What is the basis for determining the taxable value for exhibition items brought in with an ATA Carnet, which are not for sale and will be taken back? Are there any special considerations I should be aware of? Released

ATA Carnet and Principles of Determining Taxable Value

I will explain in detail about the determination of the taxable value of exhibition goods imported with the ATA Carnet as inquired by the questioner. The ATA Carnet is a temporary import customs procedure used when goods are temporarily imported for specific purposes such as exhibitions, fairs, and professional equipment and then re-exported. As mentioned, since it is not for sale and is intended to be re-exported, it corresponds to duty-free import where no payment is made in principle.

Method of Determining Taxable Value for Duty-Free Import

The taxable value of general imported goods is determined based on the actual payment price according to Article 30 of the Customs Act. However, in the case of goods imported duty-free like ATA Carnet goods, there is no actual payment price, so Article 30 of the Customs Act (Method 1) cannot be applied.

Applicability of Articles 31 to 34 of the Customs Act

Subsequently, it is necessary to review whether the taxable value can be determined in the order of Article 31 (Transaction Value of Identical or Similar Goods), Article 32 (Transaction Value of Similar Goods), Article 33 (Domestic Sales Price Standard), and Article 34 (Computed Value Standard) of the Customs Act. However, since goods imported with the ATA Carnet mostly have special purposes and are rarely sold domestically, it is often difficult to apply these methods.

Application of Article 35 of the Customs Act (Reasonable Standard)

In conclusion, the taxable value of ATA Carnet goods is mostly determined according to Article 35 of the Customs Act (Method 6, Determination of Taxable Value Based on Reasonable Standards). This method is the final method applied when Methods 1 to 5 mentioned above cannot be applied sequentially.

Reasonable standards follow the criteria presented by the tax authorities and are generally determined by considering the following factors.

• Type and characteristics of imported goods
• Manufacturing cost
• International market price
• Costs related to import such as insurance and transportation fees

Therefore, in the case of the exhibition goods of the questioner, the taxable value will be determined by comprehensively considering the factors mentioned above.

Special Considerations Regarding ATA Carnet

• Obligation to Re-export Within the Specified Period:

  Since the ATA Carnet is a temporary import system, the goods must be re-exported within the validity period specified in the Carnet. If not re-exported, import duties may be imposed.

• Taxation in Case of Failure to Re-export:

  If the exhibition goods are sold or cannot be re-exported due to reasons such as loss or theft, customs duties and value-added tax will be imposed on the goods. In this case, the taxable value is likely to be determined according to Article 35 of the Customs Act as explained above.

• Accurate Declaration of Goods Specifications:

  When applying for the ATA Carnet, the specifications of the goods must be accurately declared. If the specifications of the goods differ from the actual goods, customs clearance may be delayed, or problems may occur during re-export.

• Strengthened Customs Inspection:

  As customs inspections are being strengthened recently, crackdowns on illegal activities using the ATA Carnet may be intensified. Therefore, it is important to comply with relevant laws and thoroughly prepare the necessary documents.