments — additions to and exclusions from — the price actually paid or payable to arrive at the customs value. Section 113(1) prescribes the additions: paragraph:

• covers commissions, brokerage, and the cost of containers and packing; paragraph
• covers assists; paragraph
• covers royalties and licence fees; paragraph
• covers accruals. Section 113(2) prescribes the freight and insurance treatment, with specific provisos for air, road, rail, and pipeline transport, and the deeming-rate machinery for cases where freight or insurance is free, reduced, or undocumented.

B.2 The WTO Agreement on Customs Valuation

The Zimbabwean valuation system is a domestic implementation of the WTO Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (commonly called the WTO Valuation Agreement). The Agreement was negotiated during the Uruguay Round and entered into force on 1 January 1995. Zimbabwe is a Contracting Party to the WTO and is bound by the Agreement.

The Agreement is short by international-trade-law standards but doctrinally dense. Article 1 prescribes the transaction value method. Articles 2 and 3 prescribe the identical-goods and similar-goods methods. Article 4: significantly — provides that, at the request of the importer, the order of Articles 5 and 6 may be reversed. Articles 5 and 6 prescribe the deductive and computed value methods. Article 7 prescribes the fallback method. Article 8 prescribes the adjustments (the international counterpart of section 113). Articles 9 to 24 deal with administrative matters — currency conversion, deferment of valuation, dispute resolution, and the establishment of the WTO Committee on Customs Valuation.

The premises of the Agreement are worth stating expressly:

• the customs value should, to the greatest extent possible, be based on the actual transaction value of the goods
• where the transaction value cannot be determined, the customs value should be derived from the closest available approximation to it
• valuation procedures should be uniform, fair, and neutral
• valuation should not be used as a means of combating dumping (which is governed by separate WTO instruments)
• valuation should be predictable, so that traders can plan their commercial affairs

B.3 The ZIMRA Valuation Manual and Practice Notes

The ZIMRA Valuation Manual operationalises the statutory framework for the day-to-day work of valuation officers and clearing agents. It contains illustrative worked examples, the lists of dutiable and non-dutiable charges (the principal lists are at Chapter 13 of the Practice Notes), the procedures for currency conversion using the published Rates of Exchange for Customs Purposes, and the documentary standards for valuation declarations. The Departmental Standing Instructions (DSIs) issued by the Commissioner provide further internal guidance on contentious matters and on the treatment of specific transaction types. The customs professional is expected to be familiar with the Manual and the Practice Notes; references in this module will direct the reader to specific Practice Note chapters where appropriate.

B.4 The VAT Act Connection

Section 6(1)(b) of the Value Added Tax Act [Chapter 23:12] imposes VAT on the importation of goods. The value for VAT under section 12A of the VAT Act is the customs value plus customs duty plus surtax plus excise duty plus any other charges levied under any other Act in connection with the importation. The customs value computed under sections 105 to 113 of the Customs and Excise Act therefore feeds directly into the VAT computation. A misvaluation under-states or over-states not only the customs duty but also the VAT on importation. The valuation determination therefore has a multiplicative fiscal effect.

B.5 Recent Amendments

The Finance Act No. 7 of 2025 introduced refinements to certain aspects of the valuation system, particularly in the area of transfer-pricing-related party transactions where the OECD-aligned arm’s-length analysis under the Income Tax Act intersects with the WTO Valuation Agreement’s related-parties test. The Finance Bill 2026 contains further proposed adjustments to the deeming rates and to the treatment of certain digital-services charges that have arisen from the increasing prevalence of e-commerce importations. The classifier and valuation officer should monitor the progress of the Bill and update their practice on its enactment.

B.1 The WTO Valuation Agreement — Full Architecture

The WTO Valuation Agreement (formally the Agreement on Implementation of Article VII of GATT 1994) is the international architecture from which the Zimbabwean valuation framework descends. Its structure is as follows:

Article	Subject	Domestic Anchor
Article 1	Transaction Value (Primary Method)	Section 106
Article 2	Transaction Value of Identical Goods	Section 107
Article 3	Transaction Value of Similar Goods	Section 108
Article 4	Interchangeability of Methods 5 and 6	Section 109(1) proviso
Article 5	Deductive Value	Section 109
Article 6	Computed Value	Section 110
Article 7	Fallback Method	Section 111
Article 8	Adjustments to Price	Section 113
Article 9	Currency Conversion	Section 113(2) proviso
Article 10	Confidentiality	ZIMRA Code of Conduct
Article 11	Right of Appeal	Section 196 of the Act
Article 12	Publication	ZIMRA Public Notices
Article 13	Right to Release Pending Decision	Section 47 procedure
Article 14	Legal Effect of Annex I (Interpretative Notes)	Persuasive authority
Article 15	Definitions	Section 2; section 104(3)
Article 16	Right to Explanation	ZIMRA Practice
Article 17	Customs Right to Question Importer	Section 47
Article 18	WTO and WCO Committees	Treaty matter
Article 19	Dispute Settlement	Treaty matter
Article 20	Special Differential Treatment	Treaty matter
Article 21	Reservations	Treaty matter
Article 22	National Legislation Conformity	Sections 104-113
Article 23	WTO Annual Review	Treaty matter
Article 24	WTO Secretariat	Treaty matter

B.2 The Annexes

• Annex I — Interpretative Notes. Detailed interpretive guidance on the operation of each Article. Critical reference text for the practitioner; integral to the Agreement under Article 14.
• Annex II — Technical Committee Responsibilities. Establishes the WCO Technical Committee on Customs Valuation (TCCV) and prescribes its procedures.
• Annex III — Reservations and Concessions for Developing Countries. Permits delayed implementation, deviations from minimum-value prohibitions in defined cases, and reservations to specified provisions for developing-country members.

B.3 The Customs and Excise Act — Advanced Provisions

• section 104 — definitions for valuation, including section 104(3) which prescribes when persons are deemed related (eight tests, paragraphs (a) through (h)).
• section 105 — basis of valuation. Customs value = transaction value as adjusted under section 113 (the WTO architecture in domestic form).
• section 106 — transaction value method. Subsection (1) prescribes the four cumulative conditions; subsection (2) operates the related-party test; subsection (3) prescribes test values.
• Sections 107, 108 — transaction value of identical and similar goods.
• section 109 — deductive value method. Subsection (1) proviso allows the importer to invert sections 109 and 110.
• section 110 — computed value method.
• section 111 — fallback method. Subsection (3) prohibits seven specific bases.
• section 112 — private (non-commercial) importations.
• section 113 — adjustments. Subsection (1)(a) commissions and packing; (b) assists; (c) royalties; (d) accruals. Subsection (2) prescribes CIF treatment with provisos for air freight, road and rail insurance, and African road freight flat rates.

B.4 The General Regulations

Regulations 31-43 of the General Regulations (SI 154 of 2001) operationalise the section 104-113 framework. They prescribe the documentary evidence required for valuation decisions, the conditions for currency conversion, the use of the valuation database, and the procedure for valuation enquiries.

B.5 The Customs Valuation Manual

ZIMRA Customs Valuation Manual (regularly updated) is the operational authority that supplements the Act and Regulations. It contains:

• the policy on discounts (FOB versus VDP treatment)
• the categorisation of dutiable and non-dutiable charges (Chapter 13)
• the operational procedure for related-party enquiries
• the use of the valuation database
• the procedure for issuing valuation rulings

B.6 TCCV Decisions, Advisory Opinions, and Commentaries

The Technical Committee on Customs Valuation (TCCV), constituted under Annex II of the WTO Agreement and operating under the World Customs Organization, issues binding decisions and persuasive advisory opinions and commentaries that interpret the Agreement. Zimbabwean valuation practice draws extensively on these instruments. Examples relevant to this module include:

• Advisory Opinion 5.3 — settlement discounts where payment is not made on importation; the timing and proof-burden rules.
• Commentary 17.1 — buying commissions; the evidence required to establish a bona-fide agency relationship.
• Decisions on price elements, on relationships, and on the computed and deductive methods.

To understand why the transaction value method occupies the top of the modern valuation hierarchy, one must understand what it replaced. Before the WTO Valuation Agreement, the dominant international standard was the Brussels Definition of Value (BDV), adopted under the auspices of the Customs Co-operation Council in 1953. The BDV defined the customs value as the "normal price" — that is, the price at which the goods would be sold in the open market between independent buyer and seller. The BDV was therefore a notional or constructive value, not necessarily the actual price paid in the transaction at hand. The valuation officer at the border was empowered to substitute his own assessment of "normal price" for the transaction price declared by the importer.

The BDV had three structural defects:

• it was unpredictable. The customs value was determined by the officer at the moment of clearance, on the basis of his subjective assessment of "normal price". Importers could not plan their commercial affairs because the duty cost was unknown until clearance
• it was inequitable. Different officers reached different conclusions on materially identical goods. Two consignments of the same fabric, presented at the same border on the same day under the same trade documents, could be valued differently depending on which officer attended to which consignment
• it was abused. The notional-price standard gave officers wide discretion, which became a vector for corruption in many jurisdictions and a source of trade friction in others. Importers in jurisdictions hostile to a particular trading partner could be subjected to constructively-elevated values; importers in friendly jurisdictions could be relieved

The Tokyo Round of GATT (1973–1979) addressed these defects through the GATT Valuation Code, which inverted the doctrine: the customs value should, in the first instance, be the actual transaction value of the goods, not a notional "normal price". The Uruguay Round (1986–1994) carried this forward into the WTO Valuation Agreement. The transaction value method became the primary method, and the alternatives became increasingly approximative substitutes to be used only where the primary method was unavailable.

Zimbabwe, as a Contracting Party to the WTO and a signatory to the Valuation Agreement, has implemented this doctrine through sections 105 to 113 of the Customs and Excise Act. The current Zimbabwean system is therefore the culmination of nearly four decades of international jurisprudence on the proper basis for computing customs value. It is structurally fairer and more predictable than the BDV system it replaced, but it remains operationally complex because the transaction value of any given consignment must be tested against the four section 106(1) conditions, and where any of those conditions fails, the valuation officer must descend through the methods to find the next applicable basis.

C.2 The Six Methods Doctrine

The WTO Valuation Agreement, as transposed into Zimbabwean law, prescribes six methods of valuation, applied strictly in their hierarchical order. The hierarchy is non-negotiable except for the single Article 4 / section 109(1) inversion of methods 4 and 5 at the importer’s request. The six methods, in order, are:

#	Method	Statutory anchor	WTO anchor
1	Transaction Value of the goods being valued	section 106 (read with section 113)	Article 1
2	Transaction Value of Identical Goods	section 107	Article 2
3	Transaction Value of Similar Goods	section 108	Article 3
4	Deductive Value Method	section 109	Article 5
5	Computed Value Method	section 110	Article 6
6	Fallback Method	section 111	Article 7

The classifier of an imported consignment for valuation purposes therefore proceeds as follows. Method 1 is attempted first. If Method 1 cannot be used because one or more of the section 106(1) conditions is not met, the valuation officer descends to Method 2. If no identical goods sold for export to Zimbabwe at or about the same time can be found, the officer descends to Method 3. If no similar goods can be found, the officer descends to Method 4 — unless the importer has, before valuation begins, requested that Methods 4 and 5 be inverted, in which case the officer applies Method 5 first. If neither Method 4 nor Method 5 can be applied, the officer applies Method 6 (fallback), which permits flexible application of any of the prior methods consistent with the principles of the Agreement.

In practice, well over 95 per cent of Zimbabwean commercial importations are valued under Method 1, because most commercial transactions present a clear sale to Zimbabwe with documented payment. Methods 2 and 3 are used principally where Method 1 fails on documentary grounds — for example, where the invoice is incomplete or where the relationship test under section 106(2) cannot be satisfied. Methods 4, 5, and 6 are used in the small residual class of cases where no underlying commercial sale can be relied upon — repossessions, branch transfers, donated goods, goods entering on a barter basis, and so on.

C.3 Method 1 — The Transaction Value Method in Detail

C.3.1 The Statutory Definition

Section 106 defines the transaction value as the price actually paid or payable for the imported goods when sold for export to Zimbabwe, as adjusted in terms of section 113. Each phrase in this definition carries weight and must be examined separately.

C.3.2 "Price Actually Paid or Payable"

The price actually paid or payable is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods. This formulation is wider than it first appears. It includes not only the price recorded on the commercial invoice but also any additional payments made by the buyer as a condition of sale of the goods, whether the additional payments are made directly to the seller or to a third party for the seller’s benefit. A buyer who pays the seller US$ 10 000 for a consignment of equipment and separately pays the seller’s creditor US$ 2 000 to discharge the seller’s obligation has, for valuation purposes, paid US$ 12 000 — the full payment is the price actually paid or payable, not merely the invoice amount.

Conversely, payments made by the buyer that do not benefit the seller are not part of the price actually paid or payable. A buyer who pays a Zimbabwean clearing agent US$ 500 for clearance services has not paid the seller US$ 500; the clearance fee is incurred after importation and is not, on the conventional analysis, part of the price actually paid or payable for the goods. Similar logic applies to buying commission paid to the buyer’s own purchasing agent (a category of non-dutiable charges examined in detail below).

C.3.3 "For the Imported Goods"

The phrase "for the imported goods" requires that the goods to which the price relates are in fact imported into Zimbabwe. A price paid for goods that were never imported, or that were imported into a different country and re-exported, does not constitute a transaction value for Zimbabwean valuation purposes. The point is rarely contentious in straightforward commercial transactions but matters in transit, branch-transfer, and re-exportation scenarios.

C.3.4 "When Sold for Export to Zimbabwe"

The phrase "when sold for export to Zimbabwe" requires that there has been an international sale resulting in the export of the goods to Zimbabwe. Two elements are necessary. First, there must be a sale — a transfer of ownership for consideration. Goods donated, gifted, lent, leased, or transferred between branches of the same company are not "sold". Second, the sale must be for export to Zimbabwe — the goods must be sold with Zimbabwe as the country of destination. A consignment sold for export to Mozambique that is later diverted to Zimbabwe was not "sold for export to Zimbabwe" within the meaning of the section.

C.3.5 "As Adjusted in Terms of section 113"

The transaction value is not simply the invoice amount; it is the price actually paid or payable as adjusted in terms of section 113. Section 113 prescribes the additions and exclusions, examined in section C.5 below. The transaction value method does not produce a customs value until the section 113 adjustments have been performed.

C.3.6 The Four Conditions in section 106(1)

Section 106(1) imposes four cumulative conditions that must all be satisfied for the transaction value method to apply. If any condition fails, Method 1 is unavailable and the valuation officer must descend to Method 2.

