What is Transaction Value and Why does it Matter for Your Customs Declarations?

Every importer knows that when it comes to customs, there’s no room for error. But did you know that most SARS customs valuation disputes stem from just one thing? Incorrect use of the Transaction Value Method. It sounds straightforward, just declare the price paid for the goods, right? Not exactly.

Under Section 65 of the Customs and Excise Act, the price paid or payable for goods sold for export to South Africa is only the starting point. SARS doesn’t just look at your commercial invoice. They apply strict rules about what must be added to that invoice value to calculate your true Customs Value.

Let’s break down what the Transaction Value method means, what SARS expects, and how you can stay audit-ready.

The Heart of Customs Valuation: What is Transaction Value?

The Transaction Value Method is the most commonly used and preferred customs valuation approach, not only in South Africa but globally, under the WTO Valuation Agreement. It means customs bases your duty and VAT calculations on:

“The price actually paid or payable for goods when sold for export to South Africa, adjusted by certain dutiable additions.”

Sounds simple. But here’s the catch: this only applies if the buyer and seller are not related, or if their relationship hasn’t influenced the price. Even more importantly, SARS requires that you declare the full customs value, not just the invoice figure.

What SARS will Add to Your Invoice (Mandatory Dutiable Additions)

SARS won’t just accept the value on your supplier’s invoice. They will assess whether the following must be added to arrive at the true customs value:

Packing costs and packaging labour (even if charged separately)

Assists – costs you paid for things like:

• Moulds
• Tools
• Engineering or design work outside South Africa
• Royalties and license fees that are conditions of the sale
• Selling commissions paid to foreign agents
• Inland freight charges from the supplier’s premises to the port of export
• Any proceeds that the seller will receive later, based on resale

If you miss any of these, SARS will adjust your customs value and possibly raise a penalty.

Example: What does a Real Transaction Value Look Like?

Let’s say you’re importing industrial machinery from China. The supplier invoice shows:

• Goods Value: USD 50,000
• Packing Costs: USD 300
• Inland Freight to Port (China): USD 600
• Design Work Paid by Importer (Assist): USD 4,000

Here’s how SARS would assess the customs value:

Customs Value = 50,000 + 300 + 600 + 4,000 = USD 54,900

That extra USD 4,900 is now dutiable. If your clearing agent misses it, the risk is on you.

Common Pitfalls: Where Most Importers Go Wrong?

Many valuation issues come from not declaring these additions upfront. Here’s why that happens:

• Commercial invoices don’t always show assists or royalties
• Incoterms confusion — DAP/DDP often hides inland freight
• Poor internal communication between logistics, finance, and procurement
• Untrained customs brokers who simply key in invoice values

This lack of visibility can result in:

• SARS post-clearance audits
• Retroactive duties and VAT
• Interest and penalties
• Delays in future shipments or AEO suspension

How to Stay Compliant: Transaction Value Checklist

To avoid valuation disputes and ensure SARS compliance, consider the following best practices:

Before You Ship

✔ Confirm whether the invoice includes packing, inland freight, and other additions

✔ Identify all assists paid separately, designs, tooling, etc.

✔ Check if any royalties or license fees apply

✔ Align your Incoterms with the declared value (Ex Works, FOB, DAP, etc.)

During Customs Clearance

✔ Share all commercial terms with your broker, not just the invoice

✔ Ensure the Customs Value Calculation Sheet is correctly prepared

✔ Attach all supporting documentation (payment records, contracts, agreements)

After Shipment

✔ Store audit-ready digital records for at least 5 years

✔ Conduct internal valuation reviews quarterly

✔ If in doubt, apply for a Binding Valuation Ruling (BVR) from SARS

Why is this Crucial for High-Risk, High-Compliance Sectors?

This issue isn’t just technical, it’s strategic. For exporters and importers dealing in:

• Defence or military equipment
• Hazardous chemicals and DG cargo
• High-value electronics or industrial systems

as the risk of non-compliance is exponential. These sectors already face stricter scrutiny. If SARS suspects undervaluation or misdeclaration, shipments can be stopped, and your compliance record flagged.

Getting the Transaction Value wrong isn’t just a customs error, it’s a threat to your business continuity.

How Transglobal Cargo Supports Customs Compliance?

At Transglobal Cargo, we’ve seen how one overlooked assist or misclassified packing charge can derail an entire shipment. That’s why we integrate customs valuation into every import project we manage, especially for:

Explosives and DG shipments

• Project cargo
• Equipment for government or infrastructure use
• High-value consignments across Africa and MENA

Our team works alongside clients to ensure complete customs documentation, accurate declarations, and proactive risk management.

Ready to avoid surprises? Contact us today and let us help you move smarter, every shipment, every time.

Conclusion: Declare It Right, From the Start

In customs, what you don’t know can hurt you. Transaction Value may seem simple, but its implications run deep, especially in South Africa’s complex trade environment.

Think beyond the invoice. Look at the whole picture. And when in doubt? Don’t guess. Ask.

Transglobal Cargo, your trusted freight forwarder, is here to help importers declare with confidence and move with peace of mind.

📌 Stay tuned for the next post in this SARS Valuation Series: What Happens When Transaction Value Can’t Be Used? Understanding SARS Method 2 – Valuing Identical Goods