information on IMPLEMENTATION and administration
of the agreement on customs valuation

Check-list of Issues

Georgia

The following communication, dated 30 October 2024, is being circulated at the request of the delegation of Georgia.

_______________

1._        Questions concerning Article 1:

(a)_      Sales between related persons:

(i)_       Are sales between related persons subject to special provisions?

Yes.

Chapter VI – Customs Value of Goods

Article 37 – General provisions of the customs valuation of goods

4. For the purposes of this chapter, persons shall be deemed to be related if:

a) they manage one another's businesses (they are the persons authorised to manage the business entity);

b) they are legally recognised business partners (persons related by business interests);

c) they are employer and employee;

d) a third person directly or indirectly holds or controls 5% or more of the voting shares of both of them, or a third person owns 5% or more of such shares;

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) they are members of the same family.

Article 38 – Transaction value method

2.e) the buyer and the seller are not related persons. Where the buyer and the seller are related persons, the possibility of applying the transaction value method for determining the customs value of goods shall be determined taking into account paragraphs 3 and 6 of this article. In addition, according to Article 8.1 of the Law, the customs authority makes a decision by checking the method of determining the customs valuation and whether the declarant accurately and objectively determined the customs value. Also, in accordance with Article 8.2 of the Law, if the documents submitted by the declarant are not sufficient to make a decision after checking the customs value, the customs authority may collect additional information and documents from the declarant.

(ii)_     Is the fact of intercompany prices prima facie considered as grounds for regarding the respective prices as being influenced?

No.

Chapter VI – Customs Value of Goods

Article 38 – Transaction value method

2. The customs value of goods shall be determined based on the transaction value, i.e. the price actually paid and/or payable for the goods sold for export to Georgia, taking into account the requirements of Article 44 of this Code, provided that all of the following conditions are fulfilled:

a) there are no restrictions as to the disposal or use of goods by the buyer, except for restrictions which:

a.a) are established or required by the legislation of Georgia;

a.b) define the list of the geographical areas in which the goods may be resold;

a.c) do not affect the value of goods;

the sale or price of the goods is not related to any condition or circumstance for which b) a value cannot be determined with respect to the value of goods. Where a value cannot be determined for such condition or circumstance, that value shall be considered as indirect payment made by the buyer and therefore as part of the price actually paid or payable;

c) no part of the proceeds of any subsequent sale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, except in cases where an appropriate adjustment can be made in accordance with Article 44 of this Code;

d) the price actually paid or payable is calculated on the basis of objective and grounded data;

e) the buyer and the seller are not related persons. Where the buyer and the seller are related persons, the possibility of applying the transaction value method for determining the customs value of goods shall be determined taking into account paragraphs 3 and 6 of this article.

3. Only the fact that the buyer and the seller are related persons shall not serve as grounds for refusing the application of the transaction value method in determining the customs value of goods. In such case, all the circumstances of the sale of goods shall be verified and the transaction value shall be applied, unless the relationship between the said persons had an influence on the transaction value of the goods.

(iii)_    What is the provision for giving the communication of the afore-mentioned grounds in writing if the importer so requests? (Article 1.2(a))

Chapter VI – Customs Value of Goods

Article 38 – Transaction value method

4. Where, on the basis of the information submitted by a declarant or otherwise received, the customs authorities have reasonable doubt that the relationship between the buyer and the seller has influenced the transaction value of goods, the customs authorities shall inform the declarant of their reasoned opinions (in writing where the declarant so requests). The declarant shall have the right to provide appropriate explanations in respect of the said opinions.

(iv)_    How has Article 1.2(b) been implemented?

Chapter VI – Customs Value of Goods

Article 38 – Transaction value method

5. Where the buyer and the seller are related persons, the customs value of goods shall be determined on the basis of the transaction value method if the declarant has provided the customs authorities with evidence that the above value is as close as possible to any of the following values determined within the same period of time:

a) the transaction value of identical or similar imported goods that the seller has sold to an unrelated person (buyer);

b) the customs value of identical or similar goods under Article 41 of this Code;

c) the customs value of identical or similar goods under Article 42 of this Code.

