Customs legislation pending in New Zealand would introduce changes to the customs law, with an expected effective date of 1 October 2018.
The new customs law would change the post-importation adjustment regime. Under the current system, post-importation adjustments are typically disclosed by filing regular reconciliations (usually annually) or by filing a voluntary disclosure. Once the reconciliation or disclosure is accepted, New Zealand Customs issues a confirmation letter and makes an assessment of any additional goods and services tax (GST) and customs duty resulting from the adjustment.
Under the pending customs legislation, a “provisional value” system would be introduced for post-importation adjustments. Under this new system, eligible importers would declare a provisional import value when the goods are initially cleared for import, and then would “true up” the declared value at a later time when all information required to finalise the value is available (for example, when the amount of the year-end transfer pricing adjustment is known). Importers that are part of multinational groups could be affected by this change because there may be additional charges payable to related parties after the goods have been imported—for example, year-end transfer pricing adjustments could be such a common post-importation valuation adjustment. Read TaxNewsFlash
To be eligible to participate in the provisional value regime, the importer would need to satisfy certain requirements, under which importers would be separated into three groups:
The first two categories of importers would have an automatic right to apply the provisional value scheme. The “all other importers” seeking to apply the provisional value scheme would have to rely on New Zealand Customs’ discretion. If an importer is not able to participate in the provisional value scheme, the fall-back option for disclosing a post-importation adjustments would be to file a voluntary disclosure. If an importer could not apply the provisional value scheme and disclose a post-importation adjustment by making a voluntary disclosure, then the importer would be subject to interest on the resulting GST and customs duty shortfall—that is, additional costs to an importer. Could it also create a disincentive for importers to disclose post-valuation adjustments? There may be ways to manage the cost and risk on both sides.
Read an April 2018 report prepared by the KPMG member firms in New Zealand and Australia
© 2019 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.