When importing—or exporting—goods under a lease agreement, it is important to understand that the items are not considered sold and that transaction value will not apply. Instead, importers must use one of the other methods of valuation, applied in sequential order, as part of their Reasonable Care. U.S. Customs and Border Protection’s (CBP) Informed Compliance Publication on Customs Value, has an excellent overview of how to appraise your goods—including what items must be added or can be deducted from the price paid or payable.
How to value the goods depends on each lease scenario.
Example Scenarios
In HQ 563355, the test equipment was provided free of charge to the importer and CBP allowed the transaction value to be the book value less any depreciation.
In another ruling, HQ H320778, CBP provided different guidance on how to value merchandise imported under a lease agreement. In this ruling, the lease agreement had a fixed monthly rate and a purchase clause to buy the machine for $750,000, less rental amounts paid. Using the fallback method, CBP ruled that the importer could use the purchase price of $750,000—stated in the rental agreement—to be accepted as the “price actually paid or payable.”
These varying scenarios illustrate the importance of understanding the transaction value rules, to correctly value your goods. Since each lease scenario is different, it can be challenging to identify which method of valuation you should use. If you have questions about importing or exporting goods under a lease agreement or need help identifying the best method of valuation for your unique situation, reach out to Mohawk Global Trade Advisors.
