U.S. Customs and Border Protection has formally proposed changing its policy on the applicability of transaction value in the context of post-importation adjustments. This change would make it easier to make transfer pricing adjustments after importation and could result in some duty savings as well.
Comments on the proposed change, which would be effected through the revocation of ruling HQ 547654, are due no later than Jan. 27 and should be directed to:
U.S. Customs and Border Protection
Attn: Tracey Denning, Regulations and Rulings
Office of International Trade
799 9th Street NW., 5th Floor
Washington, DC 20229–1177
Merchandise imported into the U.S. is appraised under 19 USC 1401a and the primary method of appraisement is transaction value, or the price actually paid or payable for the merchandise when sold for exportation to the U.S. plus certain additions. The term “price actually paid or payable” means the total payment (whether direct or indirect) made, or to be made, for imported merchandise by the buyer to, or for the benefit of, the seller. Transaction value is normally fixed at the time of importation but may be arrived at by using a formula. Rebates, or any other decreases in the price actually paid or payable made or effected after the date of importation, are to be disregarded for the purposes of determining transaction value.
However, importations that involve transactions between related parties may involve adjustments to initial transfer prices after importation in accordance with the company’s formal transfer pricing policy or formula. In some cases that policy may provide for year-end compensating adjustments to comply with the requirements of an advance pricing agreement between the U.S. party and the Internal Revenue Service. Such adjustments could affect whether the price is considered fixed or determinable by objective formula at the time of importation.
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Source: Sandler, Travis & Rosenberg P.A.