Condition 1:

• No restrictions on disposal or use. There must be no restrictions on the buyer&rsquo
• s disposal or use of the goods, except restrictions that are imposed by law (such as the requirement that alcoholic beverages not be sold to persons under 18, or that certain medicines be sold only on prescription)
• restrictions that limit the geographical area in which the goods may be resold (such as a sanctions-related territorial limitation)
• restrictions that do not substantially affect the value of the goods (such as a clause requiring the buyer not to sell the new model year of a vehicle before a fixed launch date). Restrictions of these three types do not preclude use of Method 1
• other restrictions do

Condition 2 — No undeterminable conditions or considerations. The sale or price must not be subject to any condition or consideration whose value cannot be determined. The classic example is a tying condition: the price of the imported goods is set on the condition that the buyer also buys other goods from the seller. Where the value attributable to that tying condition cannot be quantified, Method 1 is unavailable. Another example is a price-determination clause linking the import price to the price at which the buyer subsequently sells unrelated goods to the seller.

Condition 3 — No accrual of resale proceeds without adjustment. No part of the proceeds of any subsequent resale, disposal, or use of the goods by the buyer may accrue directly or indirectly to the seller, unless an appropriate adjustment can be made under section 113. This is the "accrual" condition. If the buyer is contractually obliged to remit a portion of resale proceeds to the seller, those accruals must be quantified and added under section 113(1)(d); if the accrual cannot be quantified, Method 1 cannot be used.

Condition 4 — No prohibited buyer-seller relationship. The buyer and seller must not be related, except as permitted by section 106(2). Section 106(2) provides that the mere fact of relationship does not preclude use of Method 1, provided the importer can demonstrate either:

• that the relationship did not influence the price
• that the price closely approximates a "test value" — that is, a value already accepted by Customs for identical or similar goods sold to unrelated buyers, or a deductive or computed value for identical or similar goods.

C.3.7 The Test-Value Mechanism

The test-value mechanism merits expansion. In practice, the most common scenario in which the relationship test is engaged is the importation of goods between members of a multinational group — a Zimbabwean subsidiary importing from its foreign parent, or two subsidiaries of the same parent transacting across borders. The mere fact that buyer and seller are related (as commonly defined in the Companies Act, the Income Tax Act, or by reference to common control or ownership) does not preclude use of Method 1. The valuation officer, however, is entitled to examine the circumstances of the sale to determine whether the price has been influenced by the relationship.

If the importer wishes to defend the use of Method 1 notwithstanding the relationship, the importer can offer a test value. A test value is a value already accepted by ZIMRA Customs for identical or similar goods in a sale between unrelated parties, occurring at or about the same time as the sale being valued. If the related-party transaction value closely approximates the test value, Method 1 may be used. The test-value comparison is a mechanism for verifying that the relationship has not produced an artificially-depressed (or, less often in this context, artificially-elevated) price. The test-value mechanism intersects with transfer-pricing analysis under the Income Tax Act, and the careful customs professional working on a related-party transaction will coordinate with the transfer-pricing specialists to ensure consistency between the customs and income-tax positions.

C.3.8 Non-Sale Situations

Eleven categories of importation are commonly encountered in which there is no underlying sale, and Method 1 cannot be applied. The customs professional should commit them to memory:

• Donations and free gifts.
• Free-of-charge samples.
• Branch transfers (intra-firm shipments between branches of the same legal entity).
• Inherited goods.
• Barter trade (goods exchanged for goods rather than for monetary consideration).
• Goods on consignment (goods sent to a Zimbabwean agent for sale, with title remaining in the foreign principal until on-sale).
• Goods on promotion (goods sent for promotional purposes, no sale to the Zimbabwean recipient).
• Goods for repair and return (goods sent to Zimbabwe for repair, to be returned to the foreign owner).
• Goods for exhibition at trade fairs (no sale, no transfer of ownership).
• Goods on hire or lease (rental of the goods, not sale).
• Repossessions (goods returned to the seller as a result of buyer default).

In each case, Method 1 is unavailable and the valuation officer must apply Methods 2 to 6 in order. In a small but operationally significant fraction of cases, the consignment will ultimately be valued under Method 6 (fallback) because no commercial transaction can be relied upon for any of the prior methods.

C.4 The CIF Basis and Its Components

Section 105 fixes the customs value as the CIF value of the imported goods at the place of importation. CIF is an acronym for Cost, Insurance, and Freight. Each component is defined in section 2 of the Customs and Excise Act, and each must be examined separately because errors in any component cascade through the duty assessment.

C.4.1 Cost

The "cost" of imported goods, for valuation purposes, is the selling price plus all charges and expenses incurred up until the goods are placed on board the means of transport for export. Examples of charges that fall within "cost" include documentation fees incurred at the place of export, transport from the seller’s premises to the port of export, interest charges, commissions paid to the seller (or for the seller’s benefit), special-attendance charges for handling the goods at the place of export, wharfage, and packing for export.

C.4.2 Freight

"Freight" is the cost of transporting the goods from the place of export to the place of importation. It includes all charges and expenses necessary for the onward transmission of the goods between those two points — loading, unloading, transit clearance charges, handling charges along the way, and so on.

C.4.3 Insurance

"Insurance" is the cost of insuring the goods from the place of export to the place of importation. The insurance component is the cost of insuring (the premium plus any stamp duty), not the sum insured. A consignment with a cost of US$ 100 000 may carry an insurance premium of US$ 200; the insurance component is US$ 200, not US$ 100 000.

C.4.4 FOB (Free on Board)

The "Free on Board" (FOB) value is defined in section 2 and is critical to several computational mechanisms in section 113. The FOB value includes all charges (whether dutiable or not) incurred from the point of purchase up to the point at which the goods are on board the means of transport for export from the country of sale. FOB is therefore equivalent to "Cost" in the CIF formula but is named differently because it operates as a calibration anchor for the freight and insurance deeming rules examined below.

C.4.5 The Importance of FOB in Computations

FOB matters because it is the reference base for three computational mechanisms in section 113(2)(c): the 15 per cent FOB cap on air freight and air insurance (where these are not documented or where they exceed 15 per cent); the 1 per cent FOB cap on road, rail, and pipeline insurance (similarly capped where actual insurance exceeds 1 per cent or is undocumented); and the 5 per cent FOB and 7.5 per cent FOB deemed rates for African road freight where actual freight is undocumented. In each case, the customs officer first computes the FOB and then applies the relevant percentage to obtain the freight or insurance cap, comparing the cap with any actual figures and using the lower of the two.

C.5 The section 113 Adjustments Architecture

Section 113 prescribes the adjustments to the price actually paid or payable. These are adjustments that move the price from "what the buyer paid the seller" to "what the customs value should be" — capturing dutiable elements that may be invoiced separately, excluded from the invoice altogether, or otherwise opaque to a casual examination of the commercial documents.

C.5.1 General Conditions for section 113 Adjustments

Before any specific adjustment can be made, four general conditions must be satisfied. The amount must have been incurred by the buyer; it must be for the goods being valued; it must not already be included in the price actually paid or payable (avoiding double-counting); and it must be for the benefit of the seller in relation to the goods being valued. Two further conditions apply to assists specifically: the assist must have been used in the production of the goods being valued, and design or developmental work must have been undertaken outside Zimbabwe.

C.5.2 section 113(1)(a) — Commissions, Brokerage, and Packing

Section 113(1)(a) requires the addition of:

• commissions and brokerage paid to the seller or for the seller’s benefit
• the cost of containers that are treated as one with the goods (a customs-specific concept distinguishing such containers from external transport packaging — recall the Section XI / Chapter 71 treatment in Module 1);
• the cost of packing, including labour and materials. Selling commission paid to the seller’s agent is dutiable and must be added; buying commission paid to the buyer’s own purchasing agent is non-dutiable and is not added (it does not flow to the seller).

C.5.3 section 113(1)(b) — Assists

Assists are perhaps the single most under-appreciated category in Zimbabwean valuation practice. An assist is the value of goods or services supplied directly or indirectly by the buyer to the seller (or to the seller’s manufacturer) free of charge or at reduced cost for use in the production and sale for export of the imported goods. The economic logic is straightforward: where the buyer has supplied the seller with materials or services that have entered into the cost of producing the imported goods, the seller’s invoiced price will be lower than it would have been had the seller had to procure those materials or services itself. A naive valuation based only on the invoice would therefore under-state the true value of the goods. Section 113(1)(b) corrects this by requiring the value of the assist to be added to the price.

Section 113(1)(b) recognises four sub-categories of assist:

• (i) Materials
• components
• parts
• the like used in the production of the goods being valued — for example
• handles
• screws
• rivets
• printed circuit boards
• lenses
• fabric supplied by the buyer for incorporation into the manufactured product

The valuation of assists is itself a non-trivial exercise. Where the assist is acquired from an unrelated party at arm’s length, its value is the cost of acquisition. Where the assist is produced by the buyer or acquired from a related party, the value must be computed in accordance with the principles of the WTO Valuation Agreement — typically by reference to the cost of production or replacement cost.

C.5.4 section 113(1)(c) — Royalties and Licence Fees

Section 113(1)(c) requires the addition of royalties and licence fees in respect of patents, trade marks, copyright, and the right to distribute the goods in Zimbabwe (but not in respect of the right to reproduce the goods in Zimbabwe). Three conditions must be satisfied for the addition to be made:

• the royalty or licence fee must be paid as a condition of sale
• it must not already be included in the price actually paid or payable (avoiding double-counting)
• it must be for the goods being imported, not for a product made from those goods

The "condition of sale" requirement is the principal point of contention in this area. A royalty paid for the use of a brand name on goods being imported is typically a condition of sale: the seller would not sell at the invoiced price (or perhaps at all) without the royalty payment. By contrast, a royalty paid by the Zimbabwean importer for the right to manufacture branded goods in Zimbabwe using imported components is usually not a condition of sale of the imported components themselves; it is a condition of the Zimbabwean manufacturing right and is not added under section 113(1)(c).

C.5.5 section 113(1)(d) — Accruals

Section 113(1)(d) requires the addition of accruals — earnings that accrue to the seller as a result of the buyer’s subsequent use, resale, or other disposal of the goods. The textbook example is a contractual provision under which, for each garment that the buyer subsequently resells in Zimbabwe, the buyer is to remit 30 cents to the seller. If the buyer has imported 10 000 garments, the anticipated accrual is US$ 3 000, and that amount is added to the price actually paid or payable to arrive at the customs value. Where the accrual cannot be quantified at the time of valuation, the goods may be entered under provisional valuation pending resolution.

C.5.6 section 113(2)(c) — Freight and Insurance Provisos

Section 113(2)(c) governs the addition of freight and insurance to arrive at the CIF customs value. The general rule is that freight and insurance up to the place of importation are added regardless of who incurred them. The provisos modify this for specific transport modes and for cases where freight or insurance is undocumented, free, reduced, or paid as part of passenger baggage.

For air importations, the first proviso to section 113(2)(c) caps freight and insurance at 15 per cent of FOB where they are not included in the price actually paid or payable. The customs officer compares the actual freight figure with 15 per cent of FOB and uses the lower of the two. The second proviso requires the use of 15 per cent of FOB where goods are transported free of charge, at a reduced cost, as passengers’ baggage, or where no freight or insurance figures are given.

For road, rail, and pipeline importations, the third proviso caps insurance at 1 per cent of FOB on the same comparative basis. The fourth proviso applies to freight and provides for the use of deemed rates: 5 per cent of FOB for goods transported from a specified country in Africa, and 7.5 per cent of FOB for goods transported from any other country in Africa, where actual freight is unavailable, undocumented, free of charge, or paid as part of passenger baggage.

C.6 Discounts and Their Treatment

Discounts are commercial reductions of the selling price granted by the seller to the buyer. The general WTO rule is that discounts are allowable — they reduce the customs value — provided they are real discounts that have actually accrued to the buyer. ZIMRA practice draws a critical distinction between the FOB computation and the VDP (Value for Duty Purposes) computation: all discounts are allowed in the FOB computation, but only specified (named) discounts are allowed in the VDP computation. A discount described simply as "Discount" with no further specification is not allowable in VDP, on the principle that customs cannot verify the commercial reality of an unspecified discount.

C.6.1 Categories of Specified Discount

Common specified discounts in commercial practice include the following:

• Trade discount — granted on the basis of the buyer’s position in the trade chain (manufacturer to wholesaler, wholesaler to retailer).
• Quantity discount — granted on the basis of the volume of goods purchased (the more bought, the deeper the discount).
• Loyalty discount — granted on the basis of the buyer’s repeat custom.
• Prepayment discount — granted for payment in advance of delivery.
• Cash discount (also called settlement discount) — granted for prompt payment after delivery.

Each of these is a specified discount and is allowable in the VDP computation provided it is named in the commercial documents.

C.6.2 The Reducing-Balance Method

Where multiple discounts are allowed on the same transaction, ZIMRA practice applies them on a reducing-balance basis. The first discount is applied to the gross selling price; the second discount is applied to the post-first-discount balance; the third discount is applied to the post-second-discount balance; and so on, until all discounts have been applied. Cash and settlement discounts are applied last in the sequence.

C.6.3 Worked Illustration of Discount Treatment

Consider a transaction with a selling price of US$ 100, a 2.5 per cent trade discount, a 5 per cent cash discount, packing of US$ 10, and loading of US$ 15. The reducing-balance computation proceeds as follows:

Selling price	US$ 100.00
Less 2.5% trade discount on US$ 100.00	(US$ 2.50)
Sub-total	US$ 97.50
Less 5% cash discount on US$ 97.50	(US$ 4.88)
Sub-total after discounts	US$ 92.62
Add packing	US$ 10.00
Add loading	US$ 15.00
FOB value	US$ 117.62

The cash discount is applied to the post-trade-discount balance, not to the gross selling price. Had it been applied to gross, the discount value would have been US$ 5.00 (5 per cent of US$ 100), reducing FOB by US$ 0.12 — small in this illustration, large at scale.

C.7 Dutiable and Non-Dutiable Charges

Once the section 113 adjustments and discount treatment have been completed, the customs officer must distinguish between dutiable and non-dutiable charges — those charges that are part of the customs value and those that are not. The principle, drawn from Practice Notes Chapter 13, is that charges incurred by the buyer as a condition of sale of the goods for export to Zimbabwe and that accrue to the seller are dutiable, while charges incurred by the buyer in the process of buying that do not accrue to the seller are non-dutiable.

