WORLD TRADE G/VAL/N/1/ISR/1
12May1998
ORGANIZATION(98-1869)
Original: English Committee onCustoms Valuation
NOTIFICATION UNDER ARTICLE 22OFTHE AGREEMENT ON
IMPLEMENTATION OFARTICLE VIIOFTHE GENERAL
AGREEMENT ONTARIFFS AND TRADE 1994
ISRAEL
Thefollowing communication, dated 22April 1998, hasbeenreceived from thePermanent
Mission ofIsrael.1
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Asof1January 1998, theStateofIsrael hasputintoeffect theAgreement onImplementation
ofArticle VIIoftheGeneral Agreement onTariffs andTrade, 1994.
Please findattached anunofficial translated copyoftheIsraeli legislation relating tothechanges
mentioned above.
1English only.G/VAL/N/1/ISR/1
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CUSTOMS ORDINANCE AMENDMENT (NO. 15)LAW 5758-1997
Replacement ofsections 129to133B
1. IntheCustoms Ordinance (hereafter: theOrdinance) thefollowing shallreplace sections 129
to133B:
"Definitions andinterpretation
129. Insections 129to134A:
"valuated goods" -goods thevalue ofwhich must bedetermined forcustoms purposes;
"identical goods" -goods identical tovaluated goods inallrespects whatsoever, including their
physical characteristics, theirquality andtheirreputation, oncondition thattheywereproduced
inthesame country inwhich thevaluated goods were produced; forthispurpose:
(1) Minute physical differences shallnotdisqualify goods, which meettheconditions of
thedefinition inallother respects, from being deemed identical;
(2) goods thatinclude anIsrael component shallnotbedeemed identical goods;
"similar goods" -goods forwhich, eventhough theyarenotcompletely identical withthe
valuated goods, thefollowing holdtrue:
(1) They were produced inthesame country asthevaluated goods;
(2) theyhavecharacteristics similar tothose thevaluated goods andaremade ofsimilar
materials, which allows them tofunction similarly andtobeabletoreplace them in
commercial terms;
(3) theydonotinclude Israel components;
inthedetermination ofsimilarity tovaluated goods, quality, reputation andtrade marks shall
beamong theconsiderations taken intoaccount;
"Israel component: -engineering, development, artwork, design work, plans orsketches
doneinIsrael;
"production" includes growing andmining;
"commercial sphere" -wholesale, retail, salethrough anexclusive agent andsoforth;
"special relationship" -
(1) Arelationship between parties toanimport transaction, forwhom atleastoneofthe
following holds true:
(a) Oneoftheparties tothetransaction isanofficer inthebusiness oftheother;
forthispurpose,"officer"-director,generalmanager,deputygeneralmanager,
vicegeneral manager, someothermanager directly under thegeneral manager,G/VAL/N/1/ISR/1
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andanyperson whoholds anaforesaid position inthecompany, evenifhis
titleisdifferent;
(b) theparties tothetransaction areunder Lawrecognized aspartners inbusiness;
(c) theparties tothetransaction areemployee andemployer;
(d) acertain person owns, controls orholds 5percentormore ofthevoting rights
oroftheshares ineachoftheparties tothetransaction, whether directly or
indirectly;
(e) oneoftheparties tothetransaction controls theother, whether directly or
indirectly;
(f) theparties tothetransaction arecontrolled byathirdparty, whether directly
orindirectly;
(g) theparties tothetransaction jointly control athirdparty, whether directly or
indirectly;
(h) theparties tothetransaction arerelatives; forthispurpose, "relative" -spouse,
brother, sister, parent, parent 'sparent, spouse 'sparent, offspring, spouse 's
offspring, andthespouse ofanyofthese;
(2) forpurposes ofthisdefinition aperson shallbedeemed tobeincontrol ofanother
when heoccupies alegalorpractical position thatenables himtorestrict ortodirect
hisactivity;
(3) ifaperson istheexclusive agent, exclusive distributor orexclusive licensee ofthe
business ofanother, nomatter howtherelationship between them isdescribed, then
aspecial relationship shallbedeemed toexistbetween themonlyifatleastoneofthe
conditions inparagraph (1)holds trueforthem;
"personal use"-oneofthefollowing:
(1) Useofgoods imported byanindividual forhisownneeds orfortheneeds ofmembers
ofhishousehold;
(2) giving goods imported byanindividual toanother asagift,fortheneeds oftheother
individual orfortheneeds ofmembers ofhishousehold;
"commercial use"-usethatisnotpersonal use.
