WORLD TRADE
ORGANIZATIONG/VAL/N/1/PAN/11
8 October 1998
(98-3889)
Committee on Customs Valuation Original:  Spanish
NOTIFICATIONS UNDER ARTICLE 22.2 OF THE AGREEMENT ON
IMPLEMENTATION OF ARTICLE VII OF THE GENERAL
AGREEMENT ON TARIFFS AND TRADE 1994
PANAMA
Following a decision by the Committee on Customs Valuation at its meeting of 13 November,
the following communication from the Permanent Mission of Panama, dated 1 September 1998, is
being reissued entirely translated into English.  The Spanish and French versions remain the same.
_______________
Pursuant to the Decision adopted by the Committee on Customs Valuation on 12 May 1995, I
have the honour to notify Panama's legislation on customs valuation to the Committee on Customs
Valuation.
1. Cabinet Decree No. 26 of 1 August 1996, published in Gaceta Oficial  (Official Journal)
No. 23,096 of 7 August 1996, which entered into force on 1 January 1997.
"Prescribing provisions concerning the customs regime in relation to customs valuation by the
Customs Service."
2. Decision No. 704-04-017 of 10 January 1997, which entered into force upon publication in
Gaceta Oficial  No. 23,267 of 16 April 1997.
"Clearance procedure.  Establishment of a procedure for declarations of customs clearance for
domestic use in customs services in the eastern zone and others to be incorporated in thefuture, subject to written communication by the Director-General of Customs."
3. Decision No. 704-04-019 of 10 January 1997, which entered into force upon publication in
Gaceta Oficial  No. 23,348 of 5 August 1997.
"Pursuant to the legal powers conferred upon him, the Director-General of Customs provides
that, for customs purposes, automobiles that m eet the following requirements are deemed to
be used automobiles."
4. Decision No. 704-04-528 of 1 October 1997, which came into force upon publication in
Gaceta Oficial  No. 23,405 of 23 October 1997.
"Entrusting the Ministry of Finance and the Tr easury with carrying out a modernization and
decentralization programme in order to reorganize and simplify customs procedures."
                                                     
1This document cancels and replaces in English only the document dated 8 October 1998.G/VAL/N/1/PAN/1
Page 2
5. Decision No. 704-04-532 of 17 September 1997, which entered into force upon publication in
Gaceta Oficial  No. 23,402 of 20 October 1997.
"Modernization and administrative decentralization for the purpose of simplifying customs
procedures."G/VAL/N/1/PAN/1
Page 3
GACETA OFICIAL, Wednesday 7 August 1996
GACETA OFICIAL
ORGAN OF THE STATE
Established by Cabinet Decree No. 10 of 11 November 1903
LICDO. JORGE SANIDAS A. MARGARITA CEDEÑO B.
DIRECTOR SUBDIRECTOR
Office
 Avenida Norte (Eloy Alfaro) General Directorate of Revenue
y Calle 3a – 12 SUBSCRIPTIONS
Edificio Casa Amarilla, Min. 6 months, domestic B/18
San Felipe 1 year, domestic B/36
Ciudad de Panama 6 months abroad B/18 + airmail
Tel. 228-8631, P.O. Box 2189 1 year abroad B/36 + airmail
Panama - Republic of Panama
LAWS, NOTICES, EDICTS AND All payments in advance
OTHER PUBLICATIONS
SINGLE ISSUE B/1.40
CABINET COUNCIL
CABINET DECREE No. 26
(of 1 August 1996)
Prescribing provisions concerning the customs re gime in relation to customs valuation by the
Customs Service.
THE CABINET COUNCIL
WHEREAS:
The country requires a valuation system in keeping with the development of world trade
which enables it to give the same treatment to foreign imports as is granted to its exports by its
principal trading partners.
It is the responsibility of the Cabinet Council to develop provisions concerning the customs
regime, in accordance with Article 153.11 of the Constitution and the principles established byLaw No. 41 of 1996.
Like most of its trading partners, the Republic of Panama has applied for membership of the
World Trade Organization and has decided to adopt the Agreement on Implementation of Article VII
of the General Agreement on Tariffs and Trade 1994, which any country in the world may apply.
The Executive Authority is empowered to take the necessary measures to develop the
country's economic policy and, for that purpose, to adopt the necessary customs legislation.
It is necessary to issue these regulations in order that importers and exporters may be aware in
advance of the rules which govern the valuation of goods imported for home use or exported outright
and organize their imports on the basis of these new provisions.G/VAL/N/1/PAN/1
Page 4
HEREBY DECREES:
Article 1:  Legal basis and application of customs valuation .  The taxable base for the
computation of import duties and taxes shall be determined in accordance with the provisions of this
Decree and, should the latter be silent on any poi nt, recourse shall be had to the text, notes and
annexes which make up the Agreement on Implementation of Article VII of the General Agreement
on Tariffs and Trade.
The value shall be determined by the duly author ized customs official, in accordance with the
regulations and the condition in which the goods to be valued are presented, on the basis of the
records and accompanying documents, using the vari ous valuation methods in the order laid down in
this Decree and, where necessary, after the physical inspection of the goods, the interested party beingrequired to supply any additional explanations or information requested.
Article 2:  Transaction value .  The customs value of imported goods shall be the transaction
value, that is the price actually paid or payable for the goods when sold for export to the country of
importation adjusted in accordance with the provisions of Article 9, provided:
(a) That there are no restrictions as to the disposition or use of the goods by the buyer
other than restrictions which:
(i) are imposed or required by law or by the public authorities in the country of 
importation;
(ii) limit the geographical area in which the goods may be resold;  or(iii) do not substantially affect the value of the goods;
(b) that the sale or price is not subject to some condition or consideration for which a
value cannot be determined with respect to the goods being valued;
(c) that no part of the proceeds of any subsequent resale, disposal or use of the goods by
the buyer will accrue directly or indirectly to the seller, unless an appropriate
adjustment can be made in accordance with the provisions of Article 9;  and
(d) that the buyer and seller are not related, or where the buyer and seller are related, that
the transaction value is acceptable for customs purposes under the provisions of the
following paragraph.
In determining whether the transaction value is acceptable for the purposes of paragraph 1 of
this Article, the fact that the buyer and the seller are related within the meaning of Article 15 shall not
in itself be grounds for regarding the transaction value as unacceptable.  In such case the
circumstances surrounding the sale shall be examined and the transaction value shall be accepted
provided that the relationship did not influence the price.  If, in the light of information provided bythe importer or otherwise, the customs administration has grounds for considering that the relationship
influenced the price, it shall communicate its grounds to the importer and the importer shall be given a
reasonable opportunity to respond.  If the importer so requests, the communication of the grounds
shall be in writing.
In a sale between related persons, the transaction value shall be accepted and the goods
valued in accordance with the provisions of paragraph 1 whenever the importer demonstrates that
such value closely approximates to one of the following occurring at or about the same time:G/VAL/N/1/PAN/1
Page 5
(i) The transaction value in sales to unrelated buyers of identical or similar goods for
export to the same country of importation;
(ii) the customs value of identical or similar goods as determined under the provisions of
Article 6;
(iii) the customs value of identical or similar goods as determined under the provisions of
Article 7.
In applying the foregoing tests, due account shall be taken of demonstrated differences in
commercial levels, quantity levels, the elements enumerated in Article 9 of this Decree and costs
incurred by the seller in sales in which the seller and the buyer are not related that are not incurred bythe seller in sales in which the seller and the buyer are related.
However, substitute values may not be established on the basis of the above.Article 3:  Valuation on the basis of identical goods .  If the customs value of the imported
goods cannot be determined under the provisions of the previous Article, the transaction value of
identical goods sold for export to the same country of importation and exported at or about the same
time as the goods being valued shall be used.
In applying this Article, the transaction value of identical goods in a sale at the same
commercial level and in substantially the same quantity as the goods being valued shall be used to
determine the customs value.  Where no such sale is found, the transaction value of identical goods
sold at a different commercial level and/or in different quantities, adjusted to take account of
differences attributable to commercial level and/or to quantity, shall be used, provided that such
adjustments can be made on the basis of demonstrated evidence which clearly establishes thereasonableness and accuracy of the adjustment, whether the adjustment leads to an increase or a
decrease in the value.
The costs and charges of transport, loading, unloading and handling shall be adjusted in value
to take account of significant differences in such costs and charges between the imported goods and
the identical goods in question arising from differences in distances and modes of transport.
If, in applying this Article, more than one transaction value of identical goods is found, the
lowest such value shall be used to determine the customs value of the imported goods.
Article 4:  Valuation on the basis of similar good s.  If the customs value of the imported
goods cannot be determined under the provisions of Articles 2 and 3 above, the transaction value ofsimilar goods sold for export to the same country of importation and exported at or about the same
time as the goods being valued shall be used.
In applying this Article, the transaction value of similar goods in a sale at the same
commercial level and in substantially the same quantity as the goods being valued shall be used todetermine the customs value.  Where no such sale is found, the transaction value of similar goods sold
at a different commercial level and/or in different quantities, adjusted to take account of differences
attributable to commercial level and/or to quantity, shall be used, provided that such adjustments can
be made on the basis of demonstrated evidence which clearly establishes the reasonableness and
accuracy of the adjustment, whether the adjustment leads to an increase or a decrease in the value.
