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.
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 article explains the treatment of transfer pricing and the customs valuation of know-how transfer agreements from a supply chain management perspective. When third companies transfer their know-how to related companies that are involved in cross-border transactions, the paid value for having used the know-how could be taxed at the end with customs duties and other import taxes (e.g. import VAT).
This guide to the WTO Customs Valuation Agreement is based on the authors' experiences of teaching its finer points to customs officials and policy-makers around the world. Covering the methods of valuation and the provisions on enforcement, implementation and dispute settlement, the authors give practical examples, explain interpretative decisions of national and international customs bodies, and analyse the history of its negotiation. Written as a learning tool, it helps both new and experienced policy-makers, customs officials, importers and exporters to gain a deeper understanding of the Agreement's function and aims.
Global Trade Law Series, Volume 58 Customs valuation is a key element in the corpus of international trade law. Despite the facts that the /WTO Valuation Agreement 1994 remains unchanged in all material respects and that it has been adopted by virtually every trading nation on the planet, there are fissures in the system preventing consensus on many contentious questions. This extremely knowledgeable analysis by a world-renowned specialist lawyer in the field—by concentrating on diverging views on the nature of the central feature of the Agreement, the definition of the price actually paid or payable (PAPP)—provides the most extensive study available of the origins and architecture of the Valuation Agreement and its intersection with transfer pricing norms. Among much else, the author fully explains differing views on such questions as the following: criteria governing royalties and license fees; acceptability of the First Sale for Export doctrine; role of transport charges in valuing dutiable assists; status of interest payments on deferred payments; valuation of carrier media bearing software for data processing equipment; inclusion or exclusion of transport charges in the PAPP; status of the WTO’s moratorium on electronic transmissions; status of payments of money for tools and other materials used in producing the imported goods; and status of international instruments of traffic. The author expertly assesses interpretations of the Valuation Agreement as presented in the instruments of the World Customs Organization and in the administrative and judicial fora of the United States, Canada, and the European Union. This matchless book takes a giant step toward “real-world” consensus on the daunting questions of custom valuation. Customs and international tax professionals, as well as academic scholars, will come away from its in-depth coverage with an enhanced ability to discern the logic inherent in the Valuation Agreement, a greater awareness of current trends and their origins in authoritative customs valuation bodies, and improved confidence when approaching customs valuation questions.
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.
