Updated on 29/04/2016
An important new instrument was finalised at the 42nd Session of the Technical Committee on Customs Valuation which took place in Brussels from 18 to 22 April 2016 under the Chairmanship of Ms. Yuliya Gulis of the United States.
The instrument contains a case study illustrating a scenario where Customs took into account transfer pricing information in the course of verifying the Customs value.
The WTO Valuation Agreement sets out the methodology for establishing the Customs value, used as the basis for calculating Customs duties. The Agreement foresees that Customs may examine transactions between related parties where they have doubts that the price has been influenced by the relationship.
The Organisation for Economic Cooperation and Development (OECD) has developed Guidelines for establishing the transfer price, that is the price for goods and services sold between controlled or related legal entities, in order to determine business profit taxes where businesses are related.
Over recent years, the similar objectives but different methodologies of transfer pricing and Customs valuation have been noted, and it has been recognised that business documentation developed for transfer pricing purposes may contain useful information for Customs. An earlier instrument of the Technical Committee, Commentary 23.1, confirmed this principle.
The new case study provides an example of Customs making use of transfer pricing information based on the transactional net margin method. On the basis of this information, Customs accepted that the sale price in question had not been influenced by the relationship.
The OECD has provided valuable input to the Technical Committee discussions in the development of the new instrument which provides helpful guidance to both Customs administrations and the business community.
Both the WCO and the OECD advocate closer cooperation between Customs and tax administrations in order to strengthen governments’ ability to identify the correct tax and duties legally due and enhance trade facilitation for the compliant business sector.
WCO Secretary General, Mr. Kunio Mikuriya, has congratulated the Technical Committee on the work achieved : "This new instrument is an important step for the WCO and demonstrates its relevance by providing guidance on the management of Customs valuation in an increasingly complex trade landscape, whilst maintaining consistency and strengthening cooperation with Tax authorities."
The case study (Case Study 14.1) has been be made available on our website and will be published in the WCO Valuation Compendium, subject to approval by the WCO Council in July 2016.
Further information on this topic can be found in the WCO Guide to Customs Valuation and Transfer Pricing, available via this link