C.7.1 Examples of Dutiable Charges

• Selling commission — paid by the buyer to the seller’s agent and accruing to the seller’s benefit.
• Royalties and patents paid as a condition of sale.
• Payments to creditors of the seller as a condition of sale of the goods for export to Zimbabwe.
• Cost of containers integral to the goods, and cost of packing.
• Assists (subject to the section 113(1)(b) conditions).
• Accruals (subject to section 113(1)(d)).
• Freight and insurance up to the place of importation.

C.7.2 Examples of Non-Dutiable Charges

• Buying commission — paid by the buyer to the buyer’s own purchasing agent for services rendered to the buyer; it does not accrue to the seller.
• Interest payable on financing of the purchase price (subject to specific conditions in Practice Notes).
• All charges incurred after importation (including domestic freight from the place of importation to the buyer’s premises in Zimbabwe).
• Research undertaken after importation.
• Advertising costs incurred by the buyer in Zimbabwe.
• Royalties and licence fees for the right to reproduce the goods in Zimbabwe (as opposed to the right to import or distribute).

C.7.3 The Buying-versus-Selling Commission Distinction

The buying-versus-selling commission distinction is the single most-tested point in Zimbabwean valuation practice. Selling commission is paid by the buyer to an agent who acts for the seller: for example, a commission agent in the seller’ s country who finds buyers for the seller and arranges export documentation. The commission is paid as part of the transaction and accrues to the seller’ s benefit (in many cases the agent’ s commission is built into the seller’ s pricing). It is dutiable and must be added under section 113(1)(a). Buying commission, by contrast, is paid by the buyer to an agent who acts for the buyer — for example, a sourcing agent in China retained by a Zimbabwean SME to identify and purchase fabrics on the SME’ s behalf. The buying commission compensates the agent for services rendered to the buyer; it does not flow to the seller; it is not dutiable.

C.8 Methods 2 to 6 — The Alternative Methods

C.8.1 Method 2 — Transaction Value of Identical Goods (section 107)

Identical goods are goods that are the same in all respects (physical characteristics, quality, and reputation), produced in the same country, and preferably by the same producer, sold for export to Zimbabwe at or about the same time as the goods being valued. The transaction value of identical goods is used as the customs value of the goods being valued, with appropriate adjustments to reflect any differences in commercial level, quantity, or transport costs. Method 2 is used where Method 1 fails — typically where the documentary record for the goods being valued is inadequate, where the related-parties test cannot be satisfied, or where one of the section 106(1) conditions otherwise fails. The valuation officer searches the ASYCUDA records for identical-goods transactions accepted under Method 1 within a recent window (typically the last 90 days) and uses one such transaction as the basis.

C.8.2 Method 3 — Transaction Value of Similar Goods (section 108)

Similar goods need not be identical to the goods being valued but must closely resemble them in component materials and physical characteristics, must be capable of performing the same functions, must be commercially interchangeable, and must be produced in the same country, preferably by the same producer. Method 3 is used where no identical goods can be found within the recent window. The "closely resemble" standard requires more than superficial similarity: a leather handbag and a vinyl handbag, though both bags, are not similar within the meaning of section 108 because they differ materially in component materials, durability, and commercial market.

C.8.3 Method 4 — Deductive Value Method (section 109)

The deductive value method derives the customs value from the unit price at which the imported goods (or identical or similar imported goods) are sold in Zimbabwe in the greatest aggregate quantity to unrelated buyers, with appropriate deductions. The deductions cover:

• commissions usually paid or agreed for sales in Zimbabwe
• the usual costs of transport, insurance, and associated costs incurred within Zimbabwe
• the customs duties and other taxes payable in Zimbabwe by reason of importation
• any addition for usual profits and general expenses. The method essentially reverse-engineers the customs value from the Zimbabwean re-sale price

C.8.4 Method 5 — Computed Value Method (section 110)

The computed value method builds up the customs value from the cost of materials and fabrication employed in producing the goods, plus an amount for profit and general expenses equal to that usually reflected in sales of goods of the same class or kind by producers in the country of exportation for export to Zimbabwe, plus the cost of transport and insurance up to the place of importation. The method requires access to the producer’s cost records, which is rarely possible in practice except where the producer cooperates voluntarily — typically because of a related-party relationship.

C.8.5 The Inversion of Methods 4 and 5 at the Importer’s Request

Section 109(1) contains a proviso, mirroring Article 4 of the WTO Valuation Agreement, that the order of Methods 4 and 5 may be reversed at the request of the importer made before valuation begins. The reason for the inversion is operational: an importer with a cooperative foreign manufacturer producing audited cost records may obtain a more reliable valuation under Method 5 than under Method 4, which depends on Zimbabwean re-sale data and on potentially-contested adjustments. The inversion is not automatic; the importer must request it explicitly and before the valuation officer begins work.

C.8.6 Method 6 — Fallback (section 111)

The fallback method, prescribed by section 111, applies where none of Methods 1 to 5 produces a customs value. The customs value is then determined using reasonable means consistent with the principles and general provisions of the WTO Valuation Agreement and on the basis of data available in Zimbabwe. The method permits flexibility in applying the prior methods — for example, applying Method 2 with a wider time window, or applying Method 3 with a relaxed similarity test. The flexibility is not unbounded: section 111 read with Article 7.2 of the WTO Valuation Agreement prohibits valuation on the basis of:

• the selling price in the country of exportation
• a system providing for acceptance of the higher of two alternative values
• the price of goods on the domestic market of the country of exportation
• a cost of production other than as prescribed by Method 5
• the price of goods exported to a country other than Zimbabwe
• minimum customs values
• arbitrary or fictitious values.

C.1 GATT Article VII Principles — The Foundation

The WTO Valuation Agreement implements Article VII of the GATT 1994. Article VII prescribes a small number of foundational principles that bind all valuation systems of WTO members. These principles are not merely historical; they are interpretive anchors that, when correctly applied, resolve doubt in the application of the more detailed Agreement provisions. The principles are:

• Customs value shall be based on actual value. The fiscal authority is not free to construct a value of its own choosing; it must take the actual transaction as the starting point and depart from it only where the Agreement permits.
• If actual value cannot be determined, the nearest ascertainable equivalent shall be used. This is the doctrine that drives the hierarchy of methods. Each successive method approximates the actual value as closely as the available evidence permits.
• Customs value shall not be based on value of merchandise of national origin, or on arbitrary or fictitious values. Domestic values cannot be substituted; arbitrary or constructed values cannot be used. Section 111(3) of the Customs and Excise Act gives effect to this prohibition by listing seven specific bases prohibited even under the fallback method.
• Customs value shall not include internal taxes refundable on export. Where the country of export refunds VAT or sales taxes on export, those taxes are not included in the customs value.
• Currency conversion shall reflect the effectively current value of the currency. ZIMRA publishes Rates of Exchange for Customs Purposes weekly to give effect to this principle.
• Comparable quantities to be used. Where comparison values are used (under sections 107, 108, 109, or 110), they must be from comparable quantity transactions. Adjustments are made for quantity differences.

C.2 The Positive Economic Principle

The WTO Valuation Agreement is built on a positive economic principle, as opposed to a normative one. The distinction is conceptually significant. A normative valuation system asks: what should the goods be worth? — and constructs a value based on what a hypothetical reasonable transaction would have produced. A positive valuation system asks: what is the actual transaction value of the goods? — and accepts that value subject to integrity checks. The WTO Agreement adopts the positive approach: the transaction value (the price actually paid or payable, as adjusted) is the primary method, and the fiscal authority departs from it only where the Agreement rules permit.

The positive principle has practical consequences. It explains why Article 1 places the burden on the fiscal authority to demonstrate that the transaction-value method is unavailable, rather than placing the burden on the importer to demonstrate that it is available. It explains why related-party pricing is presumptively acceptable unless the relationship is shown to have influenced the price. It explains why the deductive method (Article 5) is preferred over the computed method (Article 6) — the deductive method works from observable resale prices, while the computed method requires constructive cost reconstruction. The current of the Agreement runs continuously toward observable transactional reality and away from constructed values.

C.3 Related-Party Transactions — The Article 1.2 Architecture

Related-party transactions are the heart of advanced valuation. The Article 1.2 architecture is binary: the fact that the buyer and seller are related does not, by itself, defeat the transaction-value method (Article 1.2(a) sentence 1). What defeats the method is a finding that the relationship influenced the price (Article 1.2(a) sentence 2). The fiscal authority bears the burden to demonstrate influence; the importer is entitled to demonstrate non-influence by either of two routes — the circumstances-of-the-sale enquiry, or test values.

Section 104(3) of the Customs and Excise Act prescribes the eight relationships that constitute relatedness:

• (a) officer or director of one another businesses;
• (b) legally recognised partners in business;
• (c) employer and employee;
• (d) one person directly or indirectly owns, controls, or holds 5 per cent or more of the outstanding voting stock or shares of both;
• (e) one of them directly or indirectly controls the other;
• (f) both of them are directly or indirectly controlled by a third person;
• (g) together they directly or indirectly control a third person;
• (h) members of the same family.

Where any of these relationships subsists, the related-party enquiry is triggered. It is not a presumption against the transaction value; it is a procedural gate that must be passed.

C.4 Circumstances Surrounding the Sale — The Five Dimensions

The first route to demonstrating non-influence is the circumstances-of-the-sale enquiry. This is a structured comparison between the controlled (related-party) transaction and uncontrolled (arms-length) transactions across five dimensions. Each dimension must be examined and adjustments made for differences:

C.4.1 Characteristics of the Goods

The goods compared must be identical or similar. Differences in physical specifications, brand, design, age, quality, and intended use must be identified and adjusted for. Where the differences exceed what adjustment can accommodate, the comparison is unreliable and a different uncontrolled transaction must be sought.

C.4.2 Functions Performed by the Parties

Functions are the activities that each party undertakes in the value chain — design, research and development, manufacture, distribution, marketing, advertising, financing, management, after-sales service. The functions must be analysed taking into account assets used and risks assumed. A controlled transaction in which the seller performs design and R&D (and the buyer simply distributes) is not comparable to an uncontrolled transaction in which the buyer performs design and R&D (and the seller manufactures to specification). The functions, assets, and risks profile must be matched, with adjustments where it cannot be matched precisely.

C.4.3 Contractual Terms

The contractual terms — explicit and implicit — define the allocation of responsibilities, risks, and benefits. Pricing terms (FOB, CIF, EXW), payment terms (advance, on delivery, deferred), warranty terms, return terms, exclusivity terms, and post-importation service terms must be examined. Where the contractual structure differs materially from the uncontrolled comparator, adjustment is required. In the absence of a written contract, the contractual relationships must be deduced from conduct and from the economic principles that govern uncontrolled transactions.

C.4.4 Economic Circumstances

The market and economic conditions in which the transaction occurred must be comparable. Differences in cost of production (land, labour, capital), geographic location, extent of competition, supply and demand levels, commercial level (wholesale vs retail), and date and time of transaction must be considered. Some of the section 106(1) restrictions (Article 7.2) are based on economic circumstances — for example, a sale subject to a condition or consideration whose value cannot be determined.

C.4.5 Business Strategies

Business strategies: innovation programmes, risk-aversion strategies, political-change responses, market-penetration schemes — may produce a low or nil profit on a particular transaction for a genuine commercial reason. A subsidiary launching a new product into the Zimbabwean market may sell to its parent at low margin to gain market share; a subsidiary discontinuing a product line may sell remaining inventory at clearance prices. The legitimacy of the strategy claim is tested on the timing and likely returns of the strategy. A market-penetration strategy must be capable of recovering through later higher-margin sales; if it cannot, it is not a legitimate strategy but a price suppression.

C.5 Test Values — Article 1.2(b)

The second route to demonstrating non-influence is the test-values mechanism. Article 1.2(b) provides that the related-party transaction value shall be accepted under Article 1 if, at the importer initiative, the value approximates one of the following test values:

• the transaction value to an unrelated buyer of identical or similar goods for export to Zimbabwe (Article 2 or 3 reference);
• the customs value of identical or similar goods determined under Article 5 (deductive) for goods imported at or about the same time;
• the customs value of identical or similar goods determined under Article 6 (computed) for goods imported at or about the same time.

The test values must be applied with the following adjustments to enhance comparability:

• commercial-level adjustments (wholesale vs retail);
• quantity-level adjustments (bulk vs individual);
• Article 8 (section 113) adjustment differences;
• costs incurred by the seller in the controlled and uncontrolled transactions (warranty, marketing, after-sales) — these may differ between the two and the adjustment matters.

Importantly, test values are used at the importer initiative. They are a tool for the importer to demonstrate non-influence; they are not a tool for the fiscal authority to import substitute values.

C.6 The Deductive Value Method (Article 5 / Section 109)

The deductive value method works backwards from the resale price in Zimbabwe. The conceptual movement is: take the price at which the imported goods (or identical or similar imported goods) are sold in Zimbabwe in the greatest aggregate quantity to unrelated buyers; deduct the elements that accrue post-importation; the residue approximates the customs value at importation. The method is preferred over the computed method (the importer may, however, request inversion under Article 4 / section 109(1) proviso).

C.6.1 The Greatest Aggregate Quantity Test

The unit price is determined by reference to the greatest aggregate quantity in which the goods are sold in Zimbabwe. The illustration:

Unit Price (USD)	Number of Units Sold	Aggregate at this Price
400	20	20
405	3	3
375	45	55 (45 + 10)
400	15	35 (20 + 15)
410	10	10
375	10	55 (45 + 10)

At the price of US$ 375 the aggregate quantity is 55 units (45 + 10) — the highest. Therefore the unit price for deductive method purposes is US$ 375.

C.6.2 Deductions — section 109

From the unit price, the following are deducted to arrive at the customs value:

• profits and general expenses earned in Zimbabwe on sales of imported goods of the same class or kind;
• duties and taxes levied on importation or sale (customs duty, surtax, excise, VAT);
• transport and insurance from the place of importation to the place of sale in Zimbabwe;
• loading and handling costs in Zimbabwe;
• packing applied in Zimbabwe.

Each deduction must be supported by demonstrated evidence. Profits and general expenses are typically taken from the Zimbabwean importer management accounts or from comparable industry data.

C.6.3 The Super-Deductive Variant

Where the imported goods are subjected to further processing in Zimbabwe before resale, and where the importer elects to use the super-deductive method, the deductive method is applied with the additional deduction of the value added by the further processing. The conditions are:

• the imported goods (or identical or similar imported goods) are not sold in Zimbabwe in the same condition as imported;
• the importer elects super-deductive treatment;
• the further processing does not destroy the identity of the imported goods (where it does, super-deductive is unavailable).

