The Lao PDR system of valuing imported goods is known as the transaction value system. It is based on an internationally approved set of rules, under the General Agreement on Tariffs and Trade. The system is now used by most trading nations and provides for a fair and uniform means of valuing goods for customs duty.

The transaction value system stipulates that the transaction value method must be used whenever possible. This value method bases the customs value on the price paid by the importer to the exporter for the imported goods. If the transaction value method cannot be used, one of the other five methods must be used, in the sequence presented. These other methods are known as

- Transaction value of identical goods
- Transaction value of similar goods
- Deductive value
- Computed value
- Flexible value

Transaction value method

1. The transaction value method will be used for valuation of most imported goods, except in situations where there is a relationship between the importer and exporter that may influence the value, or where the imported goods are rented or leased, or are sent on consignment, or where the exporter imposes certain conditions such as restricting the trading level or the area of resale, or barter trade.

2. When using the transaction value method, the following costs must be included in the customs value:
- Transportation costs to Lao PDR
- Insurance costs
- Packing, packaging and special handling costs
- Fees paid to the exporters for royalties, licenses, etc.
- Storage charges in the country of export that are paid by the importer
- All escalation costs charged after the goods are ordered
- All selling costs such as commissions, etc that are charged to the importer
- Assists are goods or services supplied by the importer to the exporter free or at a reduced cost that were used in the production of the goods.

3. Costs which may be deducted from the customs value are:
- Discounts for volume purchases, payment for the goods in advance or within an agreed period (such discount must be shown on the invoice and granted before importation)
- If goods were sold by the exporter on a duty and tax paid basis, deduct the amount paid for duties and taxes
- Amount paid to the exporter for work that will be performed in Lao PDR, such as construction, erection, assembly, maintenance or technical assistance related to the imported goods (such costs must be shown separately on the invoice or in a contract)

Other methods of valuing imports

The five other methods of valuation are more complex and the necessary information may not be readily available. The following is therefore only for the importer's information and, if it is necessary to apply these methods the importer may wish to consult with a customs officer to determine the value for duty.

Identical or similar goods method

Under these methods the value for duty is based on the customs value of other identical or similar goods which have been previously exported to Lao PDR, at or about the same time as the goods being imported. The customs value can be adjusted to allow for differences in the trade level of purchases and in the cost of transportation. It is unlikely that the importer will be able to use these methods, as it requires information on values declared to customs for imports of identical or similar goods. Values for duty under these methods is therefore usually calculated in conjunction with the assistance of a customs officer.

Deductive value method

Under the deductive value method, the value for duty is based on the most common selling price of goods imported into Lao PDR. From this resale price is deducted an amount which represents the average profit and general expenses involved in selling the goods in the Lao PDR. Included in the general expenses involved in the expenses will be items such as Lao PDR duties and taxes, all transportation, warehousing, selling and distribution costs, also any packaging or further processing costs in Lao PDR, should also be deducted in calculating the value for duty.

The purpose behind this method is to determine what the cost of the goods would have been had they been purchased, in the same condition as when imported, from an unrelated exporter. This method would only be used in situations such as goods being imported on consignment or barter trade.

Computed value method

The computed value method is the cost of production of the imported goods, plus an amount for normal profit and general expenses experienced by the exporter, when selling the same type of goods to importers in Lao PDR.

As most exporters are reluctant to release this information, the use of this valuation method will generally be limited to those importers who are related to the exporter and where the exporter is the manufacturer of the goods being appraised.

Flexible method

If the other methods of valuation can not be used, the flexible method must be applied. This method does not provide specific rules, but stipulates that the rules of one of the other five methods is applied in a flexible manner and that the information used is available in the Lao PDR.

Importer's Responsibility

The importer of commercial goods into Lao PDR is responsible for the self-assessment of the duty and tax liabilities on all goods imported. This means that the importer or his authorized agent must prepare all necessary documents for presentation to customs.

Customs' Responsibility

Customs is responsible to ensure that all legislation governing the importation and exportation of goods into and out of the Lao PDR have been fully complied with. Customs is also responsible to insure that all applicable duties and taxes have been paid. Customs will also review customs declarations after release of the goods and may issue notices for payment of additional, duties and tax as a result of the review, or reassessment of value or redetermination of tariff.

Importer's Rights

An importer has the right to request customs to reconsider any reassessment of value and any redetermination of tariff classification. Further, the importer has the right to appeal the customs reassessment notice to higher authorities.