Ways ofdetermining thevalue ofvaluated goods
130. Thevalue ofvaluated goods shallbedetermined asfollows:
(1) Atthevalue ofthetransaction bywhich theywere acquired, calculated under the
provisions ofsection 132;
(2) ifitisnotpossible todetermine thevalue ofthevaluated goods assaidin
paragraph (1)-atthevalue ofatransaction bywhich identical goods wereacquired,
calculated under theprovisions ofsections 133A and133C;G/VAL/N/1/ISR/1
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(3) ifitsisnotpossible todetermine thevalue ofthevaluated goods assaidin
paragraph (2)-atthevalue ofatransaction bywhich similar goods were acquired,
calculated under theprovisions ofsections 133B and133C;
(4) ifitisnotpossible todetermine thevalue ofthevaluated goods assaidin
paragraph (3)-atthesaleprice inIsrael, calculated under theprovisions of
section 133D;
(5) ifitisnotpossible todetermine thevalue ofthevaluated goods assaidin
paragraph (4)-atacalculated value, inaccordance withtheprovisions ofsection 133E;
(6) ifitisnotpossible todetermine thevalue ofthevaluated goods under paragraph (3),
andeventhough itispossible todetermine thevalue ofthegoods under theprovisions
ofparagraph (4)-firstunder theprovisions ofparagraph (5),andthatinaccordance
withanapplication bytheimporter andwithapproval bytheCollector ofCustoms;
(7) ifitisnotpossible todetermine thevalue ofthevaluated goods assaidinparagraphs (1)
to(6)-inaccordance withtheprovisions ofsection 133F.
Determining thevalue ofgoods more thanoneyearaftertheirimportation
131. (a) Ifmore thanoneyearhaspassed since valuated goods were imported assaidin
section 144andiftheyhavenotyetbeencleared from thecontrol oftheCustoms
Authority, then their value shall bedetermined according totheprovisions of
section 130,beginning withtheprovisions ofparagraph (2),andtheprovisions of
paragraph (1)shallnotapply.
(b) Notwithstanding theprovisions ofsubsection (a),theDirector may-onapplication
bytheimporter andforreasons thatshallberecorded -order thatthevalue ofthe
goods, within theirmeaning insubsection (a),bedetermined according totheprovisions
ofsection 130,beginning withtheprovisions ofparagraph (1).
Value oftransaction
132. (a) Thevalue ofatransaction istheprice paidorpayable forthegoods when theywere
soldforexport toIsrael (hereafter: transaction price), withtheaddition oftheexpenses
andamounts specified insection 133,oncondition thatalltheconditions enumerated
insubsection (b)havebeencomplied with.