The costs and charges of transport, loading, unloading and handling shall be adjusted in value
to take account of significant differences in such costs and charges between the imported goods and
the similar goods in question arising from differences in distances and modes of transport.G/VAL/N/1/PAN/1
Page 6
If, in applying this Article, more than one transaction value of similar goods is found, the
lowest such value shall be used to determine the customs value of the imported goods.
Article 5:  Alternation of the next two methods of valuation .  If the customs value of the
imported goods cannot be determined under the provisions of Articles 2, 3 and 4 above, the customsvalue shall be determined in accordance with the next two methods in the order laid down, unless the
Customs Administration accepts the request of the interested party that the order be reversed.
Article 6:  Valuation on the basis of the unit  price of identical or similar imported goods
sold in the condition as imported .  If the customs value cannot be determined in accordance with the
previous three methods, the customs value shall be determined on the basis of the value of the
imported goods or identical or similar imported goods sold in the country of importation in thecondition as imported.
The customs value of the imported goods determined under the provisions of this Article shall
be based on the unit price at which the imported goods or identical or similar imported goods are so
sold in the greatest aggregate quantity, at or about the time of the importation of the goods beingvalued, to persons who are not related to the pe rsons from whom they buy such goods, subject to
deductions for the following:
(i) Either the commissions usually paid or agreed to be paid or the additions usually
made for profit and general expenses in connection with sales in Panama of importedgoods of the same class or kind;
(ii) the usual costs of transport, loading, unloading and insurance for bringing the goods
to the country and similar and/or associated costs arising in Panama;  and
(iii) the customs duties and other national taxes paid in Panama by reason of the
importation or sale of the goods.
If neither the imported goods nor identical nor similar imported goods are sold at or about the
time of importation of the goods being valued, the customs value shall be determined in accordance
with the second paragraph of this Article on the basis of the unit price at which the imported goods or
identical or similar imported goods are sold in the country of importation in the condition as importedat the earliest date after the importation of the goods being valued but before the expiration of 90 days
after such importation.
If neither the imported goods nor identical nor similar imported goods are sold in Panama in
the condition as imported, then, if the importer so requests, the customs value shall be based on theunit price at which the imported goods, after further processing, are sold in the greatest aggregate
quantity to persons in Panama who are not related to the persons from whom they buy such goods,
due allowance being made for the value added by such processing and the deductions provided for in
the second paragraph of this Article.
Article 7:  Valuation based on computed value .  If the customs value of imported goods
cannot be established by the previous methods, it shall be based on a computed value consisting of the
sum of:
(a) The cost or value of materials and fabrication or other processing employed in
producing the imported goods;G/VAL/N/1/PAN/1
Page 7
(b) an amount for profit and general expenses equal to that usually reflected in sales of
goods of the same class or kind as the goods being valued which are made by
producers in the country of exportation for export to Panama;
(c) the cost or value of the transport, loading, unloading, handling and insurance
expenses.
Panama may not require or compel any person not resident in its own territory to produce for
examination, or to allow access to, any account or other record for the purposes of determining a
computed value.  However, information supplied by the producer of the goods for the purposes of
determining the customs value under the provisions of this Article may be verified in another country
by the authorities of Panama with the agreement of  the producer and provided they give sufficient
advance notice to the government of this other country and the latter does not object to the
investigation.
Article 8:  Valuation based on reasonable means .  If the customs value of the imported
goods cannot be determined in accordance with the methods laid down in the previous Articles, thecustoms value shall be determined using reasonable means consistent with the principles and general
provisions of this Decree and of Article VII of the General Agreement on Tariffs and Trade and on
the basis of data available in Panama.
No customs value shall be determined under the provisions of this Article on the basis of:(a) The selling price in Panama of goods produced locally;(b) a system which provides for the acceptance for customs purposes of the higher of two
alternative values;
(c) the price of goods on the domestic market of the country of exportation;(d) the cost of production other than computed values which have been determined for
identical or similar goods in accordance with the provisions of the previous Article;
(e) the price of the goods for export to a country other than Panama;(f) minimum customs values;  or(g) arbitrary or fictitious values.
If the importer so requests, the importer shall be informed in writing of the customs value
determined under the provisions of this Article and the method used to determine such value.
Article 9:  Permitted adjustments to the transaction value .  In determining the customs
value, additions may be made to the price actually paid or payable as provided in this Article.
In determining the customs value under the provisions of Article 2, there shall be added to the
price actually paid or payable for the imported goods only:
(a) The following, to the extent that they are incurred by the buyer but are not included in
the price actually paid or payable for the goods:
(i) commissions and brokerage, except buying commissions;G/VAL/N/1/PAN/1
Page 8
(ii) the cost of containers which are treated as being one for customs purposes 
with the goods in question;
(iii) the cost of packing whether for labour or materials;
(b) the value, apportioned as appropriate, of the following goods and services where
supplied directly or indirectly by the buyer free of charge or at reduced cost for use in
connection with the production and sale for export of the imported goods, to the
extent that such value has not been included in the price actually paid or payable:
(i) materials, components, parts and similar items incorporated in the imported 
goods;
(ii) tools, dies, moulds and similar items used in the production of the imported 
goods;
(iii) materials consumed in the production of the imported goods;(iv) engineering, development, artwork, design work, and plans and sketches
undertaken elsewhere than in the country of importation and necessary for the
production of the imported goods;
(c) royalties and licence fees related to the goods being valued that the buyer must pay,
either directly or indirectly, as a condition of sale of the goods being valued, to the
extent that such royalties and fees are not included in the price actually paid or
payable;
(d) the value of any part of the proceeds of any subsequent resale, disposal or use of the
imported goods that accrues directly or indirectly to the seller.
In Panama, all of the following shall be included in the customs value:(a) The cost of transport of the imported goods to the port or place of importation;
(b) loading, unloading and handling charges associated with the transport of the imported
goods to the port or place of importation;  and
(c) the cost of insurance.
Additions to the price actually paid or payable shall be made under this Article only on the
basis of objective and quantifiable data.
Article 10:  Conversion of currency .  Where the conversion of currency is necessary for the
determination of the customs value, the rate of exchange to be used shall be that duly published by thecompetent authorities of the country of importation concerned and shall reflect as effectively as
possible, in respect of the period covered by each such document of publication, the current value of
such currency in commercial transactions in terms of balboas or dollars.
The conversion rate to be used shall be that in effect at the time of declaration for home use or
any other procedure which may be applied to the goods in Panama.
On the last working day of each week, the General Directorate of Customs will notify each
Regional Customs Administration of the average conversion rate applicable to each currency duringG/VAL/N/1/PAN/1
Page 9
the whole of the following week.  The National Bank of Panama shall be the official entity that
certifies the average conversion rate.
Article 11:  Confidentiality .  All information which is by nature confidential or which is
provided on a confidential basis for the purposes of the customs valuation of a particular good shall betreated as strictly confidential by the authorities concerned, and they shall not disclose it without the
specific permission of the person or government providing such information, except to the extent that
it may be required to be disclosed in the context of judicial proceedings or during the processing of
the corresponding declaration applying a particular procedure to the said good.
Article 12:  Appeals .  With regard to the determination of customs value, the importer or any
other person liable for the payment of the customs duties and charges shall have the right to appeal,without penalty, within three working days of the calculation of the customs duties and charges.
An initial right of appeal without penalty may be to the customs administration, but there
shall also be a right of appeal, without penalty, to the General Directorate of Customs within
five working days of notification of the decision of first instance or of appeal to a judicial authority.
Notice of the decision on appeal shall be given to the appellant and the reasons for such
decision shall be provided in writing.  The appellant  shall also be informed of any rights of further
appeal.
Article 13:  Guarantee of withdrawal before determination of final value .  If, in the
course of determining the customs value of imported goods, it becomes necessary to delay the final
determination of such customs value, the importer of the goods shall nevertheless be able to withdraw
them from customs if, where so required, the importer provides sufficient guarantee in the form of a
surety, a deposit or some other appropriate instrument, covering the ultimate payment of customsduties for which the goods may be liable.
Article 14:  Definitions .  For the purposes of this Decree:
(a) "customs value of imported goods" means the value of goods for the purposes of
levying ad valorem  duties of customs on imported goods;
(b) "country of importation" means Panama or the part of its customs territory into which
the goods are imported;
(c) "produced" includes grown, manufactured and mined;
(d) "identical goods" means goods which are the same in all respects, including physical
characteristics, quality and reputation.  Minor differences in appearance would not
preclude goods otherwise conforming to the definition from being regarded as
identical;
(e) "similar goods" means goods which, although not alike in all respects, have like
characteristics and like component materials which enable them to perform the same
functions and to be commercially interchangeable.  The quality of the goods, their
reputation and the existence of a trade mark are among the factors to be considered in
determining whether goods are similar;
(f) the terms "identical goods" and "similar goods" do not include, as the case may be,
goods which incorporate or reflect engineering, development, artwork, design work,G/VAL/N/1/PAN/1
Page 10
and plans and sketches for which no adjustment has been made under
paragraph 1(b)(iv) of Article 9 because such elements were undertaken in Panama;
(g) goods shall not be regarded as "identical goods" or "similar goods" unless they were
produced in the same country as the goods being valued;
(h) goods produced by a different person shall be taken into account only when there are
no identical goods or similar goods, as the case may be, produced by the same person
as the goods being valued.
"Goods of the same class or kind" means goods which fall within a group or range of goods
produced by a particular industry or industry sector, and includes identical or similar goods.
