Should your company employ a "middleman" structure to import goods?
Many multinational corporations have established "middleman" type structures for the efficient flow of their goods through the import process. Many of these companies, however, are largely unaware of strategies that will allow them to utilize their "middleman" structures to simultaneously reduce customs duties. Consequently, they often wind up with less than optimal tiered sales arrangements and higher customs duties.
Opportunity: Reduce customs duties through a first sale Valuation
First sale is a US and EU customs approved valuation method that may be employed in multi-tiered distribution systems (e.g., foreign manufacturer, foreign middleman, and importer), whereby duties are assessed upon the "manufacturer-to-middleman" (first sale) transaction price rather than the traditionally higher "middleman-to-importer" transaction price. In essence, under a customs approved first sale transaction, customs permits the exclusion of the middleman’s costs and mark-up from the customs valuation for the imported merchandise, which reduces duty costs.
PricewaterhouseCoopers can assess the feasibility of implementing a first sale valuation strategy for your company by analyzing various functions within the company’s existing supply chain. When applicable, we can help you implement a first sale strategy, including obtaining the necessary customs approvals and/or rulings for your company. The potential US and/or EU customs duty savings may be considerable, if the duty rates on the imported goods are high and/or the middleman’s mark-up is significant.