(b) Thevalue ofatransaction shallbedetermined according tosubsection (a)onlyifall
thefollowing holdtrue:
(1) There arenorestrictions onthesaleoruseofthegoods bytheimporter, except
for:
(a) Restrictions imposed orrequired inIsrael under anenactment;
(b) restrictions inrespect ofthegeographic areas inwhich thegoods may
besold;
(c) restrictions which donotsubstantively affect thevalue ofthegoods;G/VAL/N/1/ISR/1
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(2) thesaleortheprice ofthegoods arenotsubject toanycondition or
consideration whatsoever, thevalue ofwhich cannot beassessed forpurposes
ofthedetermination ofthevalue ofthegoods;
(3) nopartoftheexpected consideration fromthesaleoruseofthegoods bythe
importer canbecredited, directly orindirectly, totheperson whosoldthe
goods, except fortheexpenses andamounts specified insection 133,ifthey
were notinadvance included inthetransaction price;
(4) (a) there isnospecial relationship between theseller andtheimporter;
(b) ifthere isaspecial relationship between theseller andtheimporter,
thevalue ofthetransaction wasnotaffected byit;forthispurpose,
thevalue ofthetransaction shallbedeemed nottohavebeenaffected
byaspecial relationship, iftheimporter proved thatthevalue ofthe
transaction approximates, asfaraspossible, oneofthevalues specified
below:
(1) Thevalue oftransaction atthesaleofidentical orsimilar goods
forexport toIsrael, toimporters who have nospecial
relationship withtheseller;
(2) thevalue ofidentical orsimilar goods, determined under the
provisions ofsection 133D;
(3) thevalue ofidentical orsimilar goods, determined under the
provisions ofsection 133E;
(c) iftheDirector believes thatthevalue ofthetransaction wasaffected
byaspecial relationship thenheshallsoinform theimporter andgive
himanopportunity topresent hisarguments tohim.
(c) Ifoneoftheconditions saidinsubsection (b)does nothold truefora
transaction, thenitshallnotbeusedforthedetermination ofthevalue ofgoods
under section 130.
(d) Inthedetermination ofthevalue ofatransaction, interest under payment
arrangements made bytheimporter inconnection withtheimport ofgoods
shallnotbetaken intoaccount, ifallthefollowing holdtrue:
(1) Interest amounts areseparate ofthetransaction price;
(2) thefinancing arrangements were made inwriting;
(3) theimporter proved, ifrequired todoso,thatthegoods arebeing sold
attheprice declared tobethetransaction price, andthatthedeclared
interest rateisnothigher thanwascustomary insimilar transactions
inthecountry where thecredit wasprovided when thefinancing
arrangements were made.G/VAL/N/1/ISR/1
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(e) Discounts onthepriceofgoods given aftertheywerecleared fromthecontrol
ofcustoms shallnotbetaken intoaccount forthedetermination ofthevalue
ofatransaction inthose goods.
Additions totransaction price inthedetermination ofvalue oftransaction
133. (a) Inorder todetermine thevalue ofatransaction, assaidinsection 132,onlytheexpenses
andamounts specified below shallbeadded tothetransaction price -iftheywerenot
included initfrom thebeginning -calculated onthebasis ofobjective datathatcan
beassessed:
(1) Thefollowing expenses paidbythebuyer orwhich hemustpayinconnection
withbuying thegoods:
(a) Feesandcommissions, other thanpurchase fees; forthispurpose,
"purchase fees" -payments paidbytheimporter tohisagent for
representative services inthepurchase ofthegoods, which theagent
extends tohimabroad;
(b) thecostofcontainers, which -forcustoms purposes -aredeemed an
inseparable partofthegoods;
(c) thecostofpackaging, including thecostoflabour andthecostof
packaging materials;
(2) theproportional value oftheservices andmeans ofproduction specified below,
which theimporter provided, directly orindirectly, without consideration or
atareduced price, inconnection withtheproduction andsaleforexport of
thegoods:
(a) materials, components, partsandsimilar items included inthegoods;
(b) tools, forms andsimilar items usedintheproduction ofthegoods;
(c) materials usedandusedupintheproduction ofthegoods;
(d) engineering, development, artwork, work forthedesign ofplans or
sketches made inIsrael andrequired forproduction ofthegoods;
(3) royalties andlicence feesrelated tothegoods which theimporter mustpay,
directly orindirectly, asacondition forhissaleofthegoods inIsrael;
(4) thevalue ofevery partthatcanbedirectly orindirectly credited totheseller
oftheprojected income fromevery saleoruseofthegoods, carried outafter
theirsaleforexport toIsrael;
(5) thefollowing costs involved inbringing thegoods totheportofimportation
ortheplace ofimportation:
(a) thecostoftransporting thegoods totheportofimportation ortheplace
ofimportation;G/VAL/N/1/ISR/1
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(b) payments forloading, unloading andhandling inconnection with
transporting thegoods totheportofimportation ortheplace of
importation, including cargo handling fees,stevedoring feesanddock
fees;
(c) thecostofinsurance.
