Related-Party Customs Valuation: Transfer Pricing and CBP

When an importer buys from a related company, such as a foreign parent or affiliate, the price can be used as transaction value only if the relationship did not influence it. Under 19 U.S.C. 1401a(b)(2)(B), the importer shows this either through the circumstances of the sale or by comparing the price to test values. Transfer pricing set for tax does not automatically satisfy customs, and year-end transfer pricing adjustments can change the value of entries already filed.

Who is related

The statute lists relationships such as parent and subsidiary, companies under common control, officers or directors of each other, and any party holding 5% or more of the other's voting stock.

The two ways to support the price

• Circumstances of sale: The price was settled the way prices are set in the industry, or the way the seller prices to unrelated buyers, or it covers the seller's costs plus a normal profit.
• Test values: The price closely matches values CBP accepted for identical or similar goods sold to unrelated buyers.

Transfer pricing adjustments

Many groups adjust intercompany prices after year-end to meet tax targets. Upward adjustments may mean more duty owed. Downward adjustments may mean a refund, but only if the program was in place before importation and the entries are still open. Reconciliation is the usual tool for flagging entries whose value may change.

Frequently asked questions

Does a tax transfer pricing study prove customs value? It is useful evidence for the circumstances of sale test, but CBP evaluates it on its own terms.

Do I flag related-party status on entries? Yes. The entry summary carries a related-party indicator.

How Caspian helps

Caspian reviews related-party entries and adjustment flows for under- and overpayment. See our trade audit and trade compliance services.

Works Cited:

• 19 U.S.C. 1401a, Value
• 19 CFR 152.103, Transaction value

This article is general information, not legal advice.