Aligning Sub Tier Transfer Pricing Adjustments with Customs Valuation Rules
Align sub-tier transfer pricing with customs valuation rules by formalizing prospective pricing formulas and advance reconciliation protocols before true-ups occur.
Customs Audits
Meaning
Verification procedures conducted by authorities after the release of goods ensure that declarations remain consistent with the financial records of the importer. A customs audits process examines the accuracy of the declared value, the classification of the tariff codes and the country of origin. These inspections take place within a three year window following the importation of the goods.
Legal Basis
Regulations on Customs Audit of the People’s Republic of China grant the General Administration of Customs the power to enter business premises. During customs audits, officials review accounting books, electronic data and commercial contracts. The authority aims to identify discrepancies that resulted in the underpayment of duties or the violation of trade restrictions.
Procedural Scope
Examination typically begins with a formal notice unless the authorities suspect a concealment of evidence. The scope of customs audits often covers the relationship between the buyer and seller to determine if the price was influenced by an affiliation. Officers verify the physical inventory against the import records to detect undeclared stock.
Entity Consequence
Results of the inspection influence the Authorized Economic Operator status of the company. If customs audits reveal systemic errors, the enterprise faces fines and an increased frequency of future inspections. Successful completion of the audit without findings confirms the reliability of the compliance system.