(b) Ifthere arenoobjective data, which canbeassessed inorder tocalculate anyofthe
expenses oramounts specified insubsection (a)thatwere incurred aspartofthe
transaction, thenthesaidtransaction shallnotbeusedforthedetermination ofthevalue
ofgoods under section 130.
Value oftransaction inwhich identical goods were bought
133A. Forthepurposes ofsection 130(2):
(1) Thevalue ofatransaction inwhich identical goods were bought shallbecalculated
under theprovisions ofsection 132;
(2) Atransaction inwhich identical goods werebought shallbeusedforthedetermination
ofthevalue ofthevaluated goods, ifallthefollowing holdtrue:
(a) Theidentical goods wereexported toIsrael atthesame timeasthevaluated
goods, ornearthattime;
(b) thetransaction bywhich theidentical goods were bought wascarried outin
thesame commercial sphere asthetransaction withthevaluated goods and
insimilar quantities; ifthere isnosuchtransaction -atransaction inwhich
theidentical goods were bought inacommercial sphere different from the
commercial sphere inwhich thevaluated goods werebought, orindifferent
quantities, oncondition thatthedifferences inrespect ofthecommercial sphere
orofthequantities were taken intoaccount fortheadjustment ofthevalue
ofthetransaction; theadjustment shallbebased onproven evidence, which
clearly indicates thattheestimate isreasonable andaccurate.
Value oftransaction inwhich similar goods were bought
133B. Forthepurposes ofsection 130(3):
(1) Thevalue ofatransaction inwhich similar goods werebought shallbecalculated under
theprovisions ofsection 132;
(2) Atransaction inwhich similar goods werebought shallbeusedforthedetermination
ofthevalue ofthevaluated goods, ifallthefollowing holdtrue:
(a) Thesimilar goods were exported toIsrael atthesame timeasthevaluated
goods, ornearthattime;
(b) thetransaction inwhich thesimilar goods werebought wascarried outinthe
same commercial sphere asthetransaction withthevaluated goods andin
similar quantities; ifthere isnosuchtransaction -atransaction inwhich the
similar goods were bought inacommercial sphere different from theG/VAL/N/1/ISR/1
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commercial sphere inwhich thevaluated goods werebought, orindifferent
quantities,onconditionthatthedifferencesthatcanberelatedtothecommercial
sphere ortothequantities were taken intoaccount fortheadjustment ofthe
value ofthetransaction; theadjustment shallbebased onproven evidence,
which clearly indicates thattheestimate isreasonable andaccurate.
Rules fordetermination ofthevalue ofatransaction ofidentical orsimilar goods
133C. Forthepurposes ofsection 130(2) and(3):
(1) Ifthere ismore thanonevalue ofatransaction ofidentical orsimilar goods, asthe
casemaybe,forwhich theprovisions ofsections 129to133Iholdtrue,thenthevalue
ofthegoods shallbedetermined according tothelowest ofthevalues;
(2) incases, inwhich theexpenses specified insection 133(a)(5) areincluded inthevalue
ofthetransaction,anadjustmentshallbemadeinconsiderationofsignificantdifferences
inthesaidexpenses -which areduetodifferences inthedistance orinthemethod
oftransportation -between thevalue ofthetransaction ofidentical orsimilar goods,
asthecasemaybe,andthevalue ofthetransaction ofthevaluated goods.
