Declared value refers to the value placed on a package or shipment imported for the purpose of resale, based on the declaration of the shipper. An alternative term for declared value is entry value.
There are two main classifications under declared value. Declared value for carriage is that which is declared by the owner or shipper which will then serve as the basis for the computation of freight charges. This value is generally the same as the cost price of the item for shipment. The declared value for carriage also serves to set limits for the carrier’s liabilities in the event of loss, delays, or damage to the shipment.
On the other hand, the declared value for customs is that which is declared by the shipper for the purpose of duties and taxes computations. In contrast to the declared value for carriage, it is usually equal to the selling price of the shipment. Oftentimes, the declared value for customs is higher than that for carriage.
It must be noted, however, that customs tariffs are not usually applied to domestic products. Tariffs are taxes assessed and imposed by the appropriate government authority on goods which go through international borders or ports. Tariffs may be based on the type of good, but are generally dependent on its declared value. Once a batch of goods crosses an international border, it becomes subject to the inspection of a customs officer who then applies the appropriate tariffs. In order to avoid tariff payments, some entities engage in smuggling activities and sell their goods in the black market.