The further-processing value added is computed on demonstrated cost evidence — labour, materials, overheads, profit margin on the processing function. Where the imported goods lose their identity (for example, raw cotton imported for spinning into yarn), super-deductive is conceptually inappropriate; the deductive base no longer corresponds to the imported goods.

C.7 The Computed Value Method (Article 6 / Section 110)

The computed value method is constructive: the customs value is built up from the production and selling cost data of the producer in the country of export. The components are:

• the cost or value of materials and fabrication employed in producing the imported goods;
• an amount for profit and general expenses equal to that usually reflected in sales of goods of the same class or kind made by producers in the country of export to buyers in the country of importation;
• the cost of CIF additions (freight, insurance, and other charges from the country of export to the place of importation in Zimbabwe).

The computed method is conceptually rigorous but practically demanding: it requires access to the producer cost accounting records. It is therefore typically used only where the producer is willing to cooperate (commonly an intra-group transaction) and where the deductive method is unavailable or has been waived by the importer.

C.8 The Fallback Method — Article 7 / Section 111

The fallback method applies where none of the preceding methods is available. The customs value is determined by reasonable means consistent with the principles and general provisions of the Agreement and Article VII of GATT, on the basis of data available in the country of importation. Section 111(3) prohibits seven specific bases even under the fallback method:

• the selling price in the country of importation of goods produced in such country;
• a system providing for the acceptance of the higher of two alternative values;
• the price of goods on the domestic market of the country of exportation;
• the cost of production other than computed values (which would by-pass the section 110 framework);
• the price of goods for export to a country other than Zimbabwe;
• minimum customs values;
• arbitrary or fictitious values.

The fallback method is, by design, the residual provision. Its proper use is rare and disciplined; its misuse — particularly through reliance on minimum values or domestic Zimbabwean prices — is one of the recurring administrative complaints addressed in WTO surveillance and in TCCV review.

C.9 Buying Commission vs Selling Commission — TCCV Commentary 17.1

The Article 8.1.a / section 113(1)(a) addition for commissions covers selling commissions but excludes buying commissions. The distinction is critical because the practical fact pattern — an agent in the country of export, a fee paid by the importer — looks similar in both cases. The TCCV Commentary 17.1 prescribes the evidence required to establish a bona-fide buying-agency relationship.

C.9.1 The Buying Agent — Functions

A buying agent represents the importer abroad in the purchase of the goods to be valued. The agent functions include:

• compiling market information for the importer;
• gathering samples;
• translating;
• placing orders on the importer instructions;
• procuring the merchandise;
• assisting in factory negotiation;
• inspecting and packing merchandise;
• arranging for shipment and payment.

C.9.2 Tests for a Bona-Fide Buying Agency

TCCV Commentary 17.1 prescribes the tests:

• the right of the principal (importer) to control the agent conduct;
• transaction documents — purchase orders, letters of credit, correspondence — naming the importer as principal;
• whether the agent operates an independent business primarily for its own account (cuts against agency) or operates for the importer account (supports agency);
• the existence of a written buying-agency agreement;
• whether the importer could have purchased directly from the manufacturers without employing the agent (this cuts against agency in close cases).

C.9.3 The Selling Agent — Distinguished

A selling agent represents the seller. Functions include:

• looking for customers for the seller
• soliciting and transmitting orders to potential buyers
• keeping and showing samples of the seller goods
• arranging transport, insurance, and storage for the seller
• assisting the seller to prepare export documents. Selling commissions are dutiable (section 113(1)(a)) because they are part of the seller consideration for making the sale

C.9.4 Where Buying Commission is Bundled in Price

Where the price actually paid by the importer to the seller includes a buying commission paid through the seller (for example, the seller invoices a price that includes the buying-agent fee), there is no authority to deduct the amount from the price actually paid or payable. The bundled fee is a disbursement to or for the benefit of the seller and is therefore part of the price. The discipline is to structure the buying-agency relationship so that the agent fee is paid directly by the importer to the agent — not through the seller.

C.10 Royalties and Licence Fees — Article 8.1.c vs 8.1.d

The section 113(1)(c) / Article 8.1.c addition for royalties and licence fees is distinct from the section 113(1)(d) / Article 8.1.d addition for accruals. Both can capture payments related to the sale, but they operate differently and the proper categorisation matters.

Article 8.1.c covers payments for intangibles related to the imported goods — patents, trademarks, copyrights, the right to distribute, technical know-how, designs. The conditions for adding under section 113(1)(c) are:

• the royalty or fee must be paid as a condition of sale;
• the royalty or fee must not already be included in the price actually paid or payable;
• the royalty or fee must be for the imported goods (not for a subsequent product made with them).

Article 8.1.d covers accruals — earnings that accrue to the seller from subsequent resale, disposal, or use of the imported goods. A royalty calculated as a percentage of the resale price is often expressed in commercial documents as an Article 8.1.d accrual, but its proper categorisation may be Article 8.1.c (royalty on the imported goods themselves) where the royalty is expressed as a per-unit licence rather than a resale-based accrual.

The practical importance: an Article 8.1.c royalty may be added only where it is for the imported goods themselves; if it is for a product made with the imported goods (downstream royalty), it is not added under Article 8.1.c but may be considered under Article 8.1.d if it accrues to the seller. The right to reproduce the goods (e.g., copyright reproduction royalty) is excluded by both — the Agreement permits only royalties on the right to use, distribute, or sell, not the right to reproduce.

C.11 Apportionment of Assists — Article 8.1.b

An assist is goods or services supplied by the buyer free of charge or at reduced cost for use in the production of the imported goods. Section 113(1)(b) and Article 8.1.b prescribe four categories:

• materials, components, parts
• tools, dies, moulds
• materials consumed
• engineering, development, art work, design work, plans and sketches undertaken outside Zimbabwe.

When an assist is provided to the producer in connection with multiple shipments and possibly multiple buyers, apportionment is required. The need arises because:

• the manufacturer may deliver some portion to the buyer in later shipments;
• the manufacturer may keep and sell other units in his own market;
• the manufacturer may ship other units to customers in other countries.

Three apportionment methods are accepted under Article 8.1.b, with the choice generally made at the importer request:

• Allocate the full cost to the first shipment imported. The first shipment bears the full assist value; subsequent shipments bear nothing. This method front-loads the duty.
• Allocate the full cost over the quantity produced up to the first shipment. The cost is spread across the units produced before the first shipment is dispatched, and only the proportionate share attaches to each shipment.
• Allocate the full cost over the anticipated total production. The cost is spread across the projected production lifetime of the assist (e.g., the projected lifetime of a tool or mould), and the proportionate share per unit attaches to each shipment.

The choice of method matters for cash-flow and timing reasons; the customs authority generally accepts the importer reasonable choice, subject to documentation.

C.12 The Valuation Database

ZIMRA maintains a valuation database — a repository of accepted customs values for imported goods, organised by tariff line, country of origin, importer, and other dimensions. The database supports valuation officers in two ways: as a reference for the reasonableness of declared values; as a comparator for transaction-value challenges.

The proper use of the valuation database is governed by the WTO Agreement and TCCV decisions. The database is not a substitute for the section 105-113 valuation methods. Its proper use is:

• as a screening tool — values significantly below database benchmarks trigger enquiry, not automatic rejection;
• as a comparator under sections 107 (identical goods) or 108 (similar goods) where the database contains a verifiable comparator transaction;
• as a reference for fallback method (section 111) where appropriate, with disclosure to the importer.

The improper use is to substitute database values for transaction values without going through the section 106-111 hierarchy. Such substitution is inconsistent with Article VII (no minimum values; no arbitrary values) and with section 105 (basis is transaction value as adjusted). The database is a tool of the valuation officer; it is not the substantive law of valuation.

C.13 The Dispute Settlement Architecture

Where a valuation decision is contested, the WTO Agreement (Article 11) and the Customs and Excise Act (sections 196-203) prescribe the dispute pathway. The international architecture is the WTO Dispute Settlement Body (DSU), invoked by member states (not by individual importers) where the Zimbabwean valuation system or its administration is alleged to violate the Agreement. The domestic architecture is:

• section 196 — written objection to the Commissioner-General. The first port of call. The objection must be in writing, must specify the grounds, and must be lodged within the prescribed period.
• Commissioner-General review. The Commissioner-General reviews and issues a determination.
• Fiscal Appeals Court. Appeal from the Commissioner-General determination lies to the Fiscal Appeals Court (constituted under the Fiscal Appeal Court Act).
• High Court and Supreme Court. Further appeal lies to the High Court and ultimately the Supreme Court on questions of law.

this lesson (Customs Appeals Process ) treats the appeal architecture in operational detail. For the valuation specialist, the key points are:

• act within the prescribed period
• lodge in writing with stated grounds
• preserve the documentary record from the assessment forward
• treat the appeal as a continuation of the valuation enquiry, not as a fresh proceeding.

C.14 Key Valuation Challenges

C.14.1 Informal Trade

The informal trade sector — cross-border traders, small-scale importers, traders without formal commercial documentation — presents persistent valuation challenges. The transaction value method requires documentation that is often absent. Section 111 (fallback) is engaged routinely. The appropriate response is the disciplined use of comparator data under sections 107 and 108 where available, and reasonable fallback under section 111 with disclosure of the basis to the importer. The simplified-trade regimes operating under SADC and COMESA assist with this on the cross-border side.

C.14.2 Second-Hand and Used Motor Vehicles

Used motor vehicles are valued by reference to the transaction (typically a foreign auction or dealer sale) rather than by reference to a manufacturer list price. Verification challenges include:

• auction documentation authenticity
• condition adjustments
• currency conversion for foreign auction transactions
• the SI 252A of 2018 designation requiring duty in foreign currency for designated vehicles, with the SI 72A of 2022 50/50 currency split. The Zimbabwean practice has been to use the auction or dealer transaction value as the starting point, supplemented by reference data, with adjustment for condition and equipment.

C.14.3 Multinational Enterprises

Multinational enterprises present the most complex related-party valuation challenges. Transfer pricing analysis under the OECD Transfer Pricing Guidelines (and the Zimbabwean transfer pricing framework introduced in section 98B of the Income Tax Act) operates in parallel with the Article 1.2 customs valuation framework. The two regimes use overlapping but not identical concepts: the OECD Guidelines emphasise the comparable-uncontrolled-price (CUP) method and the comparable-profits methods, while the WTO Agreement emphasises the circumstances-of-the-sale enquiry and test values. Where a transfer pricing study has been prepared for income tax purposes, it can support the customs related-party enquiry but does not automatically discharge it. The customs valuation officer assesses the study relevance to the customs question.

C.14.4 Pre-Shipment Inspection

Pre-shipment inspection (PSI) regimes: operated by third parties under contract with importing countries to verify quality, quantity, and price before shipment — interact with the customs valuation system. Where Zimbabwe operates a PSI system (currently through Bureau Veritas, see also CBCA under SI 35 of 2024 in Module 14), the inspection report is evidence in the valuation enquiry but does not displace the section 105-113 methods. The PSI report is not a binding determination of customs value; it is one piece of documentary evidence considered alongside the importer declared value.

C.14.5 Fighting Valuation Fraud

Valuation fraud: under-declaration to evade duty; over-declaration to externalise foreign currency; manipulation of related-party prices; concealment of dutiable charges — is a continuing challenge. The countermeasures combine:.

• intelligence-led risk profiling
• post-clearance audit (this lesson)
• the valuation database as a screening tool
• disciplined application of the related-party enquiry
• cross-border information exchange with WCO and trading-partner authorities. this lesson (Risk Management ) and this lesson (Audit Techniques ) treat the broader enforcement architecture.

In ZIMRA practice, the customs value is declared in the valuation block of the Bill of Entry lodged through ASYCUDA World. The clearing agent enters the price actually paid or payable, the section 113 additions (commissions, packing, assists, royalties, accruals, freight, and insurance), and any allowable discounts. ASYCUDA computes the customs value, the customs duty, the surtax, the excise duty (if applicable), and the VAT on importation, on the basis of the tariff line and the valuation declared. Currency conversion uses the ZIMRA Rates of Exchange for Customs Purposes published fortnightly and applicable for the period in which the Bill of Entry is lodged.

D.2 Documentary Evidence

A Bill of Entry presented for valuation purposes must be supported by the standard suite of trade documents, each performing a distinct evidentiary function:

• Commercial Invoice — a non-negotiable document raised by the seller and delivered to the buyer, evidencing the contractual price and the description of the goods. The commercial invoice is the primary evidence of the price actually paid or payable.
• Bill of Lading (BL) or Air Waybill (AWB) — a document issued by the carrier acknowledging receipt of the cargo for shipment, evidencing the contract of carriage and (in the case of a BL) constituting a document of title.
• Packing List — a document setting out the products and packaging details of each shipment, used to corroborate the invoice and to support physical examination at the border.
• Contract of Sale — the underlying agreement between buyer and seller, evidencing the conditions of sale and any obligations of the parties (relevant to the section 106(1) conditions).
• Freight Invoice — a bill issued by the carrier to the consignee for freight charges, evidencing the freight component for the section 113(2)(c) computation.
• Insurance Certificate — evidence of the insurance premium and the period and route of cover, supporting the insurance component.
• Pro Forma Invoice — a preliminary invoice issued before the actual sale, often used in opening of letters of credit; not the primary evidence of price actually paid but corroborative of the transaction structure.

D.3 The Valuation Section at ZIMRA

Where the valuation declared on the Bill of Entry is contested at the border — typically because the inspecting officer suspects under-declaration, missing dutiable charges, or related-party manipulation — the matter is escalated to the ZIMRA Valuation Section. The Valuation Section comprises specialist officers trained in the WTO Valuation Agreement, the section 105 to 113 architecture, and the ZIMRA Valuation Manual. They are equipped with access to the ASYCUDA valuation database, which contains historical valuations of identical and similar goods, and to comparative data from other regional customs administrations through the WCO Customs Enforcement Network.

D.4 Provisional Valuation and Bond

Where the valuation is contested and immediate clearance is required, the goods may be released under provisional valuation. The importer pays customs duty, surtax, excise, and VAT on the basis of the higher of the two competing valuations, or lodges a deposit or bond equal to the difference. The valuation is then finalised by the Valuation Section, with any over-payment refunded to the importer or any shortfall recovered, together with interest on the unpaid amount.

D.5 Post-Clearance Valuation Audit

Valuation is among the most-audited areas of customs practice. The ZIMRA Audit Section conducts post-clearance audits on importers identified through risk profiling — typically large importers, importers with related-party transaction patterns, and importers in sectors with historical valuation issues (textiles, electronics, fast-moving consumer goods). The audit examines the importer’s books and records over a multi-year period, recomputes the customs value of past importations, and assesses any short-paid duty together with penalty (typically 100 per cent of the under-paid duty, by section 174 read with section 193) and interest. Post-clearance valuation audits are the most fiscally significant audits ZIMRA conducts, and they are the strongest argument in favour of meticulous valuation discipline at the time of declaration.

