Transfer price and customs value

Transfer price and customs value

Transfer prices are the prices charged in transactions between entities of the same multinational group. They determine both the tax base (direct taxation) and the customs value (customs duties), creating a risk of double control.

The dilemma

A high transfer price increases the customs value (and therefore customs duties) but reduces the taxable profit in the importing country. Conversely, a low price reduces duties but increases local profit. The company is caught between the requirements of customs and tax authorities.

Related parties and transaction value

When the buyer and seller are linked (within the meaning of Article 127 of the UCC Implementing Regulation), the transaction value is only accepted if the link has not influenced the price, or if the declarant can demonstrate that the value closely approaches the reference values.

Transfer pricing adjustments

Transfer pricing adjustments made after importation (back adjustments) must be reflected in the customs value, which may result in declaration corrections and duty additions.

Best practices

Align transfer pricing policy and customs value methodology from design, document price justification and anticipate retroactive adjustments.