The Chairman of ICC Ghana, Alhaji Asoma Banda presented the documents on behalf of ICC and stated that the document is the results of the collaboration between ICC and the World Customs Organisation (WCO) to release a new guide on customs valuation as part of the WCO Revenue Package which underlines that closer cooperation and coordination between customs and tax authorities are key factors for further progress in this area.
In response to the rising concerns within the business community, ICC has identified seven innovative and pragmatic solutions based on convergence to secure, clarify and simplify transfer pricing and customs valuation rules ? the ICC proposals are included in the WCO Guide.
As the world business organization, the ICC confirms that multinational companies, from all sectors and in every part of the world, face difficulties with respect to the valuation of goods.
These difficulties arise because transactions between related parties are subject to both customs and fiscal examinations and are thereby bound by differing rules and contradictory interests.
ICC believes these examinations should yield the same value and that a resolution to the problem is in the interests of all concerned.
There are two reasons for this problem:
1. Tax and customs administrations, even within one country and sometimes within the same government department, have different approaches: tax administration focuses on intra- group sales? prices that may be perceived as higher than they should be; whereas customs authorities control imported goods for which prices may be perceived as lower than the market price.
While both administrations seek to achieve the same goal, which is arm?s length pricing, revenue interests in the transaction still remain at odds with each other.
2. Tax and customs administrations often set rules independently for the same transaction/good. Tax authorities seek conformity with the Organization 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.
Given that intercompany transactions account for more than 60% of global trade in terms of value, the divergence of customs and transfer pricing valuation presents an obstacle to the liberalization of trade and inhibits international development for companies of all sizes.
As a basic principle, it is recommend that tax administrations assess and appreciate how the enterprise has arrived at the declared customs value (and vice versa ? as the case may be – the customs administration assess and appreciate how the enterprise has arrived at the transfer price) prior to issuing a formal tax or duty assessment.
If the conflict between the enterprise and the relevant fiscal administration cannot be resolved, then the tax administration and the customs administration of the respective country should work in concert and attempt to harmonize valuation determinations.
A recommended method to accomplish harmonization of customs and income tax requirements is for customs administrations to use information contained in transfer pricing studies.
It will help determine whether the price between related parties is acceptable for customs valuation. Indeed, ICC notes that the World Customs Organization (WCO) has already considered the appropriateness of transfer pricing documentation in Commentary 23.1 of the Technical Committee on Customs Valuation (TCCV).
To the extent a customs administration believes it needs additional data that is readily available in the normal course of business to supplement standard transfer pricing study data sets, those data elements should be clearly defined and published.
This approach considers that it is not currently conceivable to try to find solutions outside existing and well-recognized principles, nor is it realistic to seek a total harmonization of customs and tax rules or even to impose one?s view onto another.
Furthermore, the business community believes that creating yet another set of rules will not solve these problems.
ICC therefore recommends a focus on how these principles can be more closely aligned and made acceptable to both government authorities and the private sector.
International Chamber of Commerce, ICC-Ghana is spearheading an educational campaign aimed at collaborating with all affiliated government, ministries and department and agencies to highlight the various principles adopted by international bodies to ensure the implementation of this customs valuation at the country?s borders.
Currently ICC boost of a ready work with intergovernmental organisations such as the Organisation of Economic Co-operation and Development (OECD) and the World Customs Organization (WCO) on this highly complex and contentious area within the global tax and customs world.
The Customs Division of the Ghana Revenue Authority (GRA) has been given the green light to take full responsibility for valuation, classification and risk management functions at the country?s ports which begun on the September 1, 2015, under what was known as a National Single Window.
The Customs Division has already started processing Customs Classification and Valuation Report (CCVR) which is targeted at replacing the destination inspection report also known as the Final Classification and Valuation Report (FCVR).
This will be in conformity with the global best practice in the international trade protocols which seeks to promote trade facilitation among nations for economic growth and prosperity.
ICC sincerely hopes that governments will take on board the recommendations proposed in the WCO Guide as increased coherence between customs and tax rules will not only help reduce legal uncertainty, trade costs and the risk of penalties, but will also lower the risk of double taxation, and enhance cross-border trade and investment. It is in the interest of all concerned that tax and customs examinations result in the same value determination.
Source : ICC Ghana
