Customs Valuation and Transfer Pricing

Historically, direct tax issues control the design of sales structures. Our experience shows that customs valuation requirements are often not properly considered.

Both the direct tax authorities and customs have to deal with the pricing of imported goods between related parties, and both have their own incentive in doing so. The direct tax authorities are concerned with the price being too high (thereby reducing taxable income in the particular tax jurisdiction) while customs is concerned with the price being too low (thus reducing tariff revenue, etc.). While the objective of both direct tax transfer pricing rules and customs related party valuation rules is the same – arriving at arm’s length prices – the rules are different. As a result, you must realize that your company’s sales structure may qualify under the transfer pricing rules, but could nevertheless fail a customs valuation audit performed by customs.

More detailed info on this subject can be found in the attached ppt. presentation see here.

 

Solutions Our people have more than 20 years of relevant experience and performed numerous customs valuation reviews/obtained many customs valuation rulings. Our experience was also built on this subject when working in multi-disciplinary supply chain management teams (consisting of customs-, direct tax-, legal- and transfer pricing people). CustomsAdvisoryPlus is highly aware of the areas which are often overlooked by transfer pricing- and direct tax advisors and can assist you whenever there is an opportunity to address customs issues along with transfer pricing. Our customs valuation services could also be performed in conjunction with a transfer pricing study performed by one of our partners or be undertaken by your own service provider.

Our approach results in the following integrated customs duties solutions:

• Tailor made assessments by using our valuable query tools (see also Software Solutions).
• Delivery of an implementation design for an acceptable customs valuation strategy, which is also fully aligned with your transfer pricing needs. 
• Delivery of monitoring tools for implemented procedures for customs and related risks, so these can be managed with the most efficient use of resources.
  

Your benefits

• Cost savings: No additional (non-recoverable) costs, because of retroactive duty assessments and fines resulting from non-compliancy.
• Reduction of fees: more efficient approach by integrated customs and direct tax fact finding and design phases.
• Optimization of customs valuation position and minimization of duty payment.
• Less unexpected surprises in the future (obtain ruling).
• More transparent customs function, consistent approach, well informed staff/management and time savings (defense documentation, implemented control procedures and training).

For other customs valuation planning ideas see under customs valuation

More information: contact info@customs.a.plus.com