Customs Conference Update

Dear Friends,

Yesterday, I had the privilege of speaking at ACI’s Advanced Forum on Customs & Trade Enforcement here in Washington, DC.  I spoke on a panel with an attorney from US Customs and Border Protection (CBP) Headquarters about the interplay between transfer pricing and customs valuation.  I have attached the slides from our presentation here for your reference.

I also wanted to pass along a tidbit I picked up from one of the other panels that addressed CBP audits.  As we have advised previously, CBP is conducting more audits, but fewer of those audits are traditional Focused Assessments (FA’s).  Instead, with the transition of enforcement responsibilities to the Centers of Excellence and Expertise (CEE’s), CBP is conducting many more “targeted” or “single-issue” audits (e.g., quick response audits, survey audits, etc.).  These focused audits are aimed at issues of perceived non-compliance, rather than at the internal controls the company has in place over one or more areas (like a traditional FA).  Also, the CBP speaker on the audit panel made it clear that, while the primary benefit of the Importer Self-Assessment program (ISA) is being removed from the CBP audit pool, that means being removed from the FA audit pool only.  Stated differently, ISA member can be (and frequently are) the subject of the targeted audits being directed by the CEE’s and conducted by Regulatory Audit.  If CBP is conducting fewer FA’s, and more targeted audits, this calls into question whether ISA members are really getting much benefit from the ISA program.

We hope this is helpful.  If you have any questions about either intercompany customs valuation or the audit issues discussed above, please let us know. 

Best regards,
Ted

 

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Customs Valuation Implications of Year-End Transfer Price Adjustments

Dear Friends:

Just a quick reminder for those of you working at multinational companies which operate on a calendar year basis – do not forget to ask your tax colleagues whether any retroactive transfer pricing adjustments were made at, or before, year end (assuming they do not send this information to you on their own).  

If such adjustments were made (whether upward or downward), please be sure to consider the customs valuation implications here in the United States and elsewhere.  The failure to declare upward transfer pricing adjustments is a very common enforcement issue in many jurisdictions (largely because the issue is so easy to identify and often involves significant amounts/penalties); whereas downward adjustments could lead to a refund of customs duties, taxes and fees in some jurisdictions (including the US, the EU, and Canada).  A quick note to your tax colleagues now could save a potential headache down the line, or put some money back in the company’s pocket. 

As part of our customs compliance assessment process, we have developed a questionnaire tailored to these issues for sending to your in-house tax colleagues.  If you think the questionnaire would be helpful to you, just let me know.

Best regards,
Ted

 

Intersection of Transfer Pricing and Customs Valuation

Dear Friends,

Last week, I had the privilege to moderate a panel of highly-experienced speakers addressing the intersection between transfer pricing and customs valuation at the Bloomberg BNA 6th Annual Global Transfer Pricing Conference here in Washington, D.C.  It was a very interesting discussion that addressed the challenges commonly presented when an intercompany transfer price is used for customs purposes (e.g., documenting the acceptability of the transfer prices from a customs perspective, dealing with retroactive transfer price adjustments for customs purposes, etc.), as well as the customs implications of the OECD’s Base Erosion and Profit Shifting (BEPS) project.  I thought you might find the slides we used for the panel to be of interest.

If you have any questions, please let me know.

Best regards,

Ted

Customs Implications of Year-End Transfer Price Adjustments

Dear Friends:

Just a quick reminder for those of you working at multinational companies which operate on a calendar year basis – do not forget to ask your tax colleagues whether any retroactive transfer pricing adjustments were made at, or before, year end.

If such adjustments were made (whether upward or downward), please be sure to consider the customs valuation implications here in the United States and elsewhere. The failure to declare upward transfer pricing adjustments is becoming an increasingly common enforcement issue in many jurisdictions (largely because the issue is so easy to identify and often involves significant amounts/penalties); whereas downward adjustments could, in some jurisdictions, lead to a refund of customs duties, taxes and fees. A quick note to your tax colleagues now could save a potential headache down the line.

As part of our customs compliance assessment process, we have developed a questionnaire tailored to these issues for sending to your in-house tax colleagues. If you think the questionnaire would be helpful to you, just let me know.

Best regards,

Ted