![]() ![]() While an upward price adjustment affecting cost of goods sold generally needs to be reported to CBP (e.g., a period 13 year- end adjustment),it is important to consider the specific nature of the adjustment to determine whether there will need to be a corresponding adjustment to the declared customs value. Not all transfer-pricing adjustments trigger additional customs duty liability More specifically, if there is a corresponding increase to the product price that also adjusts the cost of goods sold, the importer would generally be required to tender additional duties to CBP. As a result of the adjustment, the price actually paid or payable for imported goods typically changes - either up or down. Once the final price is determined, the parties may make an adjustment to " true- up" the provisional price. Often, particularly in sales of goods between related parties, the import price (or transfer price) declared to CBP at the time of importation is provisional and subject to change. Thus, the higher the commercial invoice price, the greater the assessment of duties. In many cases, the transaction value is the price listed on the commercial invoice. In the United States, customs duties are generally assessed on an ad valorem basis and applied to the "transaction value" of imported goods, defined as the "price actually paid or payable for the merchandise when sold for exportation to the United States" (19 U.S.C. An upward adjustment to price generally means increased customs duties ![]() In most situations, these compensating adjustments must be reported to U.S. The global pandemic has forced multinational enterprises to reassess previous transfer- pricing policies and consider making compensating adjustments to bring their intercompany transfer price for goods into an acceptable arm's- length range, often retroactively. One significant challenge for multinational enterprises has been how to mitigate the effects of the fluctuations in the prices of imported goods from a customs perspective.
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