Licensed U.S. Customs House Brokerage855-888-0666 · www.jfschb.com
JFSCHB

Customs Valuation & Landed Cost

Related-Party Transaction

Also known as: Related Party

A related-party transaction is a sale between a buyer and seller who are connected — for example a parent company and its subsidiary, or firms under common control — which customs treats with heightened scrutiny because the relationship can distort the price. The transaction value of such a sale may still be accepted if the importer can show that the relationship did not influence the price, typically by demonstrating that the price closely approximates arm's-length values or covers all costs plus a normal profit. Related-party pricing is a leading focus of customs audits, so multinational groups must be able to justify their intercompany transfer prices for customs as well as tax purposes.

The JFS takeLicensed customs broker · Filer 82G

Buying from a company you are related to does not disqualify transaction value, but it does put the burden on you to show the relationship did not affect the price. Importers frequently discover at audit that their transfer-pricing study was built for tax purposes and answers a different question than customs asks.

Where it matters for compliance

  • Acceptability is shown by circumstances of sale or by a test value.
  • A tax transfer-pricing study is evidence, not an answer, for customs purposes.

Related terms

Transaction ValueTransaction value is the primary method of customs valuation: the price actually paid or payable for the goods when sold for export to the country of importation, adjusted by adding certain elements not already included — such as packing, selling commissions, assists, royalties, and the cost of freight and insurance depending on the country's rules.Customs ValuationCustoms valuation is the process of determining the monetary value of imported goods on which ad valorem duties and taxes are assessed, governed internationally by a valuation agreement that establishes a hierarchy of methods.

Reviewed by a licensed customs broker. Definitions are general information, not legal or customs advice for a particular shipment. Duty rates, tariff programs and agency requirements change frequently.