Article 15:  Related persons .  For the purposes of this Decree, persons shall be deemed to be
related only if:
(a) They are officers or directors of one another's businesses;(b) they are legally recognized partners in business;(c) they are employer and employee;
(d) any person directly or indirectly owns, controls or holds 5 per cent or more of the
outstanding voting stock or shares of both of them;
(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;  or(h) they are members of the same family.Persons who are associated in business with one another in that one is the sole agent, sole
distributor or sole concessionaire, however described, of the other shall be deemed to be related for
the purposes of this Decree if they fall within the criteria of the previous paragraph.
Article 16:  Explanation in writing .  Upon written request, the importer shall have the right
to an explanation in writing from the customs administration of the country of importation as to howthe customs value of the importer's goods was determined.
Article 17:  Right to verify particulars .  Nevertheless, the customs shall have the right at
any time to satisfy themselves as to the truth or accuracy of any statement, document or declaration
presented for customs valuation purposes anywhere in the country.
Article 18:  Regulations .  At the proposal of the Gene ral Directorate of Customs, the
Ministry of Finance and the Treasury shall issue, on the basis of this Decree, the regulations necessary
to establish the procedures for the application of the various aspects of the valuation of goods.
Article 19:  Total revocation .  All previous rules for the customs valuation of goods shall be
null and void and an authorized copy of this Decree shall be sent to the Legislative Assembly, in
conformity with Article 195.7 of the Constitution.G/VAL/N/1/PAN/1
Page 11
Article 20:  Entry into force .  This Decree shall enter into force on 1 January 1997.
Done in Panama City on the first of August nineteen hundred and ninety-six (1996).
ERNESTO PÉREZ BALLADARES
President of the Republic
RAÚL MONTENEGRO DIVIAZO MITCHELL DOENS
Minister of the Interior Minister of Labour and
and Justice Welfare
RICARDO ALBERTO ARIAS NITZIA DE VILLARREAL
Minister of External Minister of Trade and
Relations Industry
OLMEDO DAVID MIRANDA JR. FRANCISCO SÁNCHEZ CÁRDENAS
Minister of Finance and Minister of Housing
the Treasury
PABLO ANTONIO THALASSINOS CARLOS A. SOUSA-LENNOX M.
Minister of Education Minister of Agricultural
Development
LUIS E. BLANCO GUILLARMO O. CHAPMAN JR.
Minister of Public Works Minister of Planning and
Economic Policy
AIDA LIBIA M. DE RIVERA
Minister of Health
RAÚL ARANGO GASTEAZORO
Minister of the Presidency and
General Secretary of the Cabinet CouncilG/VAL/N/1/PAN/1
Page 12
GACETA OFICIAL, Wednesday 16 April 1997
GACETA OFICIAL
ORGAN OF THE STATE
Established by Cabinet Decree No. 10 of 11 November 1903
LICDO. JORGE SANIDAS A.  YEXENIA I. RUIZ
DIRECTOR SUBDIRECTOR, a.i.
Office
Avenida Norte (Eloy Alfaro) General Directorate of Revenue
y Calle 3a – 12 SUBSCRIPTIONS
Edificio Casa Amarilla, Min. 6 months, domestic B/18
San Felipe 1 year, domestic B/36
Ciudad de Panama 6 months abroad B/18 + airmail
Tel. 228-8631, P.O. Box 2189 1 year abroad B/36 + airmail
Panama - Republic of Panama
LAWS, NOTICES, EDICTS AND All payments in advance
OTHER PUBLICATIONS
SINGLE ISSUE B/1
MINISTRY OF FINANCE AND THE TREASURY
GENERAL DIRECTORATE OF CUSTOMS
DECISION No. 704-04-017
(of 10 January 1997)
The Director-General of Customs
in the exercise of his legal powers
WHEREAS:
The customs is always anxious to simplify the formalities within its legal powers and seek
ways of applying the regulations without affecting the smooth operation of the service.
The procedure for valuing goods has been established by Cabinet Decree No. 26 of 1996 and
a valuation system consistent with the General Agreement on Tariffs and Trade (GATT) has been
introduced through the issuance of special instructions.
Clearance for home use requires a special and expeditious procedure in the customs offices of
the Eastern Zone and the Airport Zone which it may subsequently be possible to apply to all the
customs offices forming part of the system and in communication through the National Customs
Network (RENAD) of the General Directorate of Customs.
Paragraph 2 of Law 16 of 29 August 1979 author izes the Director-General of Customs to
adopt the measures necessary to improve the service.
Law No. 41 of 1 July 1996 authorizes the Director-General of Customs to take the necessary
action continuously to adapt and improve the orga nization of the service and its administrative
procedures.G/VAL/N/1/PAN/1
Page 13
HEREBY RESOLVES:
Article 1:  Clearance procedure .  The procedure for processing a declaration for clearance
for home use in the customs offices of the Eastern Z one and others to be incorporated in the future,
subject to written communication by the Director-General of Customs, is established.
Article 2:  Preliminary procedure.   The officials in charge of premises authorized to receive
foreign goods must enter the whole of each arriving manifest until such entry is made in the ports and
airports of arrival in the country.
Article 3:  Processing .  Import declarations or declarations for home use shall be processed
as follows:
Step 1.  Lodgement of the declaration
In all cases, the Customs Clearing Agent shall prepare the Unified Customs Declaration in his
office and present it (original and five copies) at the counter of the:
(a) Special Assessment Office (OEL), when it has already been prerecorded and
numbered, with all its accompanying documents, in the office of a Customs Clearing
Agent connected to the system;
(b) Security Office (OG), when it has been decided that security must be lodged before
the goods can be processed and withdrawn, because they are subject to an exemption
or because some special particulars are lacking;
(c) Central Assessment Office (OCL), when the customs clearing agents are not
connected to the system or when the premises where the goods are being kept does
not form part of the system.
These three offices  shall receive the Unified Customs Declaration together with the
corresponding shipping documents, invoices and other papers required by the system.
The customs official who receives the declaration shall also receive from the Customs
Clearing Agent a receipt on which he shall merely be required to note the date and time of acceptance
of the declaration and affix his signature and stamp. This receipt must indicate the number of
documents supplied. (It is listed as Annex 1.)
(a) Customs clearing agents not connected to the system may lodge their unified customs
declarations at the said premises and obtain the corresponding payment slip.
(b) Customs clearing agents connected to the system may lodge the already prerecorded
unified customs declarations to obtain the corresponding payment slip.
Step 2.  Examination
I. The declaration is passed to the examiner who shall:
Firstly:(a) Check that there are no blots and smudges, writing between the lines or corrections;G/VAL/N/1/PAN/1
Page 14
(b) make sure that the f.o.b. price on the invoice is not less than that indicated on the
declaration;
(c) verify that the number of packages on the bill of lading or air or land waybill is not
less than that declared;
(d) check whether any certificate issued by so me authority is required in respect of the
goods for which clearance is requested;
(e) in the case of declarations which call for the lodging of security, the official shall
verify that the security conforms with the requirements and enter it in the security
register.
Secondly:If these conditions have been met, the exam iner shall instruct the system to make the
assessment and issue the payment slip and shall send the documents for punching and separation.
Otherwise, he shall draw attention to the error and immediately return all the documents to
the party concerned in order that they may be corrected and the declaration resubmitted.
II. The punching or numbering and separating officer shall:
(a) Punch all the documents corresponding to the declaration with the handwritten
number which has been allocated by the system;
(b) separate the document and deliver the corresponding copies to the agent, using the
appropriate pigeonhole;
(c) retain copies (third and fourth, sky blue) to be sent to the Inspector's Office and the
original for the archives, to be delivered weekly to the Archives Section.
Step 3.  Payment slip
The interested party shall take the remaining three copies of the declaration and the payment
slip plus the other accompanying documents and proceed to the authorized bank to pay the total
amount indicated on the slip.  He shall then present himself with this prepaid document and the copies
of the declaration at the authorized premises where the goods are being kept.
Step 4.  Examination
The computerized system will indicate on a random basis whether or not the goods must be
physically inspected.
(1) If no physical inspection is required, the Cust oms Clearing Agent or whoever he may have so
authorized shall take the documents to the warehouse and present them directly for the
purpose of withdrawing the goods.
(2) If physical inspection is required, the examiner shall classify, value and apply the rules
applicable to the goods, bearing in mind that:G/VAL/N/1/PAN/1
Page 15
(a) The goods must be valued by systematically applying the methods indicated in
Articles 2, 3, 4, 6, 7 and 8 of Cabinet Decree No. 26 of 1 August 1996, in addition to
the other rules laid down concerning valuation under the GATT;
(b) where appropriate, the declared value shall be compared with information obtained
from the Valuation Section or the data in his possession relating to similar
inspections;
(c) in the case of new or used automobiles, ships or aircraft, new or used machinery or
heavy equipment (including mining machinery and self-propelled agricultural
machinery and construction plant) and, in general, used goods, except for used goods
arriving in traveller's baggage or as household effects:
(i) the examiner shall make his appraisal and send the declaration to the
Valuation Section for a mandatory opinion;
(ii) the Section shall give a ruling within two days, either approving  the value
proposed by the examiner or declaring a provisional value  based on its
records, while investigating that which should actually be applied to the
goods.
Note:I. In the latter case, if the interested party agrees, payment shall be made on the
appraised value and security shall be given for the disputed portion until the
Valuation Section has taken a decision.