D.6 Currency Conversion

Customs values are declared in United States dollars or in other foreign currency on commercial invoices, but the duty is computed in the currency in which the duty is payable (USD or Zimbabwe Gold (ZiG), depending on the goods and the applicable Designation of Foreign Currency Dutiable Goods Notice). Currency conversion uses the ZIMRA Rates of Exchange for Customs Purposes, published fortnightly. The applicable rate is that prevailing on the date of importation, defined under section 17 of the Customs and Excise Act. The valuation officer must apply the correct rate; use of a stale or incorrect rate is one of the most common procedural errors.

D.1 The Valuation Enquiry — Step by Step

The valuation enquiry is the operational expression of the section 105-113 framework. Where an officer is satisfied that the declared value is the transaction value as adjusted, the enquiry concludes at Step 1. Where doubt arises, the enquiry proceeds through subsequent steps. The procedure is:

D.1.1 Step 1 — Documentary Review

The officer reviews the commercial documents — invoice, bill of lading, packing list, contract of sale, freight invoice, insurance policy, pro-forma invoice. The review tests for:

• completeness — all required documents present
• consistency — the documents tell a coherent story
• authenticity — the documents are credible commercial instruments
• compliance — section 113 adjustments visible and supportable. Most routine commercial importations conclude at this step.

D.1.2 Step 2 — Reasonable Doubt Test

Where the officer has reasonable doubt about the truth or accuracy of the declared value, section 47 powers may be exercised to require additional information. The doubt must be reasonable:

• not arbitrary, not based solely on a database divergence, not based on the importer nationality or status. Reasonable grounds include: significant divergence from comparator transactions
• documentary inconsistency
• related-party relationship without supporting evidence
• intelligence indicating fraud
• prior compliance pattern

D.1.3 Step 3 — Information Request

The officer requests additional information from the importer — typically additional commercial correspondence, banking instructions, contracts, intra-group transfer pricing studies (where applicable), evidence of the business strategy claimed (where applicable). The information request must be proportionate to the doubt and reasonable in scope. The importer is allowed reasonable time to respond.

D.1.4 Step 4 — Related-Party Enquiry

Where related-party relationship is established, the officer determines whether the relationship influenced the price. The two routes:

• the circumstances-of-the-sale enquiry across the five dimensions (C.4 above);
• the test-values approach (C.5 above), at the importer initiative.

A determination of non-influence concludes the enquiry; a determination of influence proceeds to alternative methods.

D.1.5 Step 5 — Alternative Methods

Where the transaction-value method is unavailable, the officer applies sections 107 (identical), 108 (similar), 109 (deductive), 110 (computed), and 111 (fallback) in hierarchical order, with section 109/110 invertible at the importer request. Each method applied must be documented with the comparator data, the adjustments made, and the reasoning.

D.1.6 Step 6 — Determination and Notice

The officer issues a determination of customs value with reasons. The importer is notified and is informed of the right of objection under section 196. The goods may be released pending objection on payment of duty (or under provisional assessment under section 47).

D.2 Documentary Discipline Through the Enquiry

Throughout the enquiry, the documentary discipline matters. Each stage produces a documentary record:

• the original entry and supporting documents;
• the doubt notice (where issued);
• the information request and the importer response;
• the related-party enquiry (where conducted);
• the alternative-method analysis;
• the determination and reasons.

Where the matter proceeds to objection, the documentary record is the foundation of the appeal. Both the importer and the officer must maintain documentary discipline from the beginning.

Six fully worked examples follow, each illustrating a distinct valuation scenario commonly encountered in Zimbabwean practice. The customs student should work through each example carefully, noting the order of operations and the legal basis for each addition or exclusion.

E.1 Worked Example 1 — Simple Transaction Value with Adjustments (Air Importation)

A Harare retailer imports a consignment of electronic accessories from China by air, arriving at Robert Gabriel Mugabe International Airport. The commercial invoice records a selling price of US$ 20 000 FOB Shanghai. The invoice separately records selling commission of US$ 500 paid by the buyer to the seller’s agent in Shanghai, and packing of US$ 200. The Air Waybill records a freight charge of US$ 4 000. No insurance is documented. The applicable tariff lines attract an ad valorem rate of 25 per cent customs duty.

Step 1 — Compute FOB. The selling price is US$ 20 000. Add the dutiable charges incurred up to on-board: selling commission (US$ 500, dutiable, accrues to seller) and packing (US$ 200, dutiable). FOB = US$ 20 700.

Step 2 — Test the freight component. Actual freight is US$ 4 000. The 15 per cent FOB cap is 15% × US$ 20 700 = US$ 3 105. The lower of actual and cap is US$ 3 105. Use US$ 3 105.

Step 3:

• Test the insurance component. No actual insurance is documented
• the second proviso to section 113(2)(c) requires use of 15 per cent of FOB. Insurance is therefore deemed at 15% ×
• US$ 20 700 = US$ 3 105. (Note: in practice, where freight is documented but insurance is not, the deemed-15-per-cent rule applies only to insurance
• the air freight is independently documented.)

Selling price	US$ 20 000.00
Add selling commission (section 113(1)(a))	US$ 500.00
Add packing (section 113(1)(a))	US$ 200.00
FOB	US$ 20 700.00
Add freight — lower of actual (US$ 4 000) and 15% FOB (US$ 3 105)	US$ 3 105.00
Add insurance — deemed 15% FOB (no actual figure)	US$ 3 105.00
Customs Value (CIF / VDP)	US$ 26 910.00
Customs Duty at 25%	US$ 6 727.50

E.2 Worked Example 2 — Discounts in Reducing-Balance Treatment

A Bulawayo wholesaler imports furniture from South Africa. The invoice records a gross selling price of US$ 50 000, a trade discount of 10 per cent, a quantity discount of 5 per cent, and a cash discount of 2 per cent. Packing is US$ 1 000. Loading at the South African end is US$ 800. Freight by road is US$ 2 500 (documented). Insurance is documented at US$ 200.

Step 1 — Apply discounts on a reducing-balance basis. Cash discount applies last. Trade discount of 10% on US$ 50 000 = US$ 5 000, leaving US$ 45 000. Quantity discount of 5% on US$ 45 000 = US$ 2 250, leaving US$ 42 750. Cash discount of 2% on US$ 42 750 = US$ 855, leaving US$ 41 895.

Step 2 — Compute FOB. Add packing and loading: US$ 41 895 + US$ 1 000 + US$ 800 = US$ 43 695.

Step 3 — Test road insurance. The 1 per cent FOB cap is 1% × US$ 43 695 = US$ 436.95. Actual insurance of US$ 200 is lower than the cap. Use actual: US$ 200.

Step 4 — Add freight (documented at US$ 2 500).

Gross selling price	US$ 50 000.00
Less 10% trade discount	(US$ 5 000.00)
Sub-total	US$ 45 000.00
Less 5% quantity discount on US$ 45 000	(US$ 2 250.00)
Sub-total	US$ 42 750.00
Less 2% cash discount on US$ 42 750	(US$ 855.00)
Sub-total after discounts	US$ 41 895.00
Add packing	US$ 1 000.00
Add loading	US$ 800.00
FOB	US$ 43 695.00
Add freight (actual, road)	US$ 2 500.00
Add insurance — actual (US$ 200) lower than 1% FOB cap (US$ 436.95)	US$ 200.00
Customs Value (CIF / VDP)	US$ 46 395.00

E.3 Worked Example 3 — Goods from Africa with Deemed Freight Rate

A Mutare manufacturer imports raw materials from Zambia by road through Chirundu. The invoice records a selling price of US$ 30 000 FOB Lusaka. Packing of US$ 500 is included. Freight is paid by the foreign supplier as part of the transaction (transported using the supplier’s own vehicles), and no separate freight invoice is issued. Zambia is a specified African country for the purposes of the section 113(2)(c) deeming rate, attracting 5 per cent FOB. Insurance is documented at US$ 100.

Step 1 — Compute FOB. Selling price US$ 30 000 includes packing of US$ 500. FOB = US$ 30 000.

Step 2: Apply deemed freight. No actual freight figure is documented; the fourth proviso to section 113(2)(c) applies. For specified African countries the deemed rate is 5%. Deemed freight = 5% × US$ 30 000 = US$ 1 500.

Step 3 — Apply insurance. Actual US$ 100 is well below the 1% FOB cap of US$ 300. Use actual.

Selling price (inclusive of packing)	US$ 30 000.00
FOB	US$ 30 000.00
Add freight — deemed at 5% FOB (specified African country, free transport)	US$ 1 500.00
Add insurance — actual (US$ 100) lower than 1% FOB cap (US$ 300)	US$ 100.00
Customs Value (CIF / VDP)	US$ 31 600.00

E.4 Worked Example 4 — Assists Adjustment

A Harare manufacturer of branded leather goods sources finished handbags from a supplier in India. The Zimbabwean buyer ships to the Indian supplier, free of charge, the metal clasps and zippers used in the handbags (manufactured in Italy, purchased by the buyer for US$ 8 000) and an Italian-made injection-mould (cost US$ 12 000) used by the supplier to produce the handbags. The invoice from India records a selling price of US$ 80 000 FOB Mumbai. Freight by sea (and onward road from Durban to Beitbridge) is documented at US$ 4 000. Insurance is documented at US$ 600.

Step 1 — Identify assists. The metal clasps and zippers are an assist under section 113(1)(b):

• (materials, components, parts and the like used in production). The injection-mould is an assist under section 113(1)(b)
• (tools, dies, moulds, and similar articles). Both were supplied by the buyer to the seller free of charge for use in the production of the imported goods. Both were sourced from outside Zimbabwe and meet the territorial conditions.

Step 2:

• Value the assists. Where the assist is acquired at arm&rsquo
• s length, its value is the cost of acquisition. Clasps and zippers are valued at US$ 8 000
• the injection-mould at US$ 12 000. Total assists = US$ 20 000

Step 3 — Compute FOB and Customs Value.

Selling price	US$ 80 000.00
Add assists — clasps and zippers (section 113(1)(b)(i))	US$ 8 000.00
Add assists — injection-mould (section 113(1)(b)(ii))	US$ 12 000.00
FOB (inclusive of assists)	US$ 100 000.00
Add freight (actual)	US$ 4 000.00
Add insurance — actual (US$ 600) below 1% FOB cap	US$ 600.00
Customs Value (CIF / VDP)	US$ 104 600.00

A naive valuation would have used only the US$ 80 000 invoice plus freight and insurance, producing a customs value of US$ 84 600 and an under-payment of duty on US$ 20 000 of assist value. The assist provision corrects this and is the principal target of post-clearance audit attention in branded-goods importations.

E.5 Worked Example 5 — Method 2 Application (Identical Goods)

A Harare importer imports a consignment of plastic kitchen utensils from Vietnam. The commercial documents are incomplete: the invoice does not show packing or commission separately, the Bill of Lading is illegible in critical respects, and the contract of sale cannot be produced. The Valuation Section determines that Method 1 is unavailable. Within the previous 60 days, an unrelated Bulawayo importer imported a consignment of materially identical plastic kitchen utensils (same pattern, same supplier, same packaging) and the customs value was accepted at US$ 12 per kilogram. The Bulawayo consignment was 5 000 kg with a customs value of US$ 60 000. The current consignment is 3 000 kg.

Step 1 — Verify the identity of the goods. The earlier Bulawayo importation involved goods of the same physical characteristics, quality, and reputation, produced in the same country, by the same producer (or, failing same producer, by another producer in the same country). The identity test is satisfied.

Step 2 — Verify the temporal proximity. The earlier importation occurred within the relevant window (typically 90 days). Satisfied.

Step 3 — Verify the commercial level and quantity. The earlier importation was at the same commercial level (a wholesaler-importer) and the quantities, while different, are both wholesale quantities; no quantity adjustment is required in this illustration.

Step 4 — Apply the unit value. Customs value per kilogram from the earlier importation = US$ 60 000 / 5 000 kg = US$ 12/kg. Customs value of the current consignment = 3 000 kg × US$ 12/kg = US$ 36 000.

E.6 Worked Example 6 — Combined Computation with VAT

To illustrate how valuation feeds into the broader fiscal computation, consider a consignment with a customs value (CIF) of US$ 100 000, a tariff line attracting 40 per cent customs duty and 25 per cent surtax, no excise duty, and a 15 per cent standard VAT rate.

Customs Value (CIF / VDP)	US$ 100 000.00
Customs Duty at 40%	US$ 40 000.00
Surtax at 25% on customs value	US$ 25 000.00
Sub-total — value for VAT	US$ 165 000.00
VAT on importation at 15% on US$ 165 000 (section 12A VAT Act)	US$ 24 750.00
Total amount payable to ZIMRA	US$ 89 750.00

A US$ 1 misvaluation at the customs-value stage produces a US$ 1 underpayment of customs duty (40 cents), surtax (25 cents), and VAT (15 cents on the duty-inclusive base) — totalling roughly US$ 0.90 per dollar of misvaluation. Across a US$ 100 000 consignment, a 5 per cent misvaluation is therefore worth roughly US$ 4 500 in fiscal exposure. This is the arithmetic that drives the intensity of ZIMRA’s focus on valuation accuracy.

E.1 Worked Example 1 — Greatest Aggregate Quantity (Deductive Method)

A consignment of imported electric kettles is sold in Zimbabwe at the following prices and quantities:

Unit Price (USD)	Number of Units	Aggregate Quantity at Each Price
25.00	40	40
28.00	30	30
25.00	35	75 (40 + 35)
30.00	25	25
25.00	20	95 (40 + 35 + 20)

At US$ 25.00 the aggregate quantity is 95 units (40 + 35 + 20). At US$ 28.00 it is 30 units. At US$ 30.00 it is 25 units. The greatest aggregate quantity is 95 at US$ 25.00. Therefore the unit price for deductive method purposes is US$ 25.00. From this price, the section 109 deductions (profits and general expenses, duties and taxes, transport and insurance from importation to sale, loading and packing in Zimbabwe) are made to arrive at the customs value at importation.

E.2 Worked Example 2 — Apportionment of Assists Across Shipments

A Zimbabwean importer commissions a custom mould from a foreign producer for the manufacture of plastic containers. The mould cost is US$ 60 000 and is supplied free of charge to the producer. The first shipment is 4 000 containers; the importer projects total production over the mould lifetime to be 30 000 containers. Compute the assist apportionment under each of the three methods.