6. The procedure prescribed by paragraph 5 of this article shall be applied, if the declarant so wishes, for comparison purposes only. However, account shall be taken of the differences between commercial and quantitative levels, in the elements provided for by Article 44 of this Code, and the costs incurred by the seller following the sale of goods where the buyer and the seller are not related persons.

(b)_     Price of lost or damaged goods:

         Are there any special provisions or practical arrangements concerning the valuation of lost or damaged goods?

Yes.

Chapter VI – Customs Value of Goods

Article 37 – General provisions of the customs valuation of goods

12. Where the declared goods are part of the consignment purchased in a single transaction, the transaction value of the goods shall be as proportional to the price of the entire consignment as the quantity of the declared goods to the quantity of the entire consignment. The price actually paid or payable shall also be apportioned where part of the cargo has been lost.

2._        How has the provision of Article 4 to allow the importer an opinion to reverse the order of application of Articles 5 and 6 been implemented?

Chapter VI – Customs Value of Goods

Article 37 – General provisions of the customs valuation of goods

7. Each method of customs valuation of goods provided for by paragraph 6 of this article shall be proceeded sequentially where the previous method cannot be reasonably applied. The declarant shall have the right to change the order of application of the methods of customs valuation of goods provided for by paragraph 6(d) and (e) of this article.

3._        How has Article 5.2 been implemented?

Chapter VI – Customs Value of Goods

Article 41 – Method based on the unit price

2. Where the goods being valued, or identical or similar goods, are sold in Georgia in the same form as they were imported into Georgia (in an unaltered state), the customs value of the goods being valued shall be determined based on the unit price at which identical or similar goods were imported at or about the same time as the goods being valued, and were sold in the greatest quantity to unrelated persons, at the first commercial level, taking into account the following deductions:

4._        How has Article 6.2 been implemented?

Chapter VI – Customs Value of Goods

Article 37 – General provisions of the customs valuation of goods

1. The customs valuation of goods shall be carried out in accordance with this Code and the procedures laid down in the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994.

5._        Questions concerning Article 7:

(a)_      What provisions have been made for making value determinations pursuant to Article 7?

Chapter VI – Customs Value of Goods

Article 43 – Reserve method

1. Where the customs value of imported goods cannot be determined on the basis of Articles 38-42 of this Code, the customs value of the goods shall be determined using reasonable means which are consistent with:

a) provisions of Article VII of the 1994 General Agreement on Tariffs and Trade;

b) general principles and provisions of the Agreement on the Implementation of Article VII of the 1994 General Agreement on Tariffs and Trade;

c) the general principles and provisions of this chapter.

2. The following shall not be used as a basis for determining the customs value of goods on the basis of the reserve method:

a) the domestic sale price of goods produced in Georgia;

b) the price of goods in the domestic market of the exporting country;

c) the price of export goods in a foreign country;

d) the minimal customs value of goods;

e) the arbitrarily selected or fictitious value of goods;

f) the principle of obtaining the largest of the two values of goods;

g) the cost of production of goods, other than the computed value, determined for identical or similar goods in accordance with Article 42 of this Code.

3. The customs value of the goods determined on the basis the reserve method shall, as much as possible, be based on the customs value of the goods previously determined.

4. The price to be used in the control of the accuracy of determining the customs value of goods on the basis of the reserve method may include data obtained from open sources of information and as a result of the generalisation of practice, which are of an informative nature and are only used only to establish the accuracy of the customs valuation of goods.

(b)_     What is the provision for informing the importer of the customs value determined under Article 7?

Order of the Minister of Finance of Georgia No. 257 on "the approval of instructions on the movement and registration of goods on the customs territory"

Appendix 2

Article 13. Completion of customs declaration/re-export declaration examination

2. In the event that the authorized employee of the customs body does not agree with the declared data, at the end of the declaration check, he fills in the "declaration check act" (Annex No. 2-II-03), where one or more decisions provided for in paragraph 3 of this Article shall be indicated.

(c)_      Are the prohibitions found in Article 7.2 delineated?

Article 43 – Reserve method

2. The following shall not be used as a basis for determining the customs value of goods on the basis of the reserve method:

a) the domestic sale price of goods produced in Georgia;

b) the price of goods in the domestic market of the exporting country;

c) the price of export goods in a foreign country;

d) the minimal customs value of goods;

e) the arbitrarily selected or fictitious value of goods;

f) the principle of obtaining the largest of the two values of goods;

g) the cost of production of goods, other than the computed value, determined for identical or similar goods in accordance with Article 42 of this Code.

