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Customs valuation and TP interplay

Customs valuation and TP interplay

Leonie Ferretter explores the disparity in how transfer pricing is treated from a customs perspective across the Asia Pacific.

Leonie Ferretter

Partner, Regional ASPAC Leader – Trade & Customs

KPMG Australia


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The commonalities between some of the OECD transfer pricing (TP) methods and the customs valuation methods contained in the World Trade Organisation valuation agreement (the agreement), have not so far converged to the point where we have regional consensus on how to treat TP adjustments for customs purposes.

Additionally, despite the fact that Asia Pacific countries are parties to the agreement, which recognises that the price between related parties is not, in and of itself, reason to question the pricing between those parties, related-party transactions and post-importation adjustments continue to raise the customs risk profiles of importers across the region.

Of course, in some countries, this risk is considerably increased where there are higher duty rates, high rates of customs penalties and very active customs audit regimes. The maturity level of dealing with customs-related party pricing and post-importation adjustments differs greatly across countries in the Asia Pacific region.

At one end of the spectrum countries such as Australia have:

  • formal, publicly available customs valuation TP policies
  • the ability to obtain related party pricing valuation rulings (which provide protection from customs penalties)
  • access to customs duty refunds for post-importation adjustments
  • bulk disclosures and payments for post-importation increases to price, customs duty and goods and services tax/value added tax.

At the other end of the spectrum:

  • some countries have limited, if any, guidelines on TP and customs valuation
  • post-importation adjustments can result in customs audits upon disclosure, or there is no mechanism to disclose such adjustments
  • there is an inability to obtain customs duty refunds for price decreases
  • there can be penalties for short payments of customs duty and value added taxes where there are price increases
  • importers can have inter-company prices for goods revalued by customs authorities.


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