Determining value ofgoods according tosaleprice inIsrael
133D. Forthepurposes ofsection 130(4):
(1) Ifitisnotpossible todetermine thevalue ofthevaluated goods under section 130(1)
to(3),andifgoods identical orsimilar tothevaluated goods aresoldinIsrael inthe
condition inwhich theywereimported, thenthevalue ofthevaluated goods shallbe
calculated under thissection, onthebasis oftheunitprice atwhich theidentical or
similar goods arefirstsoldaftertheimportation inthelargest aggregate quantity, at
thetimewhen thevaluated goods areimported ornearthattime, topersons whodo
nothaveaspecial relationship withtheseller inIsrael, thefollowing amounts being
deducted:
(a) Thecommissions usually paidorthepayment ofwhich wasagreed, orthe
supplementsthatarecustomarilyaddedinthecalculationofprofit,andoverhead
expenses, inconnection withthesaleinIsrael ofimported goods ofthat
standard orofthatcategory;
(b) theordinary expenses oftransportation, insurance andrelated expenses, such
asareusually incurred inIsrael;
(c) costs connected withbringing thegoods totheportofimportation ortothe
place ofimportation, asspecified insection 133(a)(5);
(d) customs andother taxes thatmust bepaidinIsrael inconsequence ofthe
importation orsaleofthegoods.
(2) ifnoidentical orsimilar goods weresoldatornearthetimewhen thevaluated goods
were imported, thenthevalue ofthevaluated goods shall becalculated assaidin
paragraph (1),butbased ontheunitpriceatwhich identical orsimilar goods aresold
inIsrael inthecondition inwhich theywere imported atthenearest timeaftertheG/VAL/N/1/ISR/1
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importation ofthevaluated goods, oncondition that90dayshavenotpassed since
thevaluated goods were imported;
(3) ifnoidentical orsimilar goods weresoldinIsrael inthecondition inwhich theywere
imported, then-iftheimporter sorequested -thevalue ofthevaluated goods shall
becalculated assaidinparagraph (1),butbased ontheunitprice atwhich thesaid
goods aresoldinIsrael afteradditional processing inthelargest aggregate quantity
toapurchaser inIsrael whodoesnothaveaspecial relationship withtheseller inIsrael,
aftertheadded value thatstems fromthesaidprocessing issubtracted; theadded value
shallbecalculated onthebasis ofobjective datathatcanbeassessed;
(4) iftheidentical orsimilar goods weresoldinIsrael toaperson whosupplied, without
consideration oratareduced price, oneofthecomponents specified insection 133(a)(2)
inconnection withtheproduction andsaleofthesaidgoods, thenthatshallnotbe
usedforthedetermination under thissection ofthevalue ofthevaluated goods.
Determination ofcalculated value
133E. Forthepurposes ofsection 130(5):
(1) Thevalue ofthevaluated goods shallbedetermined atacalculated value, which is
thetotalofallthefollowing values:
(a) Thecostofthevalue ofmaterials andproduction orofanyother processing
used intheproduction ofthevaluated goods, including thecostofthe
components specified insection 133(a)(1), insubparagraphs (b)and(c);
(b) anamount equal totheprofits andtotheoverhead expenses commonly incurred
inthesaleofgoods ofthestandard orofthecategory ofthevaluated goods,
made byproducers intheexporting country forexport toIsrael;
(c) thecosts connected withbringing thegoods totheportofimportation orto
theplace ofimportation, asspecified insection 133(a)(5).
(2) ifaperson isnotanIsrael resident, thenheshallnotbeobligated toproduce accounts,
records orotherdocuments forexamination, andheshallnotbeobligated togiveaccess
tothemforthedetermination ofacalculated value; however, theDirector mayverify
inanother country information supplied byaproducer ofgoods forthedetermination
ofacalculated value, withthatproducer 'sconsent, afterappropriate advance notice
wasgiven tothecompetent authority intheproducer 'scountry andwhen thesaid
authority hasnotmade anyobjection within areasonable time.
