This article attempts to demystify the method of determining when a discount can or cannot be applied for the purposes of BVI Customs clearance. In some cases, the discounted price can be applied to the clearance and in some cases not. This is not a legal document and it is possible some inaccuracies exist.
You may hear things like "is the discount applies to everyone, then it is ok, if not then you can't use the discount" What does that really mean?
The Customs Management and Duties act of 2010 states the following about valuation and we have highlighted the relevant parts that may apply to discounts:
1. The value of any imported goods will be taken to be the normal price, that is to say the price which they would fetch, at the time when the charge to duty arises, on a sale in the open market between a buyer and a seller independent of each other.
2. The normal price of any imported goods shall be determined on the following assumptions:
(a) that the goods are treated as having been delivered to the buyer at the port or place of importation; and
(b) that the seller will bear freight, insurance, commission and all other costs, charges and expenses incidental to the sale and the delivery of the goods at the port or place of importation except buying commission not exceeding five per centum of the total value which is shown to the satisfaction of the Customs to have been paid to agents; and
(c) that the buyer will bear any duty or tax payable in the Territory.
3. A sale in the open market between buyer and seller independent of each other pre-supposes
(a) that the price is the whole consideration;
(b) that the price made is not influenced by any commercial, financial or other relationship whether by contract or otherwise, between the seller or any person associated in business with him or her and the buyer or any person associated in business with him or her (other than the relationship created by the sale of goods in question); and
(c) that a part of the proceeds of the subsequent resale, use or disposal of the goods will not accrue either directly or indirectly to the seller or any person associated in business with him or her.
4. Where the goods to be valued
(a) are manufactured in accordance with a patented invention or are goods to which a registered design has been applied, or
(b) are imported with a foreign trademark, or are imported for sale (whether or not after further manufacture) under
foreign trademark, the normal price will be determined on the assumption that the price covers the right to use the patent, design or trademark in respect of the goods.
5. Two persons shall be associated in business with one another if, whether directly or indirectly, either of them has an interest in the business or property of the other, or both have a common interest in any business or property, or some third person has an interest in the business or property of both of them."
A discount based on a sale like Black Friday.
Generally, these discounts are accepted since most of the cases the buyer is an individual not related to the seller in any way. However, there can be some instances where the cost of the good have been discounted during the Black Friday sale but at the time of import, the price of the goods has risen again. While we almost never see this, it is cause for customs to not accept the valuation.
A loyalty discount
In this discount, a seller may give you a special discount because you have been a customer for a long time. In this case the discount should not be applied because it has to do with a commercial relationship between the seller and the customer. An example of this may be using Ebay Bucks to pay for a product. Over time you can accumulate a discount on a purchase because of previous purchases, so that would not be accepted.
A quantity discount
We determine that discounts given for a single purchase transaction shall qualify to be used in valuation, but a discount given because of previous purchases shall not. For example, if you buy 1000 pens in one transaction, you'll get a discount for buying 1000 instead of one. But if you buy 1000 pens ten times over the course of the year and get a discount for that, this forms a relationship between you and the seller and therefore cannot be used.
A Distributor Discount
Let's say you get a special discount because you are an official distributor of something. Since that represents a commercial interest we are of the opinion that this discount would not be applied.