www.pwc.com Customs & International Trade at PwC DENIB Roundtable March 26, 2015
Customs & International Trade Practice Experienced trade professionals where and when needed
Customs & International Trade Global Presence 3
Customs & International Trade at PwC PwC s Customs and International Trade practice (CIT) can help your company manage the risks and opportunities associated with your import/export operations. Network of more than 400 Customs & Trade professionals in over 100 markets around the world. Global strategic and local tactical insights that others cannot match. A wealth of experience and knowledge of customs and trade processes around the world to provide efficient and cost-effective customs and trade operations. 4
Customs & International Trade at PwC We are the leader by reputation and usage for global indirect tax consulting services, as recognized by the Global Tax Monitor. Our network is market-focused and regionally oriented to seamlessly provide the right mix of capabilities, expertise, and cultural background to meet the complex needs of multinationals. We have deep knowledge of what local regulators are looking for and what leading practices exist to fulfill those expectations. Our practice is well integrated with other PwC lines of service and can therefore call upon necessary specialists in these other practice areas to ensure that we meet our clients needs. 5
How We Can Help First Sale for Export
Discussing First Sale Offsetting rising costs with traderelated cost saving strategies First Sale for Export 7
First Sale for Export Overview What is a First Sale for Export? When there are multi-tiered sales transactions giving rise to the importation of merchandise to the U.S., the transaction value in an earlier sale transaction may be used as the basis for appraisement, provided that certain requirements are satisfied Where can First Sale for Export be used? FSFE valuation method is currently accepted by customs authorities in the U.S. and the EU. Most other jurisdictions do not accept FSFE valuation 8
First Sale for Export Overview Typical Multi-Tiered Transaction Structure Importer Middleman Invoices Importer Orders placed Middleman Vendor Orders placed Import Sale Transaction Duties typically based off this value First Sale Transaction Duties based off this value under FSFE valuation Manufacturer Invoices Middleman Manufacturer(s) Finished Goods Shipped Directly to Importer 9
First Sale for Export Overview Example FSFE reduces an importer s duty liability by applying the duty rate to the first sale value, which is presumably lower than the import sale: Product - Bath towel, cotton HTS code 6302.91.0050 Duty Rate 9.20% Import Sale Valuation Second Sale $1000 Duty Rate 9.20% Customs Duties $92 First Sale Valuation First Sale $700 Duty Rate 9.20% Customs Duties $64.40 Customs Duty Savings: $ 27.60 10
FSFE Regulatory Requirements All four elements are required for use of First Sale appraisement: 1. Bona Fide Sale for Export The first sale must be a bona fide sale and the use of transaction value must not otherwise be precluded pursuant to the valuation law. 2. Arm s Length Transaction The first sale must be conducted at an arm s length, free from any nonmarket influences. 3. Clearly Destined The merchandise must be clearly destined for export to the US at the time of the first sale. 4. Accounting for All Required Elements of Value All additions to the price paid or payable must be properly included in the first sale value declared upon entry. 11
First Sale for Export Appraisement Key Benefits First sale for export may reduce duty expenses and help manage the landed cost of imported merchandise First sale for export may be combined with other duty savings programs to maximize benefits (e.g., FTAs with regional value thresholds) FSFE valuation can be used regardless of where the underlying imported product originates importers Suppliers whose operating structure supports FSFE are considered more valuable business partners by US/EU importers 12
First Sale for Export Practical Considerations FSFE can be used in unrelated supply chain models as well as in vertically integrated supply chain! Supply chains involving related parties will require periodic analysis of FSFE prices to ensure the manufacturer s price meets the arm s length standard Ongoing commitment to maintaining compliance with FSFE criteria! FSFE valuation risks and liabilities are those of the importer, not the foreign supplier! U.S. Customs can require substantiation of the FSFE price at any time, with an expectation that importers can provide that data within 30 days FSFE affords customer visibility to manufacturing level costing Restructuring for FSFE requires coordination between all parties in the supply chain to ensure that all considerations are addressed 13
Your PwC Contacts!
Contacts United States Anthony Tennariello Partner, New York Tel: +1 (646) 471-4087 anthony.tennariello@us.pwc.com Dom Gambardella Partner, New York Tel: +1 (646) 471-3791 domenick.gambardella@us.pwc.com Maytee Pereira Director, New York Tel: +1 (646) 471-0810 maytee.pereira@us.pwc.com
Contacts Turkey Cenk Ulu Partner, Turkey Tel: +90 212 355 58 52 cenk.ulu@tr.pwc.com Murat Kutlu Senior Manager, Turkey Tel: +90 212 355 58 54 murat.kutlu@tr.pwc.com Durul Kayili Senior Manager, Turkey Tel: +90 212 355 32 23 durul.kayili@tr.pwc.com
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