Customs Valuation Audit Mechanics for Cross Border Agency Import Transactions
Customs valuation in agency imports depends on proving buying commission exemptions under Decree 213 while adjusting for assists and royalties.
Customs Valuation Audit Mechanics
Meaning
Methodical procedures are used by customs authorities to verify the declared value of imported merchandise. The customs valuation audit mechanics focus on whether the price declared by the importer represents the actual price paid or payable and complies with the rules of the World Trade Organization. This process involves examining financial accounts, transfer pricing agreements, and payment records of the importer.
It aims to prevent duty evasion through transfer pricing.
Audit Initiation
Audits are initiated either through random risk-based selection or targeted industry campaigns. Under the customs valuation audit mechanics, specific triggers like a sudden drop in declared unit prices or a high volume of transactions with related parties will prompt an investigation. The regional customs branch issues an audit notice to the importer.
This notice gives the importer a set period to prepare their financial and transactional books.
Transaction Verification
The core of the investigation lies in the verification of the transaction value and its components. Customs officers analyze whether the transaction value was influenced by a relationship between the buyer and the seller. The customs valuation audit mechanics require the importer to demonstrate that the price is close to the price of identical or similar goods sold to unrelated buyers.
This requires detailed market comparisons. Officers also look for unrecorded payments, such as royalties, assist costs, or subsequent proceeds that should be added to the customs value.
Valuation Adjustment
If the declared transaction value is rejected, customs will reconstruct the value using alternative methods. Under the customs valuation audit mechanics, the transaction value method is discarded in favor of identical goods value, similar goods value, or deductive value methods. This adjustment process often leads to a reassessment of duties and the imposition of late payment interest.
Importers have the right to challenge these adjustments through the administrative appeals process. However, they must first pay the reassessed duties to secure the release of their goods or to avoid further penalties.