The WCO has released a new guide on the topic of Customs valuation and transfer pricing. The interaction between these two regimes has been an important issue both for Customs administrations and the trade over recent years.
The issue concerns international transactions within a multi-national group. Customs aim is to ensure that the price for transactions of imported goods is not influenced by the relationship between buyer and seller (based on the methodology for Customs valuation contained in the WTO Valuation Agreement). Tax administrations, on the other hand, are examining the same transactions to ensure the conditions are consistent with the ‘arm’s length principle’ for profit tax purposes. Generally, the methodology used for this purpose is based on the OECD Transfer Pricing Guidelines.
The new Guide, designed to be accessible to both experts and non-experts in both fields, sets out the relevant methodology for both regimes and explores the linkages and the possibilities for Customs to use transfer pricing information to examine related party transactions.