Leonie Ferretter explores the disparity in how transfer pricing is treated from a customs perspective across the Asia Pacific.
The commonalities between some of the OECD transfer pricing (TP) methods and the customs valuation methods contained in the World Trade Organisation valuation agreement (the agreement), have not so far converged to the point where we have regional consensus on how to treat TP adjustments for customs purposes.
Additionally, despite the fact that Asia Pacific countries are parties to the agreement, which recognises that the price between related parties is not, in and of itself, reason to question the pricing between those parties, related-party transactions and post-importation adjustments continue to raise the customs risk profiles of importers across the region.
Of course, in some countries, this risk is considerably increased where there are higher duty rates, high rates of customs penalties and very active customs audit regimes. The maturity level of dealing with customs-related party pricing and post-importation adjustments differs greatly across countries in the Asia Pacific region.
At one end of the spectrum countries such as Australia have:
At the other end of the spectrum:
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