II. The security shall be deposited with the corresponding regional administration.
Step 5.  Withdrawal or release
(a) If the results of the examination are satisfactory , the examiner shall pass on the
declaration to the official responsible for entering into the system the particulars of
the person withdrawing the goods (who must always be authorized by the ClearingAgent concerned).  This official shall also enter:
(i) The amount paid;(ii) the general particulars of the person withdrawing the goods;(iii) particulars of the vehicle in which the goods are to be transported;  and(iv) shall instruct the system to issue a release note , a document which shall
remain in the possession of the warehouse.
(b) If the results of the examination are not satisfactory , the examiner shall so indicate
and shall make the corresponding adjustment for the tariff differences, without
prejudice to those for misdeclaration of value.
The Agent shall lodge a new declaration for the difference and have it processed in the usual
way.G/VAL/N/1/PAN/1
Page 16
Article 4 :  Cancellation of a registered declaration .  Once the system has allocated a
registration number to a declaration it shall be deemed to have been accepted by customs and the
interested party may request customs to cancel it only in the following cases:
(a) If the legal requirements for its acceptance (registration) are not fulfilled;(b) if the goods do not appear, in their entirety;  and(c) if before physical inspection, the interested party decides to lodge another declaration
substituting for the home clearance procedure some other different but equally
definitive procedure, provided that it covers all the packages for which clearance was
requested in the original declaration.
Article 5:  Other disposals which also require valuation .  Other disposals requiring
valuation in various circumstances shall be requested by means of a unified customs declaration and
shall receive the same treatment, without the approvals and endorsements of other customs authorities
being required to initiate processing.
Article 6:  Activities of the Valuation Section .  From the date of entry into force of this
Decision, the Valuation Section shall carry out its various activities independently of the document
processing function, as indicated below.
While transferring information to the examiners, the Section shall rule on the appropriate
values within the time-limits laid down by the General Directorate of Customs.
Article 7:  It shall be responsible for carrying out the following activities:
Group 1 1. Obtain information on the goods considered most sensitive by
customs.
2. Process or verify this information and record it so that it may be used
for reference purposes by the examiners.
3. Deliver it for distribution to all examiners and regional
administrators.
4. Answer the specific inquiries of the examiners when they need
information. File the answers for possible reuse in similar cases.
Group 2 1. Find out the trading structures of the enterprises which regularly
export goods to Panama.
2. Get to know the trading structures of the enterprises which import
goods into Panama.
3. Procure the lists of prices which importers receive or obtain,
especially for the most sensitive goods.
4. Put the information into usable form and incorporate the verified data
in the value file established by ASYCUDA.
Group 3 1. Prepare final decisions on valuation appeals submitted by interested
parties.G/VAL/N/1/PAN/1
Page 17
2. Prepare numbered instructions on the various aspects of valuation
and have them circulated among regional administrations and
examiners.
Group 4 1. Prepare a decision establishing the method to be used by the
Valuation Section as a basis for valuing used goods and damaged
goods.
2. Determine how this method shall be gradually applied by the
examiners themselves while the Section ceases to participate directly
in the said valuation.
3. Establish the procedure for valuing Canal Zone goods officially
auctioned for consumption in the rest of the country.
Group 5 While transmitting to all the examiners the records in its possession, the
Valuation Section shall, within a maximum period of two days, confirm thevalue applied by the examiner and fix a provisional value pending the
determination of the exact value to be placed on the goods.
The goods which must mandatorily be submitted to the Valuation Section for
review are:
1. Automobiles, new or used.2. Ships and aircraft, new or used.
3. Heavy machinery/equipment, new or used.
4. Mining machinery and self-propelled machines, new or used.5. Footwear, other than sports footwear.
Article 8:  Mandatory consultation .  The mandatory consultation of the Valuation Section
shall have a suspensive effect with respect to the records mentioned above under the activities of
group 5 as the examiners and regional administrations receive them.
Article 9:  Timetable .  The Valuation Section shall provide the information needed by the
examiners to perform their tasks, allowing a maxi mum of thirty (30) days for each activity listed
under group 5 of Article 7 above.  This period shall commence from the date of publication of this
Decision.
Done in Panama City on the tenth of January nineteen hundred and ninety-seven.
For registration, communication and implementation.
Carlos E. Icaza E. Erick Bravo D.
Director-General of Customs General SecretaryG/VAL/N/1/PAN/1
Page 18
GACETA OFICIAL, Tuesday 5 August 1997
GACETA OFICIAL
ORGAN OF THE STATE
Established by Cabinet Decree No. 10 of 11 November 1903
LICDO. JORGE SANIDAS A. YEXENIA I. RUIZ
DIRECTOR SUBDIRECTOR, a.i.
Office
Avenida Norte (Eloy Alfaro) General Directorate of Revenue
y Calle 3a - 12 SUBSCRIPTIONS
Edificio Casa Amarilla, Min. 6 months, domestic B/18
San Felipe 1 year, domestic B/36
Ciudad de Panama 6 months abroad B/18 + airmail
Tel. 228-8631, P.O. Box 2189 1 year abroad B/36 + airmail
Panama - Republic of Panama
LAWS, NOTICES, EDICTS AND All payments in advance
OTHER PUBLICATIONS
SINGLE ISSUE B/2.40
MINISTRY OF FINANCE AND THE TREASURY
GENERAL DIRECTORATE OF CUSTOMS
DECISION No. 704-04-019
(of 10 January 1997)
The Director-General of Customs
in the exercise of his legal powers
WHEREAS:
On 1 January 1997 our country began applying the Valuation System for foreign goods in
accordance with the provisions of Cabinet Decree No. 26 of 1 August 1996, which annuls all previousprovisions concerning customs valuation.
The country is in the process of internationalizing its economy, which is making it necessary
to standardize, simplify, harmonize and decentralize the valuation of foreign goods in all the
Republic's customs offices and make it less bureaucratic.
Specific instructions for the valuation of specia l goods, such as used automobiles, need to be
included in the Valuation System under Article VII of the General Agreement on Tariffs and Trade
(GATT).
Law 16 of 29 August 1979 created the General Directorate of Customs under the Ministry of
Finance and the Treasury and, pursuant to its Article 6.2, the Director-General of Customs is
empowered to adopt the measures necessary to improve the service.
Law No. 41 of 1 July 1996 gives the Director-General additional powers to take the necessary
action continuously to adapt and improve the orga nization of the service and its administrative
procedures, which entails the application, in the first instance, of the provisions of Cabinet
Decree No. 26 of 1 August 1996 and, secondarily, of the instructions issued by the General
Directorate of Customs.G/VAL/N/1/PAN/1
Page 19
HEREBY DECIDES:
First:  Definition .  For customs purposes, "used automobiles" shall mean those which satisfy
all of the following conditions:
(a) Have been licensed in some country or are registered with some national or
international official body;
(b) have been driven more than 5,000 km.;  and(c) whose year of manufacture is earlier than the year of importation.
Second:  Importation of used vehicles .  For the importation of used vehicles, the invoice
prices shall be accepted if they are those of vehicle auctioneers or enterprises or entities recognized by
the Customs Administration.
In other transactions involving judicial or administrative authorities or effected between
private individuals, on whatever basis and in what ever form, or by distributors, the customs value
shall be determined starting from the value as ne w, in accordance with the price list supplied by
Panamanian new vehicle dealers, with application of the percentage depreciation for use specified in
the third paragraph of this Decision and in accordance with the parameters laid down in this Decision.
Third:  Use of the new vehicle price list with reductions for years of use .  If it is not
possible to apply the invoice value of used automobiles constituting special goods that cannot be
valued by any of the four extra-contractual methods established by the GATT Valuation System,
valuation shall be based on the method of last resort and reasonable means, by taking a flexible
approach to the value of similar goods.
The procedure shall be as follows:(a) The new vehicle prices indicated in the price lists supplied by the importing
distributors shall serve as a basis for valuation by the method of last resort or
reasonable means;
(b) the rebate or reduction on the price of the new vehicle shall be 15 per cent per year
and the following table shall be applied:
Year Depreciation
From the first year Fifteen per cent (15%)
From the second year Thirty per cent (30%)
From the third year Forty-five per cent (45%)
From the fourth year Sixty per cent (60%)
onwards, once only
Fourth:  Other possible reductions .  The prices established in accordance with the third
paragraph shall not be rigidly fixed since, where appropriate, consideration shall be given to special
wear and tear due to breakdown or damage, subjec t to the maximum percentages laid down in the
sixth paragraph of this Decision.
Only the values corresponding to the new vehicle may be used, provided that prices are
available for the same makes and models.G/VAL/N/1/PAN/1
Page 20
If no prices are available for the same makes and models, the method described below shall
be used.
Fifth:  Establishment of special lists of domestic-market automobile prices .  When the
invoice price is not applicable and there are no prices available for identical or similar goods and, forlack of information, it is not possible to use any of the other methods envisaged by the General
Agreement on Tariffs and Trade (GATT) other than that of last resort but based on goods which have
been imported into Panama and are being traded and with respect to which deductions have been
made for customs duties and taxes by applying the deductive method.
Within three (3) months of the publication of this Decision, the Valuation Section shall
prepare and supply lists of the prices of these automobiles to the examiners who will then be able toestablish the value using the same procedure.
The enquiries which the Valuation Section receives from examiners shall be answered in
writing, by fax or by other expeditious means.
Sixth:  Discounts for wear and damage .  When used automobiles display wear or damage
incurred subsequent to invoicing or the price of the new vehicle with depreciation for use is
employed, it shall also be possible to use a corres ponding table of reductions in the following form:
(a) According to studies furnished by the motor vehicle manufacturers, the various parts
of the vehicle represent percentage values which together add up to the total value of
the complete vehicle.