6._        How have the options found in Article 8.2 been handled? In the case of f.o.b. application, are ex-factory prices also accepted?

Chapter VI – Customs Value of Goods

Article 44 – Elements of the customs value of imported goods

6. The following costs, up to the place where goods are brought into the customs territory of Georgia, shall be included in the customs value of the imported goods:

a)transportation costs, and loading and handling (including warehousing) charges. Where different consignments are imported by the same means of transport, the transportation costs shall be proportionally distributed, which shall be laid down in the contract concluded with the carrier;

b) insurance costs, if borne by the declarant.

7._        Where is the rate of exchange published, as required by Article 9.1?

Chapter I – Scope and Subject, Purpose and Definition of Terms of the Customs Code of Georgia

Article 8 − Exchange rate of the national currency of Georgia against foreign currencies

When determining the customs value of goods and the amount of import duty, a foreign currency shall be calculated in the national currency of Georgia in the following order:

a) in the case of the existence of an official exchange rate of the lari established by the National Bank of Georgia with respect to the currency of that country on the day of registration of the customs declaration/day of the creation of the customs debt – according to this rate;

b) in the case of the absence of an official exchange rate of the lari established by the National Bank of Georgia with respect to the currency of that country on the day of registration of the customs declaration/day of the creation of the customs debt − according to the rate determined in accordance with the procedures established by the Board of the National Bank of Georgia.

8._        What steps have been taken to ensure confidentiality, as required by Article 10?

Chapter II − Rights and Obligations Provided for by the Customs Legislation of Georgia

Article 11 − Customs secret

1. Information on a person kept at the customs authorities, other than the information provided for by Article 39(11) of the Tax Code of Georgia, shall be a customs secret.

2. Information on a person containing a customs secret may be transferred to another person in the cases provided for by Article 39 of the Tax Code of Georgia.

3. The customs authorities and a third person who, under this article, have received information containing a customs secret shall maintain the secrecy of such information.

4. The unauthorised disclosure of information containing a customs secret shall result in liability in accordance with the legislation of Georgia.

5. Information containing a customs secret available within the customs authority shall have a special regime for keeping and processing it. Only the authorised persons designated by the Minister of Finance of Georgia may have access to the information containing a customs secret, under the procedure established by the Minister of Finance.

6. This article shall not apply to the making a document provided for by Article 10(7) of this Code publicly available by the customs authority.

9._        Questions Concerning Article 11:

(a)_      What rights of appeal are open to the importer or any other person?

Chapter IV – Customs Disputes

Article 33 – Proceedings in customs disputes

1. Decisions taken by the customs authorities on the basis of this Code may be appealed within the system of the Ministry of Finance of Georgia or to a court.

2. A customs dispute ('a dispute') shall be reviewed within the system of the Ministry of Finance of Georgia in accordance with the procedure established under the Tax Code of Georgia for the review of tax disputes, unless otherwise provided for by this Code.

3. The complainant shall have the right to apply to a court at any stage of the review of the dispute within the Ministry of Finance of Georgia.

4. The procedure for the conduct of proceedings in the court shall be determined by the legislation of Georgia relating to administrative procedure.

5. Appealing a decision taken by the customs authorities shall not suspend its effect, except in the cases provided for by paragraphs 6 and 7 of this article.

6. The customs authority/dispute resolution authority shall suspend the implementation of an appealed decision in whole or in part where they have good reason to believe that the decision is inconsistent with the customs legislation of Georgia or its implementation will cause irreparable damage to the person concerned.

7. An appealed decision imposing an obligation to pay import duty/customs sanction shall be deemed suspended from the day of commencement until the day of completion of the dispute, only in respect of payment of import duty/customs sanction.

8. In cases provided for by paragraph 7 of this article, the measures to secure disputed tax liabilities under Article 254 of the Tax Code of Georgia shall apply in the cases provided for and in accordance with the procedure established by the same article.

9.The period of limitation prescribed by this Code shall be suspended during the pendency of a dispute.

