The World Customs Organization released June 26 a new guide on customs valuation and transfer pricing that, according to the International Chamber of Commerce, aims to harmonize revenue collection between customs and tax authorities.

According to the WCO, the aim of customs agencies with respect to import transactions between distinct and legally separate entities of the same multinational group is to ensure that the price for those transactions is not influenced by the relationship between buyer and seller. 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. The former approach is almost always based on the World Trade Organization Valuation Agreement, whereas the latter is usually based on the Organization for Economic Cooperation and Development’s Transfer Pricing Guidelines.

The WCO Technical Committee on Customs Valuation has concluded that the examination of transfer pricing studies prepared primarily for direct taxation purposes may be of use to customs agencies when examining related party transactions for customs valuation purposes. The new WCO guide thus explores the possibilities of customs agencies using such studies, in particular encouraging them to work together and exchange relevant information and knowledge with tax authorities. The guide also encourages businesses to take into account customs agencies’ needs when preparing documentation such as transfer pricing studies and advance pricing agreements.

The WCO notes that the focus will now be on providing further guidance to customs agencies on how to examine and interpret transfer pricing documentation that may be helpful in this regard. The other key question is the impact of adjustments made after importation for transfer pricing purposes; i.e., in which cases, if any, such adjustments should be taken into account in determining the customs value of the imported goods.

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