(b) These percentages are as follows:
(i) Engine system 18%
Main parts and components:
Exhaust manifold
Carburettor
` Air filter assembly
Radiator assembly
Exhaust pipe and silencer
(ii) Chassis/bumpers  2%
Main parts and components:
Front bumpers
Rear bumpers
(iii) Electrical system 13%
Main parts and components:
Dashboard instruments
AlternatorStarter motor
Wiring components
Battery
Headlights
Windscreen wipers and motorElectrical connectorsG/VAL/N/1/PAN/1
Page 21
(iv) Transmission system 10%
Main parts and components:
Gearbox assembly
Automatic transmission parts/components
Differential shaft
(v) Steering system  4%
Main parts and components:
Steering mechanism
Steering wheel
Hydraulic pump assembly
(vi) Suspension system  9%
Main parts and components:
Shock absorbers
Shock absorber bearings
SpringsTyres
(vii) Brake system  4%
Main parts and components:
Brake drumsPads or disks
(viii) Fuel system  5%
Main parts or components:
Fuel tankPiping and joints
(ix) Body 35%
Doors
Mudguards
Boot lid
WindscreensDoor windows
Instrument panel
Console
Safety belts
Air-conditioning systemHeating system
(c) If there is post-invoicing damage, the total loss of a part of the vehicle shall be
assessed on the basis of the above-mentioned percentages, but taking into account
that the total destruction of the part shall only permit the application of, at most,seventy per cent (70%) of the percentage corresponding to that part.
(d) If the loss is not total, the percentage damage as assessed by the examiner for that part
of the vehicle shall be applied, without exceeding the maximum of seventy per cent
(70%) stipulated in the previous subparagraph.
(e) In order that the examiner may assess the damage, if it cannot be verified by simple
visual inspection, it shall be certified by a specialized workshop.G/VAL/N/1/PAN/1
Page 22
Seventh:  Application of the valuation methods .  The methods of valuing used automobiles
described in this Decision shall be mandatorily applied in the same order as laid down.
Eighth:  Ex post facto  controls .  The Procedural Audit Department of the General
Directorate of Customs shall carry out random checks on used vehicle valuations, paying specialattention to declarations claiming reductions for damage.
Ninth:  Road and environmental safety .  The conditions of vehicle safety and guarantees
thereof shall be provided in accordance with th e rules of competition that govern the market.
However, a certificate issued by the manufacturer or the competent authority of the country of
origin indicating that the vehicle has a catalytic converter or a gas emission control system authorizedin the country of exportation shall be required by customs as from 1 January 1998.
Tenth:  Entry into force .  This Decision shall enter into force as from its publication in the
Gaceta Oficial and shall supersede any contrary provisions.
Legal Basis:   Law No. 16 of 29 August 1979, Law No. 41 of 1 July 1996, and Executive
Decree No. 42 of 24 November 1983.
For registration, communication and implementation.
Carlos E. Icaza E. Erick D. Bravo Dutary
Director-General of Customs General SecretaryG/VAL/N/1/PAN/1
Page 23
GACETA OFICIAL, Thursday 23 October 1997
GACETA OFICIAL
ORGAN OF THE STATE
Established by Cabinet Decree No. 10 of 11 November 1903
LICDO. JORGE SANIDAS A. YEXENIA I. RUIZ
DIRECTOR SUBDIRECTOR, a.i.
Office
Avenida Norte (Eloy Alfaro) General Directorate of Revenue
y Calle 3a - 12 SUBSCRIPTIONS
Edificio Casa Amarilla, Min. 6 months, domestic B/18
San Felipe 1 year, domestic B/36
Ciudad de Panama 6 months abroad B/18 + airmail
Tel. 228-8631, P.O. Box 2189 1 year abroad B/36 + airmail
Panama - Republic of Panama
LAWS, NOTICES, EDICTS AND All payments in advance
OTHER PUBLICATIONS
SINGLE ISSUE B/2.20
MINISTRY OF FINANCE AND THE TREASURY
GENERAL DIRECTORATE OF CUSTOMS
DECISION No. 704-04-528
(of 1 October 1997)
The Director-General of Customs
in the exercise of his legal powers
WHEREAS:
The Ministry of Finance and the Treasury is committed to the implementation of a
programme of modernization and decentralization aimed at organizing and simplifying customs
procedures with a view to offering taxpayers and/or users a modern and efficient public service withinthe framework of the law.
Law 16 of 29 August 1979 created the General Directorate of Customs and its Article 6.2
empowers the Director-General of Customs to adopt  the measures necessary to improve the service.
Law No. 41 of 1 July 1996 gives the Director-General additional powers to take the necessary
action continuously to adapt and improve the orga nization of the service and its administrative
procedures.
On 1 January 1997, Panama began applying the Valuation System for foreign goods, in
accordance with the provisions of Cabinet Decree No. 26 of 1 August 1996.
The said Decree annuls all previous provisions concerning valuation, which means that only
the provisions of the Decree and the regulations issued by the General Directorate of Customs shall
apply.
The valuation of used goods calls for specific instructions within the Valuation System under
the General Agreement on Tariffs and Trade (GATT) and the General Directorate of Customs isG/VAL/N/1/PAN/1
Page 24
responsible for regulating these aspects pursuant to Article 1 of Cabinet Decree No. 26 of
1 August 1996.
HEREBY DECIDES:
Article 1:  Definition .  "Used goods" shall mean those goods, whether produced or
manufactured, which have been the object of an initial sale and have already been used in accordance
with their description or conditions laid down by the regulations in force.  For valuation purposes,
used goods shall be divided into: (a) goods in general;  (b) specific goods.
(a) For valuation purposes, "used goods in general" shall mean those used goods whose
customs value relates exclusively to use and not to other special conditions of sale,thereby making it possible to determine the value by a general procedure which
customs can apply indiscriminately.
(b) "Specific used goods" shall mean those used goods which have been or must be
specially studied by customs due to conditions not presented by other used goods andthose which assume special importance in relation to taxation. These latter, which
shall be defined in each case by a decision of the General Directorate of Customs,
include: automobiles, new and used construction, mining and agricultural machinery,
new and used ships and aircraft and other goods as decided by customs.
Article 2: Valuation alternatives .  The valuation alternatives are described in the valuation
decree, namely:
(a) The use, as a basis, of the invoice price;
(b) the use of the four extra-contractual valuation methods;
(c) the use of the method of last resort which allows flexibility in the application of the
previous methods.
Article 3:  Valuation based on the invoice price .  This method shall be applied when the
invoice comes from an auctioneer or when customs recognizes the enterprise as a seller of used goods.
Customs shall grant recognition if the facts are confirmed by newspapers or by information
from inspections or investigations conducted by the Valuation Section.
Before the invoice can be accepted, a check must be made to ensure that the values are
approximately the same as those which customs has on record and that there has been no false
invoicing.
In any event, a previous transaction offering some form of proof that the invoice accords with
identical or similar goods being valued shall co nstitute sufficient evidence for accepting its
authenticity.
Article 4:  Acceptance of the invoice .  Customs shall accept the invoice as a basis of
valuation:
(a) Only if the particulars it provides  correspond to the condition in which the used
goods are presented. If the invoice gives no description of the use, the invoice price
shall be rejected;G/VAL/N/1/PAN/1
Page 25
(b) if it comes from an enterprise specializing  in the sale of used goods, unless it
includes a product whose price differs substantially from the prices which customs
uses for reference purposes.
Article 5:  Application of the next four extra-contractual methods.   If the invoice price is
rejected since it fails to satisfy the above conditions, an attempt must be made to apply a value in
accordance with the other valuation methods available.
However, an analysis of these methods shows that none of them is applicable:(a) Identical goods method:
Because there are no other goods identical with respect to use. Not even the time or
date of manufacture or sale is the same; the wear and tear or use may be very
different.
Thus, if the price difference is based on use, it is not possible for there to be one good
identical to another enabling its value to be used for the collection of customs duties.
(b) Similar goods method:
Because, as with identical goods, there are no other similar goods with the same use.
(c) Deductive method:
Because it is not possible to seek on the local market an identical or similar good
which has had the same use and then derive the base price for determining thedutiable value.
There is no similarity of use since use excludes a similar quality or life, which
prevents customs from using the price of goods which are already in circulation after
having been imported as a basis for the determination of the dutiable value.
(d) Computed value method:
It is possible to compute the value of a new good since the information relates to a
good recently produced by the factory. However, it is not possible to compute the
value of a used good since it is not possible to determine the use exactly without
assuming an arbitrary depreciation. This arbitrary depreciation will differ dependingon the kind of goods to be valued and the resulting prices could not be used for
computing the true value of another used good.
Article 6:  Application of the method of reasonable means or last resort .  The only
method that can be used to value these goods is the method of reasonable means, also known as themethod of last resort.
For determining the value in accordance with th is method the following mandatory procedure,
which must be used by all officials, is laid down:
(a) Seek the value of other imports identical or similar in nature, though different with
respect to use:
(i) which customs has previously processed;G/VAL/N/1/PAN/1
Page 26
(ii) which were invoiced on the same selling market;
(iii) whose processing was completed not more than one year previously.
(b) Use the information to determine the dutiab le value, together with the data furnished
by:
(i) the importer himself, from previous clearances for home use, whether his
own or made by others, even though there may be a difference in commercial
level with respect to the other importer;
(ii) the Valuation Section, for reference purposes, provided that these values are
within a range of 10 per cent above or below.
