Customs valuation and transfer pricing, once thought to be moving toward common objectives, are now moving apart. This article looks at the causes and potential solutions for divergence between customs valuation and transfer pricing. Specifically, it discusses the increased role of governmental and nongovernmental institutions; differing Customs and tax methodologies; related-party methodologies; the uncertain role of transfer pricing studies; and disparate timing constraints between tax and Customs regimes.
This book discusses the intricate role of transfer pricing and customs value in international business environment. It examines the relationship between valuation for transfer pricing purposes and valuation for customs, and the significance of the relationship for multinational enterprises, tax authorities and customs administrations. The book begins by reviewing relevant international standards such as the OECD Guidelines and the GATT/WTO Customs Valuation Agreement. This is followed by a discussion of related issues such as VAT and administrative matters. Country chapters provide an overview of the applicable legislation and valuation methods, and case studies allow direct comparison between the practices of the different countries. The book concludes by summarizing the existing relationship between transfer pricing valuations and customs valuations, and by suggesting possible solutions towards a more integrated approach.
Issues of transfer pricing have come to the fore in both international tax and customs regimes. In particular, the problem of how to apply the two systems of valuation to the same transaction is of widespread concern. This well-known book, now in a fully updated second edition, is a problem-solving guide for professionals charged with valuating transactions in their client’s or company’s best interests. Through detailed examination of relevant guidelines, transfer pricing methodologies, and business realities prevailing among multinational enterprises, it offers a cogent and convincing account of how tax and customs transfer pricing regimes may be harmonized. Among other essential elements, the author discusses the following in depth: – the OECD Transfer Pricing Guidelines; – the GATT/WTO Customs Valuation Code (GVC) and other valuation rules in key jurisdictions and regional agreements; – the OECD and UN model tax conventions; – the arm’s length principle; – methods, both traditional and new, of determining whether the parties’ relationship in uenced the price; and – additions to and deductions from the customs value. This second edition discusses new developments in the eld, including a chapter on Commentary 23.1 and Case Study 14.1 of the Technical Committee on Customs Valuation of the World Customs Organization (WCO) – the rst international instruments linking transfer pricing and customs valuation. The book concludes with an analysis of the circumstances and conditions under which the introduction of transfer pricing year-end adjustments to transaction value would be consistent with Article 1 of the GVC. The book will continue to provide practitioners, customs administrations, and academics with a highly practical analysis of the intersection of transfer pricing and customs valuation. It will be welcomed by customs administrations charged with examining the acceptability of a transaction value xed between related parties and by multinational companies as a truly actionable tool they can use to optimize decision-making as it relates to transfer pricing and customs valuation in a “real world” setting.
Although valuation is fundamental to both tax and customs liability in international transactions, values calculated by the two regimes can differ, often markedly, in situations where no clear rules of transfer pricing apply. Through detailed examination of relevant guidelines, transfer pricing methodologies, and business realities prevailing among multinational enterprises, Customs Valuation and Transfer Pricing offers a cogent and convincing account of how tax and customs transfer pricing regimes may be harmonized.Among the essential elements of this important thesis, the author discusses the following in depth: the OECD Transfer Pricing Guidelines; the GATT/WTO Valuation Code (GVC); the arm's length principle; methods, both traditional and new, of determining whether the parties' relationship influenced the price; and additions to and deductions from the customs value. The study concludes with an analysis of the circumstances and conditions under which the introduction of transfer pricing compensatory adjustments to transaction value would be consistent with Article 1 of the GVC.
Transfer pricing and customs are separate legal disciplines and rely on different legal instruments. Transfer pricing and customs, in fact, aim at solving different issues and, therefore, the authorities appointed to supervise their application might have diverging interests. This thesis examines the interaction of the valuation processes carried on under the two legal disciplines. It provides an analysis of relevant regulations and literature and case law and is completed by the consideration of administrative practices in Italy, South Korea, UK and the USA, with the purpose of identifying the instruments currently available to economic operators to deal with the problem presented. The purpose of the paper was to identify the status quo of the subject and, whenever the issue of the imperfect interaction between transfer pricing and customs valuation methods was persisting, to propose a comprehensive solution to it.
The intertwined relationship between customs valuation and transfer pricing has caused significant concern of costs for international trade compliance and efficiency. There are sets of international and national rules for the two related matters of similar purpose, and the gap between the rules and administrations is obvious and room to improve significant. The China case study calls the public and private sectors to work together for a better business climate for compliance and efficiency in this regard. In this respect the author considers the following issues to be improved in public sector: (1) awareness and willingness of rule-based fair and efficient administration; (2) capacity building; (3) international model legislation; (4) transparency and consistency with detailed implementing rules and reasoning-based ruling program; (5) data sharing and risk management; (6) inter-agency cooperation; (7) functional reorganization; (8) standards, methods, documentation compliance requirements and liabilities for encouraging compliance; (9) analysis from the legal and reasoning perspectives; (10) reconciliation and refund mechanism.
The article studies the relationship between transfer pricing and customs valuation. The author explains two different approaches of transfer pricing, the first one adopted by tax agencies, based on the OECD Transfer Pricing Guidelines and the second adopted by customs agencies, based on the WTO Customs Valuation Agreement (CVA). From the business perspective, the divergence between the two taxation regimes is an obstacle to the liberalization of trade and inhibits international development for companies. On the other hand, the International Chamber of Commerce (ICC) believes that the WTO CVA and the use of the OECD Guidelines are enough to settle the issue of customs valuation and transfer pricing. However, ICC specifies that tax and customs approaches of intercompany transactions should converge to the same value. In this goal, ICC published a policy statement in 2012, which has been integrated in the WCO guidelines. This statement, based on the harmonization of the current rules, contains several additional options to derive customs value. The author states that the Union Customs Code does not contain any evolution from a transfer pricing perspective but contains some negatives changes regarding custom valuation. Also, the opportunity of the WCO Free Trade Agreement should be taken to move forward on this issue.
This guide concerns the relationship between customs valuation and transfer pricing. The 2018 edition includes updates to reflect developments on transfer pricing at the OECD including the OECD/G20 BEPS Project, information on recent texts concluded by the Technical Committee on Customs Valuation and updates to national initiatives (Annex I).
The third edition of EU Customs Law provides a fully updated treatment of legislation, new treaties and cases in the two courts of the EU especially but also in Member States. This volume also includes commentary on the Modernized Community Customs Code and Implementing Regulation and increased coverage of areas such as the wider role of customs authorities apart from the collection of customs duty, such as security of goods and post 9/11 developments generally, the history of customs unions and their implications for governments, non-EU customs unions to which EU law is relevant, and the inter-relation between customs duty and direct tax.