10.The period of limitation period prescribed by this Code shall not apply during the implementation of a decision of a court/dispute resolution authority by the customs authorities.

(b)_     How is he to be informed of his right to further appeal?

Chapter II − Rights and Obligations Provided for by the Customs Legislation of Georgia

Article 9 − Exchange and storage of information

1. Information between a person and the customs authorities shall be exchanged and stored using electronic data-processing techniques, except in the cases provided for by paragraph 2 of this article.

2. In addition to electronic data-processing techniques, other means for the exchange and storage of information may be used:

a) on a permanent basis, taking into account the type of transportation, or where the use of electronic techniques is not appropriate for the customs formality concerned;

b) on a temporary basis, in the case of a failure of the electronic system of a person or the customs authorities.

3. A person engaged in international air transportation shall, in accordance with the procedure determined by the Minister of Finance of Georgia, submit to the customs authority preliminary information on the means of transport engaged in international air transportation and on the goods and/or passengers carried by this means of transport.

4. To identify and respond to a customs risk, information, the provision of which has not been prescribed by the customs legislation of Georgia, may be exchanged between the customs authorities and a declarant or other debtor on the basis of a written agreement. Exchanging such information may include authorising the customs authorities to access the data of a declarant.

5. The information exchanged between the parties in the context of relations provided for by paragraph 4 of this article shall be a customs secret, unless otherwise agreed by the parties.

6. Where the information provided for by paragraph 2 of this article is exchanged in tangible (written) form, the document sent shall be signed by an authorised person, and the original copy of the document or its certified copy shall be served on the addressee.

7. A port, a railway station, or an airport shall notify the customs authorities of the entry/arrival and/or exit/departure of a means of transport that crosses the customs border of Georgia.

8. Requirements related to information/data, the procedure for the public dissemination of information, other means for the exchange and storage of information and the rule for its use, shall be determined by an order of the Minister of Finance of Georgia.

10._     Provide information on the publication, as required by Article 12, of:

(a)_       

(i)_       The relevant national laws;

The Customs Code of Georgia

The Tax Code of Georgia

Published:

(ii)_     The regulations concerning the application of the Agreement;

Order of the Minister of Finance of Georgia No. 257 on "the approval of instructions on the movement and registration of goods on the customs territory"

Published:

(iii)_    The judicial decision and administrative rulings of general application relating to the Agreement;

Chapter II − Rights and Obligations Provided for by the Customs Legislation of Georgia

Article 16 – Decisions taken on the basis of an application

1. A person or a group of persons applying to the customs authorities for a decision related to the application of the customs legislation of Georgia shall provide the customs authorities with any information requested to enable them to take that decision.

2. The customs authorities shall without delay, and at the latest within 30 days of the receipt of the application, verify whether the conditions for the acceptance of that application are fulfilled, and if the conditions are fulfilled, they shall communicate its acceptance to the applicant within the same period.

3. The customs authorities shall take a decision provided for by paragraph 1 of this article without delay, and at the latest within 120 days of the acceptance of the application.

4. Where the customs authorities cannot take a decision within the time limit prescribed by paragraph 3 of this article, they shall inform the applicant of that fact before the expiry of that time limit; in addition, they shall state the reasons and indicate a new time limit that shall not exceed 30 days, unless otherwise provided for by the customs legislation of Georgia.

5. Without prejudice to paragraph 4 of this article, the customs authorities may extend the time limit for taking a decision at the request of the applicant, for the purpose of adjusting the information provided by the applicant. The applicant shall communicate to the customs authorities such adjustments and the period of time necessary to carry them out.

6. A decision shall take effect from the date on which it is served on the applicant, unless otherwise provided for by the customs legislation of Georgia or the said decision. Decisions taken shall be enforceable by the customs authorities from the date they take effect, except in the case provided for by Article 33(6) of this Code.

7. A decision shall be valid without limitation of time, unless otherwise provided for by the customs legislation of Georgia.

8. Where a decision, if taken, may adversely affect the applicant, the customs authorities shall, before taking a decision, communicate to the applicant its contents and justification. In that case, the applicant shall be given the opportunity to provide to the customs authorities a relevant reasoning within the prescribed time limit. After the time limit has expired, the customs authorities shall take the decision and notify the applicant thereof in the prescribed manner.

