RESTRICTED
WORLD TRADE G/VAL/W/12
8October 1996
ORGANIZATION(96-4076)
Original: English Committee onCustoms Valuation
VALUATION OFSOFTWARE IMPORTED BYSATELLITE
Communication from theWorld Customs Organization
Atitsmeeting on25April 1996, theCommittee onCustoms Valuation agreed tomandate the
Chairman oftheCommittee toasktheTechnical Committee onCustoms Valuation toprovide further
explanation andelaboration ofthecircumstances where thecostofsoftware "imported" bysatellite
mayform partofthecustoms value ofimported goods. Thefollowing response from theDirector
oftheValuation Directorate oftheWorld Customs Organization hasbeenreceived.
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Irefertoyourletter of7May1996 concerning theimportation ofsoftware bysatellite. The
Chairman, Mr.P.R.V. Ramanan, hasasked metorespond onbehalf oftheTechnical Committee.
Hehasdonesoalsoonthebasis thattheremarks, towhich yourletter refers, areviews expressed
bytheWCO Secretariat andnotthose oftheTechnical Committee onCustoms Valuation.
Before Iexplain those remarks, Iwould point outthatthequestion raised byColombia has
beentaken upbytheWCO 'sPermanent Technical Committee (PTC). Inresponse totheColombian
question, thePTC, atitsrecent meeting, decided tobegin work ontheformulation ofadefinition of
"goods" forinclusion intheWCO glossary ofInternational Customs terms.
Asyouareaware, under Article 1oftheAgreement, thetransaction value ofimported goods
isthepriceactually paidorpayable forthose goods when theyweresoldforexport. TheInterpretative
NotetoArticle 1explains thattheprice actually paidorpayable isthetotalpayment made ortobe
made bythebuyer toorforthebenefit oftheseller fortheimported goods. TheWCO believes that
theremaybesituations, perhaps limited innumber, where thepayment forsoftware imported bysatellite
could fallwithin thetotalpayment made ortobemade bythebuyer inrespect ofanimported good.
Iwould provide theexample ofrobotic manufacturing machinery toexplain thepoint. Inthe
caseofsuchequipment, thesalesagreement mayinvolve thesupply ofrobotic equipment aswellas
operating software tomake theequipment perform aparticular operation orfunction. While the
equipment itselfisimported, theoperating software maybetransmitted viatelephone lineorsatellite
aftertheequipment hasbeeninstalled inthefactory. Depending, ofcourse, ontheprecise circumstances
ofthesale,thecostofthesoftware maybeincluded inthetotalpayment made bythebuyer toorfor
thebenefit oftheseller. Hence, thevalue ofthesoftware transmitted bysatellite ortelephone line
mayform partofthecustoms value oftheimported goods.
Software transmitted bysatellite mayalsobeincluded inthecustoms value ofimported goods
asan"assist" under Article 8.1(b)(iv). Ifthesoftware constitutes engineering, development, artwork,
design work andplans andsketches undertaken elsewhere thaninthecountry ofimportation andit
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isnecessary fortheproduction oftheimported goods anditissupplied freeofcharge oratareduced
cost,Article 8requires thatitsvalue beadded totheprice actually paidorpayable.
Iwould alsopoint outthatthedetermination ofcustoms value intheabove cases would not
differ between countries thatchoose toapply paragraph 2ofGATT Decision 4.1andthose thatdo
not.Paragraph 2oftheDecision relates tocarrier media only. Thus, where theimported goods are
notcarrier media, there isnoauthority, intheAgreement, thatwould allow thededuction ofthecost
ofsoftware from theprice actually paidorpayable.
There maybeother situations which Ihavenotidentified, butIhopetheabove examples help
toexplain theWCO Secretariat 'sviewtothemembers ofyourCommittee. Ifyouhaveanyfurther
questions inthisregard, Iwould behappy toprovide additional answers.