This document provides guidance on the treatment of payments for royalties and licence fees when determining the value for duty of imported goods under the transaction value method (section106 of the Customs and Excise Act).

Definition

Royalty is defined in section 104 (1) of the Customs and Excise Act (Chapter 23:02) as, an amount paid or credited as consideration for—

(a) the making, use, exercise or selling of an invention or the right to make, use, exercise or sell an invention; or

(b) the use of, or the right to use—

(i) a design or trade mark;

(ii) confidential information; or

(iii) any machinery, implement, apparatus or other equipment;

or

(c) the supply of scientific, technical, industrial, commercial or other knowledge or information; or

(d) any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of any matter falling within paragraph (a), (b) or (c);

(e) a total or partial forbearance in respect of any matter falling within paragraph (a), (b) or (c)

Royalties and licence fees may be added to the price paid or payable in terms of section 113 (1) (c) of the Customs and Excise Act.

These charges are added to the price paid or payable if they are:

1. related to the goods being valued;
2. a condition of sale;

• not already included in the price paid or payable.

Related to the Imported Goods

The phrase "payments made in respect of the goods" means that the royalty or licence fee payment made to the seller or a third party is in some way related to the goods being imported. For example, when a payment is calculated as a percentage of the price at which the goods are sold or resold, the payment is in respect of those goods.

 

Conditions of Sale

This requirement means that royalties and license fees will form part of the Customs value if their payment by the buyer to the seller or a third party is required by the seller as condition of the sale of the imported goods. Royalties or license fees which the buyer pays directly or indirectly to the seller or to the licensor who is related to the seller can normally be regarded as being paid as a condition of sale even when the fee is not payable until after the goods are resold, used or otherwise disposed of after importation.

Rights associated with royalties and license fees

Categories of royalty or license fees:

1. Patents
2. Trademarks

iii. Copyrights

Right to reproduce, distribute or resell

Royalties and licence fees, including any payments for patents, trademarks or copyright and for the right to distribute or resell the goods shall be added to the price actually paid or payable for the goods. Section 113 (1) (c) of the Customs and Excise Act excludes royalty or licence fee payments made for the right to reproduce imported goods in Zimbabwe from being added to the price paid or payable of the imported goods. The right to reproduce refers not only to the physical reproduction of imported goods but also to the right to reproduce an invention, creation, thought, or idea incorporated in, or reflected by, the imported goods. For example, royalties calculated on the sale in Zimbabwe of discs produced domestically from an imported master recording would not be added to the price paid or payable for the master recording.

Please click on the hyperlink below for detailed information regarding Zimbabwe Customs valuation system:

Valuation manual

https://www.zimra.co.zw/customs/forms?download=1218:customs-valuation-manual

Customs and Excise Act [Chapter 23:02]

https://www.zimra.co.zw/downloads/category/17-acts?download=166:customs-and-excise-act-chapter-23-02-updated

This document outlines and explains the treatment of leased, loaned and hired goods for customs valuation.

Goods imported under a lease or hire contract into Zimbabwe do not constitute a sale. Duty, however, has to be levied based on a value which is the total of rentals; hire or lease charges paid or payable for the period of use in Zimbabwe plus freight and insurance of the whole consignment to the place of importation in Zimbabwe.

For example, if the charge for a 48-month contract is $1,000 per month, the customs value will be $48,000. Should the rental include a charge for any function, e.g. erection and maintenance, to be undertaken by the importer, the customs value must not include such charge.

To ensure that the goods are exported on due date, a temporary deposit, which is refundable on export or an ATIP (Application for Temporary Importation Privileges) which is guaranteed by a bank or insurance has to be lodged pending final re-export.

Please click on the hyperlink below for detailed information regarding Zimbabwe Customs valuation system:

Valuation manual: https://www.zimra.co.zw/customs/forms?download=1218:customs-valuation-manual

Customs and Excise Act [Chapter 23:02]

https://www.zimra.co.zw/downloads/category/17-acts?download=166:customs-and-excise-act-chapter-23-02-updated

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