9. Paragraph 8 of this article shall not apply:

a) where a preliminary decision provided for by Article 22(1) of this Code is issued;

b) where the interests of the protection of the state of Georgia and its population, the health of humans, animals or plants, the environment, or consumers, so require;

c) where a decision provided for by paragraph 8 of this article aims at ensuring the enforcement of another decision;

d) where the interests of criminal investigations or customs offence proceedings may be prejudiced;

e) in other specific cases.

10. A decision which adversely affects the applicant shall set out the grounds on which it is based and shall refer to the right of appeal in accordance with procedures established by this Code.

Article 22 – Preliminary decisions

1. The customs authorities may, on the basis of an application by the person concerned, issue a preliminary decision relating to a goods code or a preliminary decision relating to the origin of goods. An application for a preliminary decision by the customs authorities shall not be accepted if:

a) the application is submitted by or on behalf of the holder of a preliminary decision relating to a goods code in respect of the goods under that decision, or by or on behalf of the holder of a preliminary decision relating to the origin of goods in respect of the goods under that decision and it specifies the circumstances provided for by that decision which are necessary for determining the origin of the goods;

b) the application does not specify the customs procedure for which the said decision is used.

2. Preliminary decisions relating to a goods code or to the origin of goods in respect of the classification of goods or the determination of the origin of goods:

a) shall be binding on the customs authorities only in respect of goods for which customs formalities are completed after the decision takes effect;

b) shall be binding on the holder of the preliminary decision from the date on which the decision is served on him/her.

3. A preliminary decision relating to a goods code or to the origin of goods shall be valid for three years from the date on which it takes effect.

4. To ensure the execution of a preliminary decision in carrying out a particular customs procedure, the holder of the preliminary decision shall prove that:

a)in the case of a preliminary decision relating to a goods code, the goods declared fully correspond to those described in the decision;

b)in the case of a preliminary decision relating to the origin of the goods, the goods in question and the circumstances of their origin fully correspond to the goods and circumstances described in the decision.

(iv)_    General or specific laws being referred to in the rules of implementation or application.

The Customs Code of Georgia

The Tax Code of Georgia

Order of the Minister of Finance of Georgia No. 257 on "the approval of instructions on the movement and registration of goods on the customs territory"

Published:

(b)_     Is the publication of further rules anticipated? Which topics would they cover?

Further rules and procedures are expected to be provided in for a Customs Valuation Manual by the Order of the Director General of the Revenue Service (Tax and Customs Administration).

11._     Questions concerning Article 13:

Chapter VIII – Guarantees for Securing the Payment of Import Duties

Article 55 – General provisions

1. The person who incurs or may incur an obligation to pay import duty shall provide a guarantee for securing the payment of import duty ('guarantee') unless otherwise provided for by the customs legislation of Georgia. The customs authorities may authorise a person, other than that person, to provide a guarantee.

2. Without prejudice to Article 59 of this Code, the customs authorities may require the provision of only one guarantee in respect of a specific customs declaration or specific goods. The guarantee provided for a specific customs declaration shall cover the amount of import duty the obligation of the payment of which arises in respect of the goods declared in or released against that customs declaration, irrespective of whether that customs declaration is drawn up correctly.

3. Where the guarantee has not been released, it may be used to meet a customs debt incurred after the post-release control of goods.

4. The customs authorities may, in accordance with Article 59 of this Code, permit the person provided for by paragraph 1 of this article, on the basis of his/her application, to provide a comprehensive guarantee for two or more operations, customs declarations or customs procedures in respect of which an obligation to pay import duty has been or may be incurred.

5. No guarantee shall be required from state authorities or municipality bodies in respect of activities or operations which they carry out in the capacity of public authorities.

6. No guarantee shall be provided where the goods are carried:

a) by air or sea;

b) by a pipeline or an electric transmission line;

c) by rail.

7. Other cases where it shall not be required to provide a guarantee shall be determined by an order of the Minister of Finance of Georgia.

Law of Georgia No 7006 of 15 July 2020 – website, 28.7.2020

Order of the Minister of Finance of Georgia No. 257 on "the approval of instructions on the movement and registration of goods on the customs territory".

