Share with your friends

KPMG report: Tariff effect of intellectual property payments

Tariff effect of intellectual property payments

Most importers recognize that tariffs are generally assessed against the dutiable value of imported merchandise.


Related content

What is not well known, however, is that tariffs may also be assessed against intellectual property payments for imported goods, such as royalties and license fees.

What makes that a major concern in today’s trade environment is that for many products, especially goods from China, the Trump Administration has assessed tariffs of up to 25% against the transaction value of imported merchandise. As a result, if a royalty payment were to be considered dutiable by U.S. Customs and Border Protection (CBP), the value of the royalty would be subject to the same duty rate as the imported product. Also, CBP could retroactively recover five years’ worth of duties, fees, penalties, and interest. Therefore, the overall liability associated with those payments could be considerable.

Understanding when royalty payments are dutiable and proactively managing them will help control that hidden compliance risk.

Read a July 2020 report* [PDF 250 KB] prepared by KPMG Trade & Customs professionals

For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Andy Siciliano | +1 (631) 425-6057 |

*This report originally appeared in Tax Notes International l (20 July 2020) and is provided with permission of the publisher.

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.

Connect with us


Want to do business with KPMG?


loading image Request for proposal