Determination ofvalue inother cases
133F. Forthepurposes ofsection 130(7):
(1) When itisnotpossible todetermine thevalue ofthevaluated goods under section 130(1)
to(6),thentheirvalue shallbedetermined bytheuseofreasonable means thatconform
totheprinciples andprovisions prescribed intheGATT Agreement of1994 andin
theAgreement fortheApplication ofSection VIIoftheGATT Agreement of1994,
asexpressed insections 129to133I;G/VAL/N/1/ISR/1
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(2) thevalue ofgoods valuated under thissection shallnotbedetermined onthebasis of
anyofthefollowing:
(a) Theprice toconsumers oflocally produced goods;
(b) amethod thatprescribes thatavalue bedetermined forcustoms purposes as
thehigher oftwogiven values;
(c) theprice ofthegoods onthelocalmarket intheexport country;
(d) thecostofproduction, exclusive ofacalculated value determined foridentical
orsimilar goods under section 133E, andforthispurpose goods shall be
deemed identical orsimilar goods eveniftheywerenotproduced inthesame
country;
(e) theprice ofthegoods forexport inacountry thatisnottheState ofIsrael;
(f) aminimum value forcustoms purposes;
(g) arbitrary andfictitious values.
(3) without derogating fromtheprovisions ofparagraph (1),theDirector may-inorder
toapply theprovisions ofthissection -refertomethods forthevaluation ofgoods
specified insection 130,evenifitisnotpossible tocomply withalltheirconditions.
Determination ofthevalue ofgoods damaged before theywere cleared
133G. Thevalue ofgoods thatweredamaged before theywere cleared from thecontrol of
Customs Authorities shallbedetermined bythemethods ofvaluation prescribed insection 130,taking
intoaccount thereduction invalue ofthevaluated goods duetothedamage; ifthevalue ofthedamaged
goods wasdetermined under theprovisions ofthissection, thentheprovisions ofsection 150(1) shall
notapply tothem.
Giving theimporter adetailed account
133H. TheDirector shallgivetheimporter written notification ofthevalue ofthegoods which
wasdetermined under theprovisions ofsections 130to133G, asthecasemaybe,andofthemethod
according towhich thesaidvalue wasdetermined; attheimporter 'srequest theDirector shallgive
himalsotheparticulars ofthecalculation.
Applicability togoods imported forcommercial use
133I. Theprovisions ofsections 129to133H shall onlyapply togoods imported for
commercial use.
Amendment ofsection 134
2. Insection 134(a) oftheOrdinance, replace "133" with"133I".
Insertion ofsection 134A
3. Insert aftersection 134oftheOrdinance:G/VAL/N/1/ISR/1
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"Value ofgoods imported forpersonal use
134A. Thevalue ofgoods imported forone'spersonal use,either asaccompanied freight
orinsome other way, shallbecalculated inaccordance withregulations tobemade
bytheMinister ofFinance withapproval bytheKnesset Finance Committee."
Amendment ofPurchase TaxLaw-No.13
4. InthePurchaseTax(GoodsandServices)Law5712-1952,insection4B,replace"insection130"
everywhere with"insections 129to134A, asthecasemaybe".
Amendment oftheValue-Added TaxLaw5736-1975
5. IntheValue-Added TaxLaw5736-1975:
(1) Insection 11(a) replace "insection 130" with"insections 129to134A, asthecase
maybe";
(2) insection 30(a), inparagraph (5)andinparagraph (6)(b), replace "ofthecommonly
accepted price under section 131oftheCustoms Ordinance", with"ofthevalue
determined assaidinsections 129to133IoftheCustoms Ordinance, asthecasemay
be".
Effect
6. ThisLawshallgointoeffect on1January 1998.
ThisAmendment waspassed bytheKnesset on16December 1997, andwasofficially published in
Sefer Ha-Chukkim 1643, 28December 1997, page24ff.
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