PARIS-based International Chamber of Commerce (ICC) has issued a policy
statement on ‘Transfer pricing and customs value’ to facilitate streamlining
intercompany operations and international business.
The Policy Statement,
which was put in public domain on 14 May 2012, claims to break “new ground in a
highly complex and contentious area within the global tax and customs
world.”
ICC expects many around the world to contribute to this topic in
the foreseeable future.
Transfer pricing is often viewed and dealt with
different approaches by income tax and customs authorities in countries, thereby
creating problems for multinationals involved in related party
transactions.
ICC Policy statement notes: “Tax and customs
administrations often set rules independently for the same transaction/good. Tax
authorities seek conformity with the Organisation for Economic Co-operation and
Development (OECD) Transfer Pricing Guidelines which have been largely codified
in many countries. This set of rules provides guidance on the application of the
arm's length principle for the valuation of cross-border transactions between
associated enterprises, whereas customs authorities conform to Article VII of
the General Agreement on Tariffs and Trade (GATT) Valuation
Code.”
Although numerous points of divergence can be listed between
customs and tax approaches, it is important to stress that points of convergence
also exist. Therefore, while it may not be necessary to change WTO rules or the
OECD guidelines we believe that the two can and should be aligned by finding a
common way of interpreting the arm’s length principle, it adds.
It has
thus recommended that “Concerning related parties, formal recognition by the
customs administration of the arm’s length principle (as per Article 9 OECD
Model Tax Convention) in order to determine the customs value.”
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