Leonie Ferretter, Trade and Customs Specialist in KPMG's Transfer Pricing group, reveals customs areas of compliance focus for 2016, including correct disclosure of the customs value of imported goods.
In the recently issued Goods Compliance Update by Australian Border Force (Customs) the Commander of Customs Compliance provided an outline of 2016’s compliance areas of focus. Of particular interest to importers will be the review of the correct use of Tariff Concession Orders (TCOs) and correctly disclosing the customs value of imported goods.
TCOs, which provide a free rate of duty where no substitutable goods are produced in Australia, have been an area of considerable focus by Customs over the past 18 months and the subject of a number of Administrative Appeal Tribunal (AAT) cases. Use of TCOs without regular review of the goods and the applicable TCO is not recommended given the change in Customs and the AATs views on TCO eligibility.
Valuation of goods can be complex, especially where production assists are provided to manufacturers, royalties are paid, goods are provided free of charge or there are retrospective transfer pricing adjustments. As a rule, business should always review amounts that are paid in addition to amounts on the commercial invoices and determine whether they are required to be included in the customs value. Additionally, there is no such thing as a ‘free’ good for customs purposes – the legislation will provide a mechanism to value that good.
Given the various penalties Customs are able to issue for non-compliance, this is a timely reminder to check your customs compliance is in order.