(c) Use as a basis the price of similar new goods , obtained by customs and reduced for
years of use in accordance with the following table:
USED GOODS VALUATION TABLE
Goods Depreciation for use
1. Ships and aircraft (light aircraft, microlights)
(luxury yachts, fishing boats)When the customs value is determined on the basis of
the price of a new good the following maximum
depreciation shall be applied:
15% per year, after the first year.Maximum reduction: 75% of the value of the new good.
To obtain a reference value for:
(a) Aircraft: the technical certificate of the Office of Air Safety may be used.
(b) Ships: the survey value report of the General Directorate of Consular Matters and Ships may be used as
information for determining the value.
2. Heavy equipment for agriculture and construction
(portal cranes and builder's cranes).
3. Mining machinery, self-propelled machinery, lift
trucks and the like.
4. Outboard motors, inboard marine engines, tricycles,
Jet Sky, motorcycles, 4-wheel drive and similarlight equipment.When the customs value is determined on the basis of
the price of a new good the following maximumdepreciation shall be applied:
15% per year, after the first year.
Maximum reduction: 75% of the value of the new good.
5. Electronic equipment, including: radios, television
sets and computers.When the customs value is determined on the basis of
the price of the new equipment the following maximumdepreciation shall be applied:
30%, from the second year of appearance of the model;
and
20% for each subsequent year up to a maximum of 70%
of the value as new.
Article 7:  Other considerations which must be taken into account .  The examiner shall
reject invoices which do not satisfy the following conditions:G/VAL/N/1/PAN/1
Page 27
(a) The price may only be invoiced by the foreign supplier;
(b) consolidators may not invoice the prices of goods because they are not the sellers and
if they are they must invoice the goods separately from the invoices for their services;
(c) the cargo agent, the shipper, the consolidator, the carrier and the deconsolidator are
not authorized to invoice goods.
Article 8:  Depreciation for damage .  Damage, other than normal wear and tear, incurred
since the invoicing of the used goods or since the determination of their customs value by the method
of reasonable means shall be treated in accordance with the following maximum depreciation table:
USED GOODS DEPRECIATION TABLE
Goods Depreciation for damage
1. Ships and aircraft (light aircraft, microlights)
(luxury yachts, fishing boats)
2. Electronic equipment, including: radios, television
sets and computers.
3. Outboard motors, inboard marine engines, tricycles,
Jet Sky, motorcycles, 4-wheel drive and similarlight equipment.The maximum percentage for damage cannot be more
than 30% of the customs value obtained on the basis of
an acceptable invoice or the price of the goods as new
reduced for use.
4. Heavy equipment for agriculture and construction
(portal cranes and builder's cranes).
5. Mining machinery, self-propelled machinery, lift
trucks and the like.The maximum percentage for damage cannot be more
than 50% of the customs value obtained on the basis of
an acceptable invoice or the price of the goods as new
reduced for use.
With respect to the application of the preceding table it is important to take into consideration
that:
(a) The percentage depreciation for damage  must be applied to the price reduced for
use and only if the damage has been incurred since the goods were invoiced.
For this it is necessary to produce evidence of the time at which the damage occurred,
whether provided by the carrier, an official authority or the insurance company
concerned.
(b) A percentage depreciation for damage shall also be applied  if the reduction for
use has been given on the basis of the price as new.
Article 9:  Request for information .  Examiners shall request the appropriate information
from the importers themselves or the customs clearing agents representing them who shall be obliged
to provide it and do everything they can to obta in it in good time since this will determine how
quickly the goods can be cleared for home use.
In the event of it not being possible to procure the relevant information, it may be requested
from the Valuation Section which is responsible for obt aining it, especially with regard to those goods
which are regularly being valued by customs.
Article 10:  Sanctions .  Once the responsibility of the official or user has been determined,
failure to comply with this Decision shall be sanctioned in accordance with the provisions of
Law No. 30 of 8 November 1984.G/VAL/N/1/PAN/1
Page 28
Legal basis:   Law No. 16 of 29 August 1979, Law No. 41 of 1 July 1996, Cabinet
Decree No. 26 of 1 August 1996, and Executive Decree No. 42 of 24 November 1983.
For registration, communication and implementation.
Carlos E. Icaza E. Erick D. Bravo Dutary
Director-General of Customs General SecretaryG/VAL/N/1/PAN/1
Page 29
GACETA OFICIAL, Monday 20 October 1997
GACETA OFICIAL
ORGAN OF THE STATE
Established by Cabinet Decree No. 10 of 11 November 1903
LICDO. JORGE SANIDAS A. YEXENIA I. RUIZ
DIRECTOR SUBDIRECTOR, a.i.
Office
Avenida Norte (Eloy Alfaro) General Directorate of Revenue
y Calle 3a - 12 SUBSCRIPTIONS
Edificio Casa Amarilla, Min. 6 months, domestic B/18
San Felipe 1 year, domestic B/36
Ciudad de Panama 6 months abroad B/18 + airmail
Tel. 228-8631, P.O. Box 2189 1 year abroad B/36 + airmail
Panama - Republic of Panama
LAWS, NOTICES, EDICTS AND All payments in advance
OTHER PUBLICATIONS
SINGLE ISSUE B/2.00
MINISTRY OF FINANCE AND THE TREASURY
GENERAL DIRECTORATE OF CUSTOMS
DECISION No. 704-04-528
(of 1 October 1997)
The Director-General of Customs
in the exercise of his legal powers
WHEREAS:
The Ministry of Finance and the Treasury is committed to the implementation of a
programme of modernization and decentralization ai med at simplifying customs procedures with a
view to offering taxpayers and/or users an efficient service within the framework of the law.
This programme considers it essential to maintain and improve the control systems which
enable the Customs Service to know the true mode of disposal of goods arriving in the country.
Law No. 16 of 26 August 1979 created the General Directorate of Customs under the
Ministry of Finance and the Treasury.
Law No. 41 of 1 July 1996 amended Law No. 16 of 1979 and empowered the
Director-General to adapt and improve the organization of the service and its administrative
procedures, in accordance with the technical rules of customs administration.
In accordance with these provisions, it is the responsibility of the Director-General of
Customs to take the measures necessary to improve the controls which the Customs Service must
apply.
For the purpose of standardizing administrative procedures the application of the Automated
Customs System (ASYCUDA) is being developed in all the customs offices of the Republic, which
has made it possible for all the premises covered by Law 6a of 19 January 1961 to carry out a process
of control of foreign goods arriving in the country.G/VAL/N/1/PAN/1
Page 30
Thanks to the high level of development achieved it is already possible to adopt a special and
expeditious procedure for transport enterprises to submit their manifests to customs and for the latter
to incorporate the data required by the computerized system.
HEREBY DECIDES:
Article 1:  Establishment of a Premises Control Office .  A Premises Control Office shall
be set up under the Regional Administrator of Custom s of the Eastern Zone and the Airport Zone for
the following purpose:
(a) Control the arrival and departure of vessels within the relevant administrative area;
(b) enter the manifest particulars;  and
(c) check the efficacity of the inspections conducted on premises authorized to store
foreign goods.
Article 2:  Basis of customs control .  The legislation in force authorizes customs to control
and inspect foreign goods entering the customs territory. Accordingly, customs must receive the
manifest or freight list from the means of transport in order to enter the particulars, whether manually
or electronically.
Article 3:  Organization of the Section .  The Premises Control Section shall consist of a
Vessels and Manifests Subsection and an Inspection Subsection.
The role of the Vessels and Manifests Subsection shall be to receive vessels and their
manifests, check that they comply with national customs regulations and enter the particulars ofconsignments declared at arrival and then unloaded and delivered to the various places authorized to
store foreign goods.
The role of the Inspection Subsection shall be to make a selective check on all the
examinations carried out in the customs office in order that any errors may be rectified and the State
may receive its lawful dues.
Article 4:  Operation of the Vessels and Manifests Subsection .  This Subsection shall
consist of:
(a) The Vessel Reception Office which shall be responsible for having the vessel visited
on arrival on behalf of customs, for accepting the manifests, which must be handedover by the captain, for sealing compartments, where necessary, to prevent illegal
disposal of the goods and for inspecting all vessels which enter port carrying foreign
merchandise;
(b) the Manifest Input Office shall enter the particulars provided either on documents or
electronically, number and register them and make any necessary corrections;
(c) fill out transfer and transit forms and carry out the control operations relating to these
customs procedures.
Article 5:  Functions of the Manifest Input Office .  Documentary manifests shall be entered
manually by customs as soon as they receive the document from the officer visiting the vessel or the
shipping company.G/VAL/N/1/PAN/1
Page 31
When the information is supplied electronically and the corresponding particulars are entered,
they shall merely be stored and not registered until the documentary manifest is delivered.  Only then
may an appropriate number be assigned and work begin on the re-exportation, transhipment, transfer
or transit of the goods or their clearance for home use.
No manifest may remain in the Manifest Offi ce without being stored or registered in the
system or if it has been only incompletely registered.
Article 6:  Responsibilities of shipping company . The shipping company shall be
responsible for visiting the vessel on arrival and delivering the manifest to customs.
The manifest may be lodged with customs by electronic means approved by the Information
Technology Section of the General Directorate of Customs up to 48 hours in advance of the arrival of
the vessel.  However, this shall not relieve the company of its obligation to visit the vessel on arrival.