Appendix 4

Article 1 - Presentation of guarantee, use and exemption from presentation of guarantee, forms and types of guarantee

Paragraph 1. - Unless otherwise stipulated by the customs legislation of Georgia, it will be mandatory to submit a guarantee if:

Sub-paragraph c) - in case of disagreement between the declarant and the customs authority on the determination of the customs value of the goods during the release of the goods;

12._     Questions concerning Article 16:

(a)_      Does the respective national legislation contain a provision requiring customs authorities to give an explanation in writing as to how the customs value was determined?

Chapter II − Rights and Obligations Provided for by the Customs Legislation of Georgia

Article 9 − Exchange and storage of information

1. Information between a person and the customs authorities shall be exchanged and stored using electronic data-processing techniques, except in the cases provided for by paragraph 2 of this article.

2. In addition to electronic data-processing techniques, other means for the exchange and storage of information may be used:

a) on a permanent basis, taking into account the type of transportation, or where the use of electronic techniques is not appropriate for the customs formality concerned;

b) on a temporary basis, in the case of a failure of the electronic system of a person or the customs authorities.

3. A person engaged in international air transportation shall, in accordance with the procedure determined by the Minister of Finance of Georgia, submit to the customs authority preliminary information on the means of transport engaged in international air transportation and on the goods and/or passengers carried by this means of transport.

4. To identify and respond to a customs risk, information, the provision of which has not been prescribed by the customs legislation of Georgia, may be exchanged between the customs authorities and a declarant or other debtor on the basis of a written agreement. Exchanging such information may include authorising the customs authorities to access the data of a declarant.

5. The information exchanged between the parties in the context of relations provided for by paragraph 4 of this article shall be a customs secret, unless otherwise agreed by the parties.

6. Where the information provided for by paragraph 2 of this article is exchanged in tangible (written) form, the document sent shall be signed by an authorised person, and the original copy of the document or its certified copy shall be served on the addressee.

7. A port, a railway station, or an airport shall notify the customs authorities of the entry/arrival and/or exit/departure of a means of transport that crosses the customs border of Georgia.

8. Requirements related to information/data, the procedure for the public dissemination of information, other means for the exchange and storage of information and the rule for its use, shall be determined by an order of the Minister of Finance of Georgia.

(b)_     Are there any further regulations concerning an above-mentioned request?

Order of the Minister of Finance of Georgia No. 257 on "the approval of instructions on the movement and registration of goods on the customs territory".

Appendix 2

Article 13 - Completion of customs declaration/re-export declaration checks

2. In the event that the authorized employee of the customs body does not agree with the declared data, at the end of the declaration check, he fills in the "declaration check act" (Annex No. 2-II-03), where one or more decisions provided for in paragraph 3 of this article will be indicated.

13._     How have the Interpretative Notes of the Agreement been included?

Provided in for a Customs Valuation Manual by the Order of the Director General of the Revenue Service (Tax and Customs Administration).

14._     How have the provisions of the Decision on the Treatment of Interest Charges in the Customs Value of Imported Goods been implemented?

Chapter VI – Customs Value of Goods

Article 44 – Elements of the customs value of imported goods Paragraph 9.e

charges for interest under a financing agreement entered into by the buyer and relating to the purchase of the import goods, provided that:

e.a) these interest charges are separated from the actual price of the goods;

e.b) the financing agreement has been made in writing;

e.c) where necessary, the buyer may demonstrate that the goods are actually sold at the price declared and that the rate of interest does not exceed the average rate of interest effective in respect of similar financing agreements at the time when the finance was provided and in the country where the financing person is located. This provision shall apply irrespective of whether the transaction is financed by the seller, a bank or a third person;

15._     For those countries applying paragraph 2 of the Decision on the Valuation of Carrier Media Bearing Software for Data Processing Equipment, how have the provisions of this paragraph been implemented?

Chapter VI – Customs Value of Goods

Article 45 – Determination of the customs value of a carrier medium of automated data processing or other software

In determining the customs value of a carrier medium of automated data processing or other software, only the price of the software shall be taken into account. Where the value of automated data processing or other software is not separated from the value of the software carrier medium, the value of the carrier medium shall be determined taking into account Articles 38–44 of this Code.

For the purpose of this article, 'software carrier medium' shall not include integrated circuits and similar devices, nor any parts thereof.

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