Method	Apportionment	Per-Container Assist
Method 1 — full cost to first shipment	US$ 60 000 to first shipment	US$ 15.00 per container (60 000 / 4 000)
Method 2 — over quantity produced up to first shipment	US$ 60 000 / 4 000 = US$ 15.00	US$ 15.00 per container
Method 3 — over anticipated total production	US$ 60 000 / 30 000	US$ 2.00 per container, applied to all shipments

At the importer election, Method 3 produces a much smaller per-shipment assist (US$ 2.00 against US$ 15.00) — but the assist value continues across all 30 000 containers, not just the first 4 000. The choice has cash-flow consequences (Method 1/2 front-loads the duty; Method 3 spreads it) and operational consequences (Method 3 requires continuing tracking of cumulative production against the projection). The customs authority generally accepts the importer reasonable choice, with documentation.

E.3 Worked Example 3 — Buying versus Selling Commission

A Zimbabwean importer engages an agent in the country of export to source goods on its behalf. The agent fee is US$ 5 000 per consignment. Consider three structuring scenarios:

Scenario A: The agent invoices the importer directly for US$ 5 000. The seller invoices the importer separately for US$ 100 000 for the goods. Treatment: the US$ 5 000 is a buying commission (non-dutiable) provided the bona-fide agency tests in C.9.2 are satisfied. Customs value addition for commission: nil. Customs value (commission element): US$ 100 000.

Scenario B: The seller invoices the importer for US$ 105 000, of which the seller pays the agent US$ 5 000. Treatment: the US$ 5 000 is bundled in the price actually paid to the seller. There is no authority to deduct it; it remains part of the price. Customs value (commission element): US$ 105 000.

Scenario C: The agent represents the seller (not the importer) and is paid by the seller out of the seller margin. The seller invoices the importer for US$ 100 000. Treatment: this is a selling commission. It does not appear separately to the importer (it is already in the seller margin), so no addition is required to the US$ 100 000 — it is already included. Customs value (commission element): US$ 100 000.

The lesson: structure matters. Scenario A is the cleanest result for the importer; Scenario B is the most expensive. The bona-fide agency tests must be satisfied for Scenario A — without them, the customs authority may treat the agent fee as a selling commission in fact regardless of its formal designation.

E.4 Worked Example 4 — Test Values for a Related-Party Transaction

A Zimbabwean subsidiary imports textile goods from its foreign parent at US$ 20 per unit. The transaction is related-party. The subsidiary identifies three potential test values:

• an unrelated buyer in Zimbabwe imports identical goods from a different foreign producer at US$ 22 per unit — Article 2 reference;
• the deductive value for similar goods imported by an unrelated importer is US$ 21 per unit — Article 5 reference;
• the computed value for similar goods (where producer cooperation was available) is US$ 23 per unit — Article 6 reference.

The subsidiary declared value of US$ 20 is below all three test values. The subsidiary may argue that quantity-level adjustments and commercial-level adjustments account for the difference (it imports in larger volume and at wholesale level, while the comparators are smaller volume retail-level). If the documented adjustments support a US$ 20 figure consistent with the test values after adjustment, the related-party transaction value of US$ 20 is accepted under Article 1.2(b). If they do not — if the commercial-level and quantity adjustments cannot bridge the US$ 2-3 gap — the transaction value is rejected and the alternative methods apply.

E.5 Worked Example 5 — Discount Allowed at FOB but Not at VDP

A consignment of imported goods has the following structure:

• Selling price US$ 100 000
• Trade discount (specified) 5%
• Loyalty discount (unspecified, claimed but not documented) 3%
• Cash discount (specified, settlement-tied) 2%
• Packing US$ 2 000
• FOB charges (loading at port of export) US$ 1 500
• Freight to Beitbridge (road, Africa) documented at US$ 4 000
• Insurance documented at US$ 600. Compute the FOB value and the VDP

FOB calculation. Apply all discounts to the selling price on a reducing-balance basis: 100 000 x (1 - 0.05) = 95 000; x (1 - 0.03) = 92 150; x (1 - 0.02) = 90 307. Add packing and FOB charges: 90 307 + 2 000 + 1 500 = US$ 93 807. FOB value = US$ 93 807.

VDP calculation. Apply only specified discounts (trade and cash) on the selling price: 100 000 x (1 - 0.05) = 95 000; x (1 - 0.02) = 93 100. The unspecified loyalty discount is disallowed for VDP. Add packing and FOB charges: 93 100 + 2 000 + 1 500 = US$ 96 600. Add freight: US$ 96 600 + US$ 4 000 = US$ 100 600. Test road insurance against 1% FOB cap: 1% x 96 600 = US$ 966; the documented US$ 600 is lower than the cap, so use US$ 600. VDP = US$ 100 600 + US$ 600 = US$ 101 200.

Most individual travellers entering Zimbabwe at Beitbridge, Forbes, or one of the airports do not engage with the section 105 to 113 valuation system. They are valued under section 112 (private importations), which adopts a simplified basis for non-commercial goods. Where, however, a traveller is moving goods that exceed the simplified-system thresholds, or where the customs officer has reason to suspect a commercial purpose, the section 105 to 113 system applies. The traveller is then subject to the full transaction-value-and-adjustments architecture, with the practical consequence that goods in personal possession can attract the same valuation treatment as a containerised commercial consignment.

F.2 SMEs

SMEs are the most-exposed taxpayer group on valuation. A typical Mbare cross-border importer sourcing from Dubai or Guangzhou faces a documentary environment that is informal: invoices are sometimes hand-written, packing lists are absent, freight invoices are bundled with consolidator services, and the contract of sale is verbal. The SME’ s clearing agent must extract a defensible customs value from this thin documentary base, and the valuation officer at the border may legitimately question elements of the declaration. Common SME valuation errors include omission of selling commission (which the importer treats, mistakenly, as a buying commission), under-declaration of packing and other dutiable charges, under-declaration of freight where the freight is bundled into a consolidator’ s "all-in" charge, and failure to apply the deeming rates on undocumented African road freight. Each error attracts not only the under-paid duty but also penalty under section 174 and interest. SMEs that adopt structured documentary practices — a complete invoice template with each charge separately identified, a packing list, a separate freight invoice, an insurance certificate — substantially de-risk their exposure.

F.3 Large Corporates

Large corporates face two distinct valuation risks. The first is the related-party risk: a Zimbabwean subsidiary importing from its foreign parent must demonstrate, in the event of post-clearance audit, that the related-party price has not been influenced by the relationship — typically by reference to test values, transfer-pricing benchmarking studies, or the application of Method 1 with a fully-documented arm’s-length comparison. The customs-valuation analysis intersects with the income-tax transfer-pricing analysis under sections 98A to 98C of the Income Tax Act, and the careful corporate maintains aligned documentation across both regimes. The second risk is the assists risk: large corporates frequently supply moulds, designs, components, or technical assistance to their offshore manufacturers, and these supplies must be captured under section 113(1)(b). Failure to capture assists is a classic post-clearance audit finding for corporates with offshore manufacturing arrangements. The compliant corporate maintains an assists register that records every item supplied to offshore manufacturers, its valuation, and the consignments to which it relates.

F.4 Cross-Border Traders

Informal cross-border traders (CBTs) operate principally under simplified regimes that bypass the formal section 105 to 113 architecture for low-value consignments. Where, however, a CBT moves a consignment that exceeds the simplified-system threshold, or where the customs officer reclassifies the movement as commercial, the full valuation system applies. The CBT is then in the same position as the SME but with even less access to professional valuation support. ZIMRA periodically issues simplified-system guidance that the CBT should consult, and the CBT’s clearing agent (where one is engaged) bears a heightened duty to the CBT to ensure the valuation declaration is defensible.

F.1 Individual Importers

Individual importers: typically those clearing motor vehicles, household goods, or personal-effects consignments — encounter advanced valuation principally on used motor vehicles. The auction transaction is the starting point; condition adjustments and currency conversion follow; the SI 252A of 2018 / SI 72A of 2022 / SI 138 of 2024 currency framework applies. Disputes over auction value are common; the discipline is to retain the auction documentation, the bill of sale, and any condition reports from the time of purchase.

F.2 SMEs

SMEs encounter advanced valuation principally on: related-party transactions where the SME is part of a small group with a foreign supplier-affiliate; royalty-bearing imports where a brand or technology licence is bundled with the goods supply; buying-agent arrangements for sourcing in markets where direct purchase is impractical (typically China, India, Turkey). The risk is that the SME commercial structure was not designed with customs valuation in mind, producing unintended dutiable elements. Periodic review of intercompany pricing, royalty arrangements, and agency structures with customs counsel is the prudent discipline..

F.3 Large Corporates

Large corporates and multinational enterprises encounter the full advanced valuation suite continuously. Related-party imports, transfer-pricing-coordinated valuation, royalty additions, assist apportionment, and post-importation adjustments are routine. The corporate response is typically:

• a dedicated customs valuation function within the tax department;
• a relationship with ZIMRA at the Large Taxpayer Office level;
• coordination of customs valuation positions with transfer pricing positions to ensure consistency;
• preparation of valuation rulings on recurring transactions to provide certainty;
• post-clearance audit readiness through disciplined record-keeping.

F.4 ZIMRA Officers

ZIMRA valuation officers: particularly at the major ports (Beitbridge, Forbes, Kazungula, Plumtree, Harare International Airport, Harare Freight) and the Large Taxpayer Office — operate the advanced framework continuously. The skills required include: valuation technical skills; PCA techniques; accounting and bookkeeping; IT skills; anti-fraud and investigation techniques; risk analysis and management; commercial awareness; legal knowledge; trainer skills; effective communication with the private sector. The advanced module is the course that produces this skill profile.

As with classification, reported Zimbabwean authority on customs valuation is thin. Most disputes are resolved at the Valuation Section level or, on appeal, at the Fiscal Appeal Court level, with reasons that are not consistently published. Persuasive authority from comparable jurisdictions — particularly South Africa, the United Kingdom, and the European Union — is therefore the principal source of jurisprudential guidance on contested valuation questions. The customs student should treat such authority as guidance rather than binding law.

G.2 Persuasive South African Authority — Related Parties and Transaction Value

The South African Supreme Court of Appeal has examined the related-parties test under the WTO Valuation Agreement on several occasions. The settled doctrine, helpful to Zimbabwean practice, is that the burden of demonstrating that the relationship has not influenced the price rests on the importer, not on the customs administration. The importer discharges that burden either by showing that the price was negotiated in a manner consistent with normal pricing practices for the industry (the "circumstances of the sale" test) or by demonstrating a close approximation to a test value. Mere assertion that the relationship did not influence the price is insufficient; the importer must produce evidence — typically internal pricing policies, comparable arm’s-length transactions, or transfer-pricing studies. This doctrine maps onto Zimbabwean practice and is likely to be applied by the Fiscal Appeal Court if the issue arises.

G.3 Persuasive UK and ECJ Authority — Royalties and Licence Fees

The relationship between royalty and licence fee payments and the customs value has generated extensive UK and ECJ jurisprudence on the meaning of "condition of sale" under Article 8.1(c) of the WTO Valuation Agreement (mirrored in section 113(1)(c)). The settled position is that a royalty is paid as a condition of sale where the seller is unwilling to sell, or would not sell at the same price, in the absence of the royalty payment. The royalty must therefore be linked, expressly or by clear inference, to the transaction itself. A royalty paid by a Zimbabwean importer to an unrelated trade-mark owner unconnected with the seller is unlikely to be a condition of sale by the seller; a royalty paid to the seller (or to a person controlled by the seller) is much more likely to be such a condition. The Zimbabwean valuation officer applying section 113(1)(c) should reason within this framework.

G.4 ECJ Authority — Assists

The treatment of assists has generated substantial ECJ authority. The settled doctrine is that the value of an assist is to be apportioned over the goods to which the assist relates, rather than expensed entirely against the first consignment. A buyer who supplies a US$ 100 000 mould to a foreign manufacturer to produce 100 000 plastic articles has assisted to the extent of US$ 1 per article, not to the extent of US$ 100 000 against the first consignment of one article. The apportionment principle is consistent with the policy purpose of section 113(1)(b) and would be expected to apply in Zimbabwean practice.

G.5 The WCO Technical Committee on Customs Valuation

The WCO Technical Committee on Customs Valuation, established under Article 18 of the WTO Valuation Agreement, issues Advisory Opinions, Commentaries, Explanatory Notes, and Case Studies on contested valuation questions. These instruments have substantial persuasive weight in member-state practice. ZIMRA Valuation Section practice routinely consults them on novel matters, and the customs student should be aware of their existence and their role.

G.1 Zimbabwean Authority

Reported Zimbabwean case law specifically on customs valuation is limited, with most disputes resolved at the Commissioner-General review stage or in the Fiscal Appeals Court (whose decisions are not regularly published). The persuasive authority therefore comes principally from South African and other Commonwealth jurisdictions adopting the WTO Agreement.

G.2 South African Authority

South African Revenue Service v Levi Strauss SA (Pty) Ltd [2021] ZASCA: Supreme Court of Appeal of South Africa held that royalties paid to a related-party trademark owner were dutiable additions under Article 8.1.c of the WTO Agreement (equivalent to section 67(1)(c) of the South African Customs and Excise Act, structurally parallel to section 113(1)(c) of the Zimbabwean Act) where the conditions — paid as a condition of sale, not already included in the price, related to the imported goods — were satisfied. The case is leading authority on the application of the three Article 8.1.c conditions.

Commissioner SARS v Distell Ltd [2007] — Supreme Court of Appeal of South Africa addressed the related-party transaction value question and held that the burden on the importer to establish non-influence requires positive evidence, not merely the absence of evidence of influence. The case illustrates the practical operation of the circumstances-of-the-sale enquiry.

G.3 Persuasive International Authority

TCCV decisions and advisory opinions — particularly Advisory Opinion 5.3 (settlement discounts), Commentary 17.1 (buying commissions), and Decision 6.1 (interpretation of the deductive method) — provide persuasive authority. They are not binding on Zimbabwean courts but represent the considered international view on contested points and are routinely referenced by the Customs Valuation Manual.

