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WCO case study; transfer pricing documentation and customs valuation

World Customs Organization case study

The World Customs Organization (WCO) issued a case study that examines the effects of a company’s transfer pricing report on whether the price paid (or payable) for imported goods was influenced by the relationship between the buyer and seller.


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The case study [PDF 122 KB] examined transactions involving luxury bags between the seller (located in one country) to a distributor (located in a second country). Both the seller and distributor were subsidiaries of a multinational enterprise (the brand owner). The case study (14.2) illustrates when customs took into account transfer pricing information in the course of verifying the customs value. The new case study provides an example of the customs authority making use of transfer pricing information based on the resale price method. 

The WCO case study considered whether the transfer pricing report provided information that enabled the customs authorities to conclude whether (or not) the price actually paid (or payable) for the imported goods was influenced by the relationship between the parties, and concluded that:

  • The declared import price “was not settled in a manner consistent with the normal pricing practices of the industry and thus had been influenced by the relationship between the buyer and seller.”
  • The customs value “should be determined by application of the alternative methods of appraisement….”
  • The use of a transfer pricing report as a possible basis for examining the circumstances surrounding the sale is to be considered on a case-by-case basis.

In this case study, it was determined the declared import price was not settled in a manner consistent with the normal pricing practices of the industry and had been influenced by the relationship between the buyer and seller. Therefore, the customs value needed to be determined by applying the alternative methods of appraisement in a sequential order. 

The WCO reported that it has been working with the OECD and other international organizations to promote closer cooperation between customs and tax administrations in order to strengthen governments’ ability to identify the correct tax and duties legally due and enhance trade facilitation for the compliant business sector.


For more information, contact a professional with KPMG’s Trade & Customs practice:

Douglas Zuvich | +1 (312) 665-1022 |

Andrew Siciliano | +1 (631) 425-6057 |

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