Article 7:  Operation of the Inspection Subsection .  The Inspection Subsection shall consist
of officers specialized in classification, valuation and special regulations concerning goods forclearance.
Their function as inspectors shall be to re-examine goods declarations for home use on a
random basis to ensure that they comply with the requirements of the regulations in force.
The inspectors of this Section shall, jointly with the customs examiners, be responsible for
any errors which the latter may have made and failed to detect, report and/or correct at the time.
Article 8:  Functions of the Inspection Subsection .  The officials of the Inspection
Subsection shall:
(a) Receive the information from the Automated Customs System indicating which
declarations need to be re-examined;
(b) carry out inspections daily at each premises and verify that the examination made
previously by the local examiner complied with the classification, valuation and other
rules applicable;
(c) the inspectors shall operate in four two-man teams. When the examiners have already
reported the result of their examination to the Automated System, the inspectors shall
re-examine the goods;
(d) where there is reasonable doubt, the inspectors shall retain the declaration and take
the appropriate steps to reactivate the clearance immediately;
(e) however, their decision shall be valid for the system so that, once the re-examination
has been carried out, if the results are satisfactory a release note shall be issued or, ifthey are not, a counter demand for any difference shall be prepared;
(f) at the end of their day's work they shall prepare a report showing which declarations
were re-examined and the errors found and submit it to the Head of the Inspection
Subsection for information and transmission to the Audit Office, where appropriate.
Article 9:  Customs Audit .  The Procedures Audit Department shall conduct the internal
investigations it considers necessary in order to assess the actual performance of the examiner and the
inspector.G/VAL/N/1/PAN/1
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The fact that the examinations and re-examinations have been carried out shall not prevent the
auditors from reviewing the actions of those re sponsible and verifying their compliance with the
regulations in force.
Article 10:  Sanctions .  Failure to fulfil the functions, procedures and responsibilities
stipulated herein shall be sanctioned in accordance with the respective provisions of Law No. 30 of
8 November 1984.
Single Provisional Article:   While the administrative structures of the Regional Customs
Services are being reorganized, the Premises Control Section shall report directly to the General
Directorate of Customs.
Legal basis:   Articles 498, 499, 500, 501, 502, 503 et al. of the Tax Code, Law No. 16 of
29 August 1979, Law No. 41 of 1 July 1996, Executive Decree No. 42 of 24 November 1983.
For registration, communication and implementation.
Carlos E. Icaza E. Erick D. Bravo Dutary
Director-General of Customs General SecretaryG/VAL/N/1/PAN/1
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DECISION No. 704-04-532
(of 17 September 1997)
The Director-General of Customs
in the exercise of his legal powers
WHEREAS:
The Ministry of Finance and the Treasury is committed to modernization and administrative
decentralization for the purpose of simplifying customs procedures and offering taxpayers and/or
users a modern and efficient public service within the framework of the law.
Law No. 16 of 29 August 1979 created the General Directorate of Customs under the
Ministry of Finance and the Treasury as the entity directly responsible for the administration,
verification, control and supervision of customs duties.
Article 2.5 of Law No. 41 of 1 July 1996 established that the purpose of the new customs
regime is to simplify customs administration and the various customs procedures.
The same Law empowers the Director-General to take the necessary action continuously to
adapt and improve the organization of the service and its administrative procedures, including the
procedure for declaring the value of goods for customs purposes.
On 1 January 1997, Panama began applying the Valuation System for foreign goods, in
accordance with the provisions of Cabinet Decree No. 26 of 1 August 1996, which annuls all previous
provisions concerning valuation.
Consequently, only the provisions of the Decree and the instructions issued by the General
Directorate of Customs will be applied for establishing the customs value of goods, in accordance
with the Valuation System of the General Agreement on Tariffs and Trade (GATT).
HEREBY DECIDES:
Article 1:  Terms of sale (Incoterms) .  The invoice shall indicate the terms or mode of sale
used in the transaction it represents. Otherwise, the importer himself shall declare the mode or terms
of sale. The Customs Clearing Agent or the importe r himself, where appropriate, shall indicate them
in the declaration for home use.
Article 2:  Procedure for declaring the terms of sale in the goods declaration .  To
establish how the transport costs, the insurance and other loading, unloading and handling costs shall
be declared to customs, the importer, where appropriate, or the Customs Clearing Agent shall proceed
as follows:
(a) If the declaration indicates that the transa ction has been effected on a c.i.f. basis ,
all the costs up to the arrival of the goods in the country will be included in this
c.i.f. value; accordingly, the corresponding values shall not be adjusted for carriage,
insurance and other loading and unloading costs.
Being the responsibility of the seller, the carriage, insurance, loading and unloading
costs, even though incorporated in the total price of the goods, may not be modified,
increased or reduced unless the customs find that there is an excessive difference
between the declared values and those which it uses for information purposes and,
moreover, the importer is unable to offer an acceptable explanation.G/VAL/N/1/PAN/1
Page 34
(b) If the declaration indicates that the tr ansaction has been effected on a f.o.b.
basis , the total transport costs and the unloading costs must be included in the price
of the goods.
The only portion which may be deducted is that corresponding to domestic transport
when indicated in the bill of lading issued in the port of departure, provided that the
cost of transporting the goods from the foreign country to the port of arrival and the
amount paid for domestic carriage in Panama are clearly distinguished.
The attestations given by the carrier or bodies authorized to issue secondary way-bills
or bills of lading covering deconsolidated goods must correspond to the contract
actually concluded with the shipper.
(c) If the declaration indicates that the transaction has been effected on a FAS basis ,
the loading, transport and unloading costs must be added to the price of the goods.
(d) If the declaration specifies an ex-factory or ex-warehouse transaction , the price
of the goods will have to be adjusted for the transport, insurance and handling costs
necessarily incurred in order to bring th em alongside the means of transport which
will convey them to Panama. To these costs in the country of exportation there must
be added the loading, transport and insurance costs for carrying the goods and
unloading them in Panamanian customs territory.
Article 3:  Concept of international freight .  International freight includes all the domestic
transport costs in the country of exportation from which the goods are consigned to Panama and any
loading and unloading costs incurred in this connecti on, if not already included in the transport costs
themselves.
Therefore, in every case, even if the freight costs are grea ter than the price of the goods , it
is necessary to add all the freight costs in order to constitute the value for customs purposes.
Article 4:  Deductions for domestic carriage . Deductions for domestic carriage shall only
be accepted if separately indicated on the corresponding bill of lading because so agreed between the
shipper and the carrier at the time of loading abroad.
Therefore, values shall not be reduced for "house to house" transport if the local transport
costs are not separately indicated on the same bill of lading.
If customs finds that a declaration does not correspond to the values agreed between shipper
and user or exceeds the actual costs of domestic transport in Panama or if the carrier has certified or
indicated a non-existent or excessive discount, th e sanctions laid down in Law No. 30 of 1984 shall be
applied.
Article 5:  Lack of records .  If there is no record of the freight costs, it shall be mandatory to
apply the average table of existing air, land and sea transport tariffs obtained from the normal
schedules of charges applied by the various carriers, which shall be published and kept up to date by
the General Directorate of Customs by means of a decision prepared by the Valuation Section on the
basis of its research.
If the goods are such as to permit the application of either a tariff by weight or a tariff by
volume, the lesser of the two shall be used.G/VAL/N/1/PAN/1
Page 35
The interested party may appeal the tariff applied  and to facilitate the decision shall
furnish the Regional Customs Administration with reliable evidence that the lower amount asserted in
his appeal is that which the company which actually transported the goods would charge.
Article 6:  Apportionment of freight costs .  If the goods have different tariff classifications
and it is necessary to apportion the freight costs, they shall be divided up percentage wise on the basis
of the weight corresponding to each tariff heading.
Article 7:  Declaration of insurance .  The total cost of insurance shall always be added to
the customs value of the goods for which clearance is being requested, even if they are transported by
air and the insurance companies are domestic.
Article 8:  Declaration of insurance de pendent on the terms of the transaction .  The
insurance shall be declared differently depending on the terms of the transaction:
(a) If the terms of the transaction are ex-factory, f.o.b., FAS or C&F , the total
insurance shall be added to the price of the goods, and if this figure is not availablethere shall be added the appropriate amount according to the average insurance table
published by the Valuation Section for this purpose.
Paragraph.   Within three (3) months of the publication of this Decision, the
Valuation Section shall publish this average table.  In the meantime, customs clearingagents shall determine and apply the percentage which would usually be charged by
an insurance company established in the country:  (a) for the same goods, (b) from
the same country of purchase.
(b) If the terms of sale are C&I  (Cost and Insurance), the insurance costs will already
be included in the invoiced price; accordingly, if the insurance certificate indicates a
different amount of insurance, this amount shall be declared and the difference shall
be deducted from the f.o.b. price of the goods. Since, in any event, the total C&S will
be the same, to obtain the c.i.f. value it will only be necessary to add the transport
costs.
(c) If the terms of sale are c.i.f. , the invoice total shall be declared in the box of the
declaration for home use corresponding to the c.i.f. value. When the insurance and/or
freight costs indicated in the respective documents do not coincide with those shown
on the invoice, they shall be declared as indicated in the said transport and insurance
documents and the difference shall be deducted from the f.o.b. value, so that the value
declared on the invoice is maintained as the c.i.f. value.
Article 9:  Global insurance .  If the insurance applied to the goods being cleared is a global
insurance, it will be necessary to factorize  by dividing the total amount of the insurance premium by
the total global insurance and multiplying this fact or by the total C&F value of the imports being
declared for clearance for home use.
