An opportunity to support US customs valuations
01 June 2012
Harmonising a company’s transfer pricing documentation with customs requirements has always been a contentious issue because of the inconsistencies between the two regimes. David Grace, Emin Toro and Mateo Caballero from Covington & Burling explain how taxpayers can make this process easier.
After many years of severely limiting the use of tax transfer pricing documentation and advance pricing agreements (APA) to support valuations declared for customs duty purposes, recent ruling letters and notices by US Customs and Border Protection (CBP) demonstrate an increased willingness to consider these documents when determining dutiable value. This change in attitude presents an opportunity for taxpayers to structure transfer pricing studies and APAs to satisfy both their income tax and customs obligations.
When a foreign entity sells goods to a related party in the US, CBP and the Internal Revenue Service (IRS) share, at least in theory, the same goal: determining the correct price that the US importer should pay to the related foreign entity for the goods. The CBP and IRS, however, have different concerns. CBP will generally be concerned that the price might be artificially low so as to minimise the duty due on the...
This article is available to subscribers and current trialists of International Tax Review only. Please log in or subscribe for access to the rest of the article.
Alternatively take a free trial, giving you 7 days of access.
This article is available to subscribers only. To read the rest of this article please subscrbe.
This article is available to trialists and subscribers only. Please take a free 7 day trial to read the rest of the article.