The single most-frequent valuation error in Zimbabwean practice is the conflation of buying and selling commission. The clearing agent receives an invoice on which "commission" is recorded and treats it without analysis. The commission may or may not be dutiable depending on whom the commission agent serves. The discipline is:

• ask, in every case, whose agent the commission-recipient is. If the agent works for the seller (sourcing buyers, arranging exports, negotiating on the seller&rsquo
• s side of the table), the commission is selling commission and is dutiable. If the agent works for the buyer (sourcing goods, negotiating on the buyer&rsquo
• s side, executing purchases on the buyer&rsquo
• s behalf), the commission is buying commission and is non-dutiable

H.2 Missing Assists

Assists are systematically under-captured in Zimbabwean valuation declarations, particularly by large corporates with offshore manufacturing arrangements. The procurement and supply-chain functions know what is being supplied to offshore manufacturers; the customs declaration function often does not. The two functions must communicate. A practical control is the maintenance of an assists register integrated with the procurement system, automatically flagging any supply to an offshore manufacturer for valuation review.

H.3 Wrong Treatment of Freight on African Road Importations

A common error is to ignore the section 113(2)(c) provisos and use either no freight figure (where no documentary figure is available) or an arbitrary estimate. The correct treatment is to apply the deeming rate: 5 per cent of FOB for specified African countries, 7.5 per cent for other African countries. The list of specified countries is published in ZIMRA Practice Notes; the customs professional must consult the current list rather than working from memory.

H.4 Wrong Discount Treatment

Two related errors are common: the application of all discounts to the gross selling price (rather than on a reducing-balance basis) and the allowance of unspecified "discounts" in the VDP computation. The first overstates the discount benefit; the second introduces non-allowable adjustments into the customs value. The discipline is: apply discounts in sequence on a reducing balance, and allow only specified (named) discounts in the VDP.

H.5 Failure to Apply the 1 Per Cent Insurance Cap on Road / Rail / Pipeline

The 1 per cent FOB insurance cap is widely under-known. Where actual insurance exceeds 1 per cent of FOB on a road, rail, or pipeline importation, the lower figure (the cap) is used. Where actual insurance is below the cap, the actual is used. The cap is a maximum, not a deeming rate. Confusion between the cap (used where actual exceeds the cap) and the deeming rate (used where actual is undocumented) is widespread.

H.6 Currency Conversion at the Wrong Rate

The applicable Rate of Exchange for Customs Purposes is the rate prevailing on the date of importation, not on the date of invoice, payment, or shipment. Use of an incorrect rate is mechanically simple but easily missed when the dates of invoice, shipment, and importation diverge widely. ASYCUDA applies the correct rate automatically from the published table, but manual computation in audit responses must replicate this discipline.

H.7 Failure to Apportion Assists Across Consignments

Where an assist (typically a tool, mould, or developmental work) relates to multiple future consignments, its value must be apportioned across those consignments. Expensing the entire assist against the first consignment over-states the customs value of that consignment and produces a refund position once the apportionment is recognised. The discipline is: apportion the assist on the basis of the expected production run, with a true-up at the end of the run if actual production differs.

H.8 Treating Post-Importation Charges as Dutiable

Charges incurred after importation: domestic freight in Zimbabwe, advertising in Zimbabwe, post-clearance handling, retail commission paid to Zimbabwean re-sellers — are non-dutiable. They must not be included in the customs value. The error is most common where a single freight invoice covers both pre- and post-importation legs of the journey; the invoice must be apportioned and only the pre-importation portion included.

H.9 Related-Party Inertia

Related-party transactions are often valued under Method 1 with no analysis of whether the relationship has influenced the price. This is an error: the importer bears the burden of demonstrating non-influence, and the failure to maintain that documentation exposes the importer to retrospective challenge. The compliant related-party importer maintains a current pricing study, transfer-pricing benchmarking, or test-value evidence, refreshed annually.

H.1 Treating Database Values as Substantive Law

The most common error of administration is treating the valuation database as the substantive law of valuation. The database is a tool; the law is sections 105-113. Where database values are used to override declared transaction values without going through the section 106-111 hierarchy, the determination is appellable on legal grounds.

H.2 Treating Related-Party Status as Defeating Transaction Value

A second common error is treating related-party status as automatically defeating the transaction-value method. Article 1.2 explicitly prohibits this — the relationship triggers an enquiry, not a presumption against the price. Officers must conduct the enquiry; importers must understand they are entitled to it.

H.3 Bundling Buying Commission in the Seller Invoice

Importers sometimes structure buying-agent arrangements with the agent fee invoiced through the seller. This bundles the fee into the price actually paid and forfeits the buying-commission exclusion. The structure must be: importer pays agent directly; seller invoices for goods only.

H.4 Misclassifying Royalties Between Article 8.1.c and 8.1.d

Royalties calculated as a percentage of resale price are often misclassified. The correct analysis distinguishes the legal nature of the royalty (intangibles for the imported goods would be 8.1.c; accruals from subsequent disposal of the goods would be 8.1.d) regardless of the calculation formula.

H.5 Incorrect Apportionment of Assists

Apportioning assists without proper documentation, or selecting an apportionment method without rationale, produces challengeable determinations. The discipline is to document the chosen method and the underlying calculation.

H.6 Failing to Address Test Values in Related-Party Cases

Importers in related-party cases sometimes argue circumstances-of-the-sale alone, ignoring the test-values mechanism. Where test-value evidence is available, it is often the most efficient route to non-influence demonstration. Both routes should be considered.

H.7 Misapplying the Greatest Aggregate Quantity Test

The greatest-aggregate-quantity test requires aggregation across transactions at the same unit price, not selection of a particular high-volume transaction. Multiple transactions at the same price are aggregated; this aggregation must be done correctly.

H.8 Inadequate Documentation of Business Strategy Claims

Where a business-strategy claim is made (typically a market-penetration low-price strategy), the timing and likely returns must be documented. A bare assertion is insufficient; a documented strategy paper supported by financial projections is required.

H.9 Confusion Between Customs Valuation and Transfer Pricing

Customs valuation (Article 1.2 / section 106) and income tax transfer pricing (OECD Guidelines / section 98B of Income Tax Act) operate on different concepts of arm-length-ness. A transfer-pricing study is supportive evidence in customs valuation but does not displace the section 106 enquiry. Transfer-pricing positions and customs positions should be coordinated but not assumed to be identical.

H.10 Late Objection

Section 196 prescribes a period within which the objection must be lodged. Late objection is jurisdictionally fatal regardless of the merits. The discipline is to docket the assessment date, the objection deadline, and the responsible person on receipt.

Five questions follow. Answers and worked explanations are provided in Section J.

Question 1 (Definitional). Define the four components of the section 113 adjustments under section 113(1) and identify, for each component, one Zimbabwean commercial scenario in which the adjustment would be operatively triggered.

Question 2 (Conceptual). Explain why the WTO Valuation Agreement places the transaction-value method at the top of the hierarchy, and identify the three structural defects of the Brussels Definition of Value that the transaction-value standard was designed to remedy.

Question 3 (Computational — Air Freight Cap). A Harare importer imports electronics from Dubai by air. The invoice records a selling price of US$ 50 000 FOB Dubai, packing of US$ 800, and selling commission of US$ 1 200. The Air Waybill records freight of US$ 9 000. No insurance is documented. The applicable customs duty rate is 30 per cent. Compute:

• the FOB value
• the Customs Value (CIF / VDP)
• the Customs Duty.

Question 4 (Computational — Reducing Balance Discounts and Road Freight). A Bulawayo wholesaler imports clothing from South Africa by road through Beitbridge. The invoice records a gross selling price of US$ 25 000, a trade discount of 8 per cent, a quantity discount of 4 per cent, a cash discount of 2 per cent, packing of US$ 400, and loading of US$ 300. Freight is documented at US$ 1 500. Insurance is documented at US$ 350. Compute the FOB and the Customs Value.

Question 5 (Application — Method Selection and Related Parties). A Zimbabwean subsidiary of a multinational group is importing US$ 2 million of branded apparel from its parent in Hong Kong on a recurring quarterly basis. ZIMRA challenges the use of Method 1 on the basis of the related-party relationship. Explain:

• the legal basis on which ZIMRA may make that challenge under section 106(2)
• the two routes by which the subsidiary may defend its use of Method 1
• the documentary evidence the subsidiary should maintain to discharge its burden.

Five questions follow. Answers in Section J.

Question 1 (Doctrinal). Articulate the GATT Article VII principles. Explain the positive economic principle on which the WTO Valuation Agreement is built and contrast it with a normative valuation system. State three practical consequences of the positive principle for the operation of the Article 1 transaction-value method.

Question 2 (Conceptual — Related Parties). A Zimbabwean subsidiary imports finished goods from its foreign parent at US$ 50 per unit. ZIMRA challenges the value, contending that the relationship has influenced the price. Outline the two routes available to the importer to demonstrate non-influence under Article 1.2. For the circumstances-of-the-sale route, identify the five dimensions of comparison and give a Zimbabwean-context example for each.

Question 3 (Computational — Deductive Method). A consignment of imported goods is sold in Zimbabwe at the following prices:

• 50 units at US$ 100
• 30 units at US$ 110
• 20 units at US$ 100
• 100 units at US$ 95
• 25 units at US$ 100. From the unit price determined under the greatest-aggregate-quantity test, the following deductions are documented: profits and general expenses 20% of selling price
• duties and taxes US$ 12 per unit
• transport and insurance US$ 3 per unit
• loading and packing US$ 1 per unit. Compute the customs value at importation under the deductive method

Question 4 (Application — Buying Commission). A Zimbabwean importer engages an agent in Guangzhou to source electronics. The agent fee is 8% of the goods value. The importer is considering three structuring options:

• the agent invoices the importer directly
• the seller invoices the importer for goods plus agent fee bundled
• the agent represents the seller and is paid out of the seller margin. State the customs valuation consequences of each structure. State the documentary evidence the importer should maintain to establish a bona-fide buying-agency relationship under TCCV Commentary 17.1.

Question 5 (Strategic — Multinational Enterprise). A Harare-based subsidiary of a UK pharmaceutical group imports finished medicines from the parent. The annual import value is US$ 25 million. The parent has prepared an OECD-style transfer pricing study supporting the inter-company pricing. Discuss how the customs valuation officer should approach the related-party enquiry given the existing transfer pricing study. Identify three differences between the customs valuation framework and the transfer pricing framework that may produce different conclusions on the same transaction.

J. Quiz Answers with Explanations

J.1 Answer to Question 1

The four components of the section 113(1) additions are commissions and packing (paragraph:

• ); assists (paragraph
• ); royalties and licence fees (paragraph
• ); and accruals (paragraph
• ).

Section 113(1)(a) — commissions, brokerage, and the cost of containers and packing — would be triggered, for example, where a Harare retailer pays a Shanghai-based buying commission of 3 per cent on an invoice but the customs officer determines, on examination of the contractual relationship, that the commission is in fact selling commission paid to an agent of the seller and accrues to the seller. The 3 per cent commission is added to the price.

Section 113(1)(b) — assists — would be triggered, for example, where a Harare branded-leather-goods manufacturer ships free of charge to its Indian supplier the metal clasps and zippers used in the finished handbags. The cost of the clasps and zippers is added to the price as an assist under section 113(1)(b)(i).

Section 113(1)(c) — royalties and licence fees — would be triggered, for example, where a Zimbabwean importer of branded sportswear pays a 5 per cent royalty to the brand owner as a condition of being permitted to import and distribute the branded goods in Zimbabwe. The royalty is added to the price.

Section 113(1)(d) — accruals — would be triggered, for example, where a contract of sale provides that, for each unit subsequently resold by the buyer in Zimbabwe, 30 cents is to be remitted to the seller. The anticipated accrual (30 cents multiplied by the number of units) is added to the price.

J.2 Answer to Question 2

The transaction value method is at the apex because the WTO Valuation Agreement embodies a preference for the actual transaction value of the goods over any constructive or notional alternative. The actual transaction value, where it is reliable and documentary, is the most accurate measure of the economic reality of the importation. The alternative methods — identical goods, similar goods, deductive value, computed value, and fallback — are increasingly approximative substitutes used only where the actual transaction value cannot be relied upon.

The transaction-value standard was designed to remedy three structural defects of the Brussels Definition of Value (BDV): the BDV was unpredictable: the customs value was determined by the officer at the border on the basis of his subjective assessment of "normal price", so importers could not plan their commercial affairs because the duty cost was unknown until clearance; the BDV was inequitable: different officers reached different conclusions on materially identical goods; the BDV was abused: the wide discretion conferred on officers by the notional-price standard became a vector for corruption, for trade-protectionist manipulation, and for inconsistent administration. The transaction-value standard, by anchoring the valuation in the actual price of the actual sale, addresses all three defects: it is predictable (the price is known to the parties before importation), equitable (the same price produces the same value at any border post by any officer), and resistant to abuse (the price is documented in the commercial documents that the parties exchange in any event).

J.3 Answer to Question 3

Step 1 — Compute FOB. Selling price US$ 50 000 plus packing US$ 800 plus selling commission US$ 1 200 = US$ 52 000.

Step 2 — Test air freight. Actual US$ 9 000. Cap at 15% FOB = 15% × US$ 52 000 = US$ 7 800. Use the lower: US$ 7 800.

Step 3:

• Test air insurance. Not documented
• second proviso to section 113(2)(c) applies: deemed at 15% FOB = 15% ×
• US$ 52 000 = US$ 7 800

Step 4 — Customs Value = US$ 52 000 + US$ 7 800 + US$ 7 800 = US$ 67 600.

Step 5 — Customs Duty at 30% = 30% × US$ 67 600 = US$ 20 280.

A common error in Question 3 is to use the actual freight figure of US$ 9 000 because it is documented. The 15 per cent FOB rule is a cap, not a deeming rate: where actual exceeds the cap, the cap is used. The rationale is that excess freight might disguise dutiable charges; the cap protects the fiscus from this risk.

J.4 Answer to Question 4

Step 1 — Apply discounts on a reducing-balance basis, with cash discount last. Gross US$ 25 000. Trade 8% on US$ 25 000 = US$ 2 000, leaving US$ 23 000. Quantity 4% on US$ 23 000 = US$ 920, leaving US$ 22 080. Cash 2% on US$ 22 080 = US$ 441.60, leaving US$ 21 638.40.

Step 2 — FOB = US$ 21 638.40 + packing US$ 400 + loading US$ 300 = US$ 22 338.40.

Step 3 — Test road insurance. 1% FOB cap = US$ 223.38. Actual US$ 350 exceeds the cap. Use the cap: US$ 223.38.

Step 4 — Add freight (actual road, documented) = US$ 1 500.

Step 5 — Customs Value = US$ 22 338.40 + US$ 1 500 + US$ 223.38 = US$ 24 061.78.

A common error in Question 4 is to use the actual insurance figure of US$ 350 without testing it against the 1 per cent cap. Where actual exceeds the cap on a road / rail / pipeline importation, the cap applies.