If the goods have different tariff classifications , it will be necessary to divide up the
insurance costs percentagewise on the basis of the value for each tariff heading.
Article 10:  Free zone prices .  Goods from the free zone shall be valued in the same way as
goods sold from abroad. Accordingly, the selling prices of the goods indicated on the invoices shall be
accepted if they correspond to an actual sale and the in voiced price shall be regarded as that of a c.i.f.
sale, since the goods are already in the country.G/VAL/N/1/PAN/1
Page 36
The entry documents and the original invoices  of the foreign seller or supplier issued in
favour of the trader or user in the free zone shall provide a reliable basis for the acceptance of the
invoices issued when the goods are sold to Panamanian importers.
Article 11:  Processing zone prices .  When processing zone goods are cleared for home use,
the total c.i.f. value of the foreign components shall be declared as the dutiable value and domestic
parts and parts previously imported against payment of import duties and taxes shall be disregarded.
Article 12:  Currency conversion .  Where the conversion of currency is necessary for the
determination of the customs value, the average exchange rate in effect when the customs duties
become payable, as published by the National Bank of Panama, shall be used.
Article 13:  Samples of no commercial value .  The valuation of samples of no commercial
value cannot be based on the invoiced price, since they do not represent a sale, but a means of
advertising the goods it is hoped to sell. These samples are generally used for display purposes or are
given away.
The similar goods method  seems the most appropriate since they can then be valued in
accordance with the prices of the goods they exemplify, provided that possible differences in
treatment for quantity or commercial level are taken into account.
If the interested party provides  a pro forma invoice giving an indication of the price,
customs may accept it if it matches the prices on the price lists or other records in their possession.
If the interested party does not provide  any supporting documents, the similar goods
method can be made more flexible by using Artic le 8 of Cabinet Decree No. 26 of 1 August 1996. In
this case, it is possible to seek the prices corresponding to similar goods made by other manufacturersor from other countries.
Article 14:  Package deals .  If a collection of goods is purchased on the basis as a package
deal and price is the only consideration, the goods shall be declared as follows:
(a) If different goods  are sold and invoiced globally, the invoiced price may be accepted
as the total transaction value.
If the interested party has to divide up the global value to apportion it to various tariff
headings with different duties:
(i) If the sale is by kilos, the apportionment shall be accepted if based on weight;(ii) if the sale is by units, then the value may be apportioned among the tariff
headings according to the units classified in each tariff heading.
No other mode of apportionment can be accepted as the price assigned to the different
units would not correspond to the price obtained for the package.
(b) If the goods are identical , the total invoice price may be accepted as a basis for
valuation, since it corresponds to an actual sale satisfying the conditions of Cabinet
Decision No. 26 of 1 July 1996.
Partial clearances can be valued by dividing the total value by the total number of
units and multiplying the result by the number of units for which clearance is
requested.G/VAL/N/1/PAN/1
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Article 15:  Computer media with software .  In the case of computer media with software,
the transaction value shall constitute the primary basis of valuation and shall be used in accordance
with the general regulations in force.
In the case of media without information (software), the transaction price shall be acceptable
as the basis of valuation, unless for some reason the customs has to reject it and apply another
valuation method, in accordance with the regulations in force.
Phonographic tapes, cassettes and disks, compact, laser or of any material and with any
other recording system, shall pay on the basis of the transaction value, unless it is more appropriate to
apply another of the valuation methods, in accordance with the regulations in force.
Film of any description and videotapes  shall also be valued in the first instance on the basis
of the transaction value and, where this is not possible, the other methods shall be applied until the
appropriate value has been established, in accordance with the provisions in force.
Article 16:  Domestic goods and goods previously imported against payment of import
duties and taxes sent abroad for display in exhibitions and reimported .  Domestic goods and
goods previously imported against payment of import duties and taxes which are sent abroad to be
exhibited or as a temporary export which will later be reimported in the same state, except for any
normal wear and tear, shall be valued on the basis of their export value plus the transport and
insurance costs of reimportation.
If they have suffered any damage during their stay outside the country, the appropriate
percentage shall be deducted, in accordance with the regulations in force.
Article 17:  Goods reimported after having been temporarily exported for
manufacturing, processing or repair abroad .  In all cases, the total value of the goods reimported
should be declared, including the total costs of insurance and transport from the country in which the
outward processing was carried out.
This general declaration shall be supplemented as follows:(a) In the case of manufacturing and processing , where it is a question of goods being
sold and incorporated in the domestic goods or goods previously imported against
payment of import duties and taxes, the cost of manufacturing or processing
(comprising the cost of materials and labour, engineering, the profit of the enterprise
that does the work and other work-related costs), including the freight and insurance
costs for the return of the processed goods, shall be declared separately.
The tariff heading applicable in this case shall be that which corresponds to the
description of the goods which return processed.
(b) In the case of repair , the total value of the repairs plus the total transport and
insurance costs for the return of the repaired goods from the country of repair to
Panama shall likewise be declared.
The corresponding duties shall be assessed only on this declared total value and the
percentage duty rate applied shall be that corresponding to the goods temporarilyexported for repair.
Article 18:  Interest .  The interest yielded by a financing agreement for the goods shall not
form part of the value if it is clearly indicated on the invoice, if the agreement is in writing andG/VAL/N/1/PAN/1
Page 38
provided that the price corresponds to an actual price and the interest does not exceed the level
applied to transactions of the same type. It is immaterial who provides the financing and what method
of valuation is applied.
Article 19:  Commissions .  If the goods are valued in accordance with Article 2 of Cabinet
Decree No. 26 of 1 July 1996, selling commissions and brokerage shall be added to the invoiced
price; for these purposes:
(a) "selling commissions" means those commissions which the supplier must pay the
agent who sells the goods he supplies on his behalf;  and
(b) "brokerage" means those percentages which the supplier pays an intermediary for
arranging a sale.
When it is the buyer who pays a commission in order to acquire the goods he needs, it shall
not be added to the invoiced price.
In brokered transactions, the services of the broker are usually shared between the seller and
the buyer and the buyer's share shall be added, if it has not previously been included in the invoiced
price.
Article 20:  Selling commissions .  Goods sold through a sales agent who undertakes to seek
customers, take orders on behalf of a seller, store or stock the goods and deliver them when a deal is
made cannot be purchased without paying the appropriate selling commission.
Normally, the buyer will pay it as part of the price charged by the seller and, accordingly, no
adjustment is necessary.
However, if the commission has not been included in the invoiced price paid to the seller and
the latter must pay it separately, it shall be added to the dutiable value.
Article 21:  Buying commissions .  Buying commission is paid by the customer or buyer in
the country of importation for a service rendered by  the buying agent. Accordingly, it does not form
part of the value of the goods and therefore is not included in the invoice and does not form part of thedutiable price.
Article 22:  Cash discount .  Cash discounts actually granted by the seller shall be accepted
because they correspond to the price actually paid or payable for the goods forming the subject of the
transaction.
The discount shall be applicable even if payment has not been made at the time of
valuation ; nevertheless, if payment is made more than sixty (60) days after the completion of the
transaction, it shall be deemed to be inapplicable.
Article 23:  Quantity discounts .  Quantity discounts shall be accepted only if it can be
shown that the seller establishes his prices on the basis of a fixed schedule of quantities sold.
Quantity discounts shall be declared as follows:
(a) If there is a contract fixing a price for a particular quantity of goods , the discount
shall be acceptable whether the goods are dispatched in a single consignment or in
separate consignments.  What matters is the contract recording the total price for all
the goods.G/VAL/N/1/PAN/1
Page 39
The partial invoices accompanying each shipment shall be accepted as presented;
however, the total of the partial shipments must add up to the price of the total
contract.
(b) If there is a contract of sale with a discount for a specified quantity, that
discount shall be accepted, except:
(i) Where the discount takes effect or increases when the buyer acquires a
specified number of units as a result of successive purchases. A discount
which takes effect or increases in this way shall be valid only for the
importation being valued and not for previous purchases, even if the seller
has included a general provision to that effect.
When the previous goods were valued, a fixed lower price had not been
established but the possibility of a lower price had been agreed, which is not
enough for this deduction to be applied to the goods in question.
(ii) If the discount  is granted on condition that the buyer takes a specified
number of units during a predetermined period, only the reduction
corresponding to the goods presented for valuation at that time shall be
accepted.  Customs shall reject the reductions made by the seller for previous
purchases since a discount granted retrospectively cannot be applied to newlypurchased goods.
Article 24:  Fraudulent valuation .  The valuation regulations require actual facts and the
customs are empowered to check the truthfulness and accuracy of any information with which they
are provided.
If within the period established for demanding the amounts due to the Treasury the customs
discover that information is fraudulent, they may annul the value initially applied and require payment
of the difference resulting from the definitive valuation.
In any event, the customs shall decide whether the fraudulent information constitutes an
offence under Law No. 30 of 8 November 1984 and take the appropriate action.
Article 25:  Annulation .  Decisions concerning the customs valuation of goods issued prior
to 1 August 1996 shall be rendered null and void in  their entirety by Cabinet Decree No. 26 of the
same date.
Legal basis:   Law No. 16 of 29 August 1979, Law No. 41 of 1 July 1996, Cabinet
Decree No. 26 of 1 August 1996.
For registration, communication and implementation.
Carlos E. Icaza E. Erick D. Bravo Dutary
Director-General of Customs General Secretary
__________