G-20/OECD BEPS recommendations – the impact on customs duty
The G-20/OECD BEPS recommendations — the impact on customs duty
Although the OECD BEPS project has garnered the most attention for its impact on direct taxation and transfer pricing, a number of the Actions appear to have customs implications, falling into three broad categories:
- Pricing of tangible goods
- Additions to the customs value
- Supporting documentation
In particular, transfer pricing methodologies used by companies will have a significant impact on how customs values will be supported. Country-by-country documentation requirements will increase the amount of data and transparency of related-party transactions for customs authorities. And the limitation on base erosion for financial payments can impact customs related-party valuation analysis and results.
From a customs authority perspective, addressing base erosion generally means looking to add off-invoice payments to expand the base for customs duty purposes, and therefore increasing the dutiable value. This trend is seen in the changes at the EU and at the World Customs Organization level with the increased scrutiny on royalty payments.
With increased transparency, customs authorities will have full details of related-party flows at their fingertips, not just details about transfers of tangible good sales. Importers will need a supportable position if they seek to exclude certain payments from dutiable value.
How EY can help
Our global indirect tax network can help companies of all sizes operating in the digital economy. We can carry out a risk review to help analyze the appropriate duty valuation for related-party transactions and the impact of payments for intangibles on the valuation of tangible goods, as well as review the impact of any changes in legislation or business model.
Reducing the taxable base for duties and VAT for online transactions directly increases the gross margin. We can assist clients in all sectors to identify and achieve VAT and duty savings for online sales in connection with:
- Currency issues, transport costs, customs duty, royalties other surcharges
- Discounts, returned goods, collection costs and bad debts
- Product valuation
- Valuation planning
- Webcast replay: Global trade management: making sense of a world in motion
- Webcast replay: Major changes to the Union Customs Code
- The 2016 EY Global Trade Symposium report: Making sense of a world in motion – a global trade perspective
- Tax insights: customs guide on related-party pricing is valuable
- Global Trade
- Global focus on base erosion and profit shifting (BEPS)