J.5 Answer to Question 5

(i) Legal basis for the ZIMRA challenge. Section 106(1)(d) requires, as a condition of using the transaction-value method, that the buyer and seller not be related except as permitted by section 106(2). Where the parties are related, ZIMRA may examine the circumstances of the sale to determine whether the relationship has influenced the price. The mere fact of relationship does not preclude Method 1, but it shifts the burden to the importer to demonstrate non-influence.

(ii) Two routes for defending Method 1. First, the subsidiary may demonstrate that the relationship did not influence the price. This is the "circumstances of the sale" route: the subsidiary shows that the price was set in a manner consistent with normal pricing practices for the apparel industry, that there is internal documentation of the pricing methodology, and that the same pricing approach is applied to unrelated buyers (where any exist). Second, the subsidiary may demonstrate that the price closely approximates a test value — that is, a value already accepted by ZIMRA Customs for identical or similar goods sold to unrelated buyers, or a deductive or computed value for identical or similar goods, occurring at or about the same time. The two routes are alternatives; the subsidiary need establish only one.

(iii) Documentary evidence. The subsidiary should maintain:

• a current transfer-pricing study prepared in accordance with the OECD Transfer Pricing Guidelines and the requirements of sections 98A to 98C of the Income Tax Act, demonstrating arm’s-length pricing for the related-party transactions
• the parent group’s internal pricing policy or master pricing agreement, evidencing the pricing methodology
• records of comparable arm’s-length transactions either by the parent with unrelated buyers or by other producers of similar goods at the same commercial level
• any test values previously accepted by ZIMRA on identical or similar goods sold to unrelated buyers;
• a contemporaneous record refreshed at least annually demonstrating that the pricing remains consistent with the foregoing benchmarks. The customs and income-tax positions should be aligned: a transfer-pricing analysis that supports the income-tax position will typically support the customs position, and vice versa, but the customs professional should verify the alignment rather than assume it.

J.1 Answer to Question 1

GATT Article VII principles:

• customs value based on actual value
• where actual value cannot be determined, nearest ascertainable equivalent
• no national-origin substitution, no arbitrary or fictitious values
• no inclusion of internal taxes refundable on export
• currency conversion reflects effectively current value
• comparable quantities to be used.

Positive economic principle: the value of the goods is taken as what it is, not what it should be. The transaction value is the primary basis precisely because it is observable and actual. A normative system, by contrast, asks what a hypothetical reasonable transaction would have produced and constructs a value accordingly. The positive principle is doctrinally built into Article 1: the transaction value is presumptively the customs value; the fiscal authority may depart from it only where the Agreement rules permit.

Three practical consequences:

• the burden falls on the fiscal authority to demonstrate that the transaction-value method is unavailable, not on the importer to demonstrate that it is available
• related-party pricing is presumptively acceptable absent demonstrated influence
• the deductive method (working from observable resale prices) is preferred over the computed method (requiring constructive cost reconstruction) — the current runs continuously toward observable transactional reality.

J.2 Answer to Question 2

Two routes under Article 1.2: (a) circumstances-of-the-sale enquiry (Article 1.2:

• )
• test values (Article 1.2(b)) at the importer initiative.

Five dimensions of the circumstances-of-the-sale enquiry, with Zimbabwean examples:

• Characteristics of the goods — the imported finished goods compared with the comparator must be identical or similar (e.g., the same brand of pharmaceutical, the same specification of textile);
• Functions performed — the parties value-chain roles (e.g., parent performs R&D, manufacturing, and design; subsidiary performs distribution, regulatory compliance, and after-sales service in Zimbabwe);
• Contractual terms — pricing, payment, warranty, return, exclusivity (e.g., subsidiary has exclusive distribution rights in Zimbabwe and bears regulatory risk);
• Economic circumstances — market conditions, cost of production, competition (e.g., Zimbabwean market is small, competition is limited, regulatory burden is high);
• Business strategies — innovation, market-penetration, risk-aversion programmes (e.g., subsidiary has a five-year market-development plan with low initial margins).

Where the controlled and uncontrolled transactions differ on a dimension, adjustments are made; where the differences exceed adjustment capacity, a different uncontrolled transaction must be sought. The objective is to demonstrate that, after adjustment for material differences, the related-party price is consistent with arms-length pricing for the same functional and economic profile.

J.3 Answer to Question 3

Step 1 — apply the greatest-aggregate-quantity test. Aggregate quantities at each unit price:

• US$ 100: 50 + 20 + 25 = 95 units;
• US$ 110: 30 units;
• US$ 95: 100 units.

The greatest aggregate quantity is 100 units at US$ 95. Therefore the unit price for deductive method purposes is US$ 95.

Step 2 — apply section 109 deductions:

• profits and general expenses 20% of selling price: 0.20 x 95 = US$ 19.00;
• duties and taxes: US$ 12.00;
• transport and insurance: US$ 3.00;
• loading and packing: US$ 1.00;
• total deductions: US$ 35.00.

Step 3 — customs value at importation. Selling price US$ 95.00 minus deductions US$ 35.00 = US$ 60.00 per unit. This is the deductive customs value at importation.

J.4 Answer to Question 4

Structure (a) — agent invoices importer directly. The agent 8% fee is a buying commission, non-dutiable, provided the bona-fide agency tests are satisfied. Customs value: goods value only.

Structure (b) — seller invoices for goods plus bundled fee. The 8% fee is part of the price actually paid to the seller (constituting a disbursement to or for the benefit of the seller) and is not deductible. Customs value: goods value plus 8% bundled fee — fully dutiable.

Structure (c) — agent represents seller, paid from seller margin. The 8% is a selling commission embedded in the seller price. The price to the importer reflects the cost. The customs value is the price as invoiced; no separate addition or deduction.

Documentary evidence to establish bona-fide buying agency under TCCV Commentary 17.1:

• written buying-agency agreement specifying scope, fee, and reporting
• purchase orders issued by the importer to the seller (not by the agent)
• letters of credit or other payment instruments naming the importer as buyer
• commercial correspondence between the importer and the seller (showing the principal-principal relationship for the goods sale)
• evidence that the importer has the right to control the agent conduct
• evidence that the agent is operating for the importer account, not its own
• evidence that the importer could not practicably have purchased directly.

J.5 Answer to Question 5

Approach to the related-party enquiry given an existing transfer pricing study. The transfer pricing study is supportive evidence — particularly for the functions, assets, and risks profile of the parent and subsidiary, and for benchmarking analysis against comparable uncontrolled prices. However, it does not automatically discharge the customs related-party enquiry. The customs officer should:

• review the transfer pricing study for relevance to the customs question (the transactions analysed, the methods used, the conclusions drawn);
• identify the parts of the study that bear on the circumstances-of-the-sale enquiry and consider their adequacy under the customs framework;
• request additional or different evidence where the transfer pricing analysis does not address customs-specific concerns (for example, on commercial-level adjustments or on packaging-related inclusions);
• consider whether the importer wishes to invoke the test-values mechanism in addition to the circumstances-of-the-sale enquiry.

Three differences between customs valuation and transfer pricing frameworks: Conceptual basis. Customs valuation under Article 1 is a positive system — the transaction value is presumptively the customs value. Transfer pricing under the OECD Guidelines is normative — what would arms-length parties have charged? The two systems can produce different answers on the same transaction.; Comparator selection. Customs valuation under Article 2/3 looks at identical or similar goods imported into the same country at or about the same time. Transfer pricing benchmarks against broader comparable companies regardless of the goods or jurisdiction. The customs benchmark is narrower and more demanding.; Treatment of post-importation adjustments. Customs valuation under Article 1.4 prohibits ex-post adjustment of customs value based on subsequent transfer pricing adjustments. Transfer pricing routinely applies year-end adjustments. The two systems can therefore diverge over time as transfer pricing adjustments accumulate without corresponding customs revisions..

K. Key Takeaways

• Customs valuation is the second pillar of the customs system: tariff classification gives the rate, valuation gives the base, and together they produce the duty assessment.
• The legal anchor of valuation in Zimbabwe is sections 105 to 113 of the Customs and Excise Act, implementing the WTO Agreement on Customs Valuation.
• Section 105 fixes the basis of customs value as the CIF value at the place of importation: Cost + Insurance + Freight.
• The six methods of valuation operate hierarchically and may not be skipped, save for the single inversion of Methods 4 and 5 at the importer's request before valuation begins.
• Method 1 (Transaction Value, section 106) is the price actually paid or payable for the imported goods when sold for export to Zimbabwe, as adjusted under section 113. It applies in the overwhelming majority of commercial importations.
• Method 1 requires four cumulative conditions under section 106(1): no restrictions on disposal or use; no undeterminable conditions or considerations; no unaccounted-for accruals; and no prohibited buyer-seller relationship. The fourth condition is qualified by section 106(2), which permits use of Method 1 in related-party transactions where the importer demonstrates either non-influence or close approximation to a test value.
• Section 113 prescribes the adjustments to the price actually paid or payable: paragraph (a) commissions and packing; paragraph (b) assists in four sub-categories (parts; tools, dies, moulds; consumables; engineering and design work outside Zimbabwe); paragraph (c) royalties and licence fees that are conditions of sale; paragraph (d) accruals.
• Section 113(2)(c) governs freight and insurance: the 15 per cent FOB cap on air freight and air insurance; the 1 per cent FOB cap on road, rail, and pipeline insurance; the 5 per cent FOB and 7.5 per cent FOB deemed rates on African road freight where actual is undocumented.
• Discounts are applied on a reducing-balance basis, with cash and settlement discounts applied last. All discounts are allowed in the FOB computation; only specified (named) discounts are allowed in the Value for Duty Purposes computation.
• Dutiable charges are charges incurred by the buyer that accrue to the seller; non-dutiable charges are charges incurred by the buyer that do not accrue to the seller. Selling commission is dutiable; buying commission is not.
• Methods 2 to 6 (identical goods, similar goods, deductive value, computed value, fallback) apply in descending order where Method 1 is unavailable. Method 6 (fallback) permits flexible application of the prior methods consistent with the Agreement's principles, subject to the Article 7.2 prohibitions.
• Valuation feeds directly into the duty calculation chain (Module 5) and into the VAT-on-importation computation under section 12A of the VAT Act, with multiplicative fiscal effect. A single misvaluation cascades through customs duty, surtax, excise, and VAT.
• Common pitfalls — buying-versus-selling commission, missing assists, wrong African freight treatment, wrong discount sequencing, wrong insurance cap application, wrong currency conversion, failure to apportion assists, treatment of post-importation charges as dutiable, and related-party inertia — account for the bulk of post-clearance audit findings and should be drilled into every customs student.
• Mastery of valuation is a precondition to subsequent modules: Origin and Preference (Module 3) operates on the customs value to which a preferential rate is applied; Rebates (Module 4) operates by reference to the customs value; Calculation of Duty (Module 5) integrates classification and valuation into a single computational chain.
• This lesson is the advanced extension of (Customs Valuation, ). It assumes mastery and addresses the contested cases — related-party transactions, multinational enterprise imports, royalty additions, second-hand vehicles, and informal trade — that resist routine treatment.
• The WTO Valuation Agreement implements GATT Article VII through Articles 1-24 with three Annexes. Zimbabwe gives effect to the Agreement through sections 104-113 of the Customs and Excise Act, the General Regulations, the Customs Valuation Manual, and TCCV decisions and commentaries.
• The positive economic principle distinguishes the WTO Agreement from earlier valuation regimes: customs value is what the transaction value is, not what it should be. The current runs continuously toward observable transactional reality.
• Related-party transactions trigger an enquiry, not a presumption against the price. Section 104(3) prescribes the eight relationships. Article 1.2 provides two routes to non-influence demonstration: circumstances of the sale, and test values.
• The circumstances-of-the-sale enquiry operates across five dimensions: characteristics of the goods, functions performed, contractual terms, economic circumstances, business strategies. Each dimension must be examined and adjustments made for differences.
• Test values under Article 1.2(b) are at the importer initiative. They use Article 2/3, Article 5, or Article 6 as benchmarks, with adjustments for commercial level, quantity, Article 8 differences, and seller costs.
• The deductive value method works from the resale price using the greatest-aggregate-quantity test. The super-deductive variant deducts further-processing value where applicable, at the importer election, provided the imported goods retain their identity.
• The computed value method is constructive — built from materials cost, fabrication cost, profit and general expenses, and CIF additions. It requires producer cooperation and is typically used in intra-group transactions.
• Buying commissions (paid by the importer to its own agent) are non-dutiable; selling commissions (paid by the seller to the seller agent and reflected in the price) are dutiable. The TCCV Commentary 17.1 prescribes the bona-fide agency tests. Bundling buying commission in the seller invoice forfeits the exclusion.
• Royalties under Article 8.1.c are added where: paid as a condition of sale; not already in the price; for the imported goods (not for a downstream product). Article 8.1.c covers payments for intangibles; Article 8.1.d covers accruals from subsequent resale or disposal.
• Assists are apportioned across multiple shipments and buyers using one of three methods at the importer election: full cost to first shipment; over quantity produced up to first shipment; over anticipated total production. Documentation and continuing tracking matter.
• The valuation database is a tool, not the substantive law of valuation. Proper use is as a screening tool, a comparator under sections 107/108, or a fallback reference under section 111. Substituting database values for transaction values without going through the section 106-111 hierarchy is appellable.
• The dispute-settlement architecture: section 196 objection to Commissioner-General; Fiscal Appeals Court; High Court; Supreme Court. This lesson covers the appeal architecture in operational detail.
• Key challenges: informal trade (limited documentation; section 111 routinely engaged); used motor vehicles (auction transaction value with condition adjustments and SI 252A/72A/138 currency framework); multinational enterprises (transfer pricing intersection); pre-shipment inspection (PSI report as evidence, not as binding determination); valuation fraud (intelligence, audit, database, related-party enquiry, cross-border information exchange).
• Common pitfalls: treating database values as substantive law; treating related-party status as defeating transaction value; bundling buying commission in seller invoice; misclassifying royalties; incorrect apportionment of assists; failing to address test values; misapplying the greatest-aggregate-quantity test; inadequate business-strategy documentation; confusing customs valuation with transfer pricing; late objection.
• this lesson establishes the foundation for the rest. this lesson (Origin and Preference ) addresses the rules-of-origin counterpart to valuation. this lesson (Risk Management ) addresses the enforcement architecture. this lesson (Audit Techniques ) addresses the post-clearance verification of valuation positions. this lesson (Customs Appeals Process ) addresses the dispute-settlement architecture.