Aligning Related Party Import Prices with Customs Transaction Value Rules
Aligning related party import prices requires establishing prospective formula clauses in supply contracts that satisfy both tax profit margins and customs valuation decrees.
Test Values
Meaning
A set of comparative benchmarks allows customs authorities to evaluate whether the relationship between a buyer and seller influenced the declared price of goods. These test values consist of the transaction prices of identical goods sold to unrelated buyers at the same time. The General Administration of Customs uses these figures to determine if the related-party price approximates the market level.
Benchmarking Process
Customs officials compare the declared price of the shipment against prices established in previous transactions between independent entities. These test values are used only for the purpose of comparison and cannot be used as the primary basis for determining the value of the goods. The importer has the right to present their own data to demonstrate that the price is acceptable.
Acceptable Variation
Slight differences between the transaction price and the comparative figures are permitted if they arise from different commercial levels or quantities. These test values must be adjusted to account for the costs of transport and insurance to ensure a fair comparison. The customs bureau considers industry standards and the specific circumstances of the sale during the evaluation.
A price that falls within a reasonable range of the benchmark is accepted as the transaction value.
Evidentiary Value
Importers use the data to prove that their internal pricing policy is consistent with market realities. These test values act as a secondary defense when the primary circumstances of sale analysis is challenged by the tax bureau. Success in the comparison avoids the need for the more complex deductive or computed value methods.
Documentation of previous sales is necessary for the successful application of this method.