How are royalties and licence fees to be treated for valuation purposes?
Ans: When the buyer pays a royalty or licence fees related to the imported goods as a condition of sale, the, amount has to be added to the price actually paid or payable. Examples are payments in respect of patents, trademarks, copyrights etc. The basic requirement for addition of these fees under Article 8.I(c) of the ACV are: (i) such amounts are related to the goods being valued; and (ii) the buyer pays these amounts as a condition of sale of the goods being valued. Payments made by the buyer for the right to distribute or resell the imported goods have to be added to the price actually paid or payable for the imported goods only if such payments are a condition of the sale for export to the country of importation. On the other hand, payments for the right to reproduce the imported goods in the country of importation should not be added to the price actually paid or payable for the imported goods in determining the customs value.
