The Price Actually Paid or Payable (PAPP) is the total payment, whether direct or indirect, made or to be made by the buyer to (or for the benefit of) the seller for the imported merchandise. It is defined in 19 U.S.C. § 1401a(b)(4)(A) and is the starting point for computing transaction value.
PAPP includes all payments made by the buyer to the seller, whether:
- Direct (wire transfer, letter of credit, cash payment)
- Indirect (indirect payments to third parties on the seller's behalf, settlement of a seller's debt to a third party, etc.)
- Cash, in kind, or by negotiable instrument
Excluded from PAPP — that is, non-dutiable if separately identified — are:
- The cost of transportation, insurance, and related services after the goods leave the country of exportation
- Costs of construction, erection, assembly, maintenance, or technical assistance after importation
- U.S. customs duties and federal taxes
- Buying commissions (commissions paid to the buyer's agent)
PAPP is before adding the five statutory additions (assists, royalties, packing, selling commissions, proceeds of resale) that get you from PAPP to full transaction value.
Discounts, rebates, and price adjustments are part of PAPP if they exist at the time of importation and are documented. Post-importation rebates that are speculative or unilateral are generally not deductible — see Allied International v. United States and CBP guidance on rebates and discounts (HQ 547144).