Transfer pricing is a major concern for business entities dealing with related companies.
The Bureau of Customs and Bureau of Internal Revenue are very keen in reviewing transfer prices between related parties.
Both income tax and customs rules seek the same result, ensuring that prices between related parties are “at arm’s length,” set as if the parties were unrelated. But the rules are different. Income tax Transfer Pricing rules are essentially based on guidelines established by the Organization for Economic Co-operation and Development, OECD as adopted by local rules, while Customs valuation principles are established in the WTO Valuation Agreement as adopted in the Customs Modernization and Tariff Act (CMTA).
A high transfer price generally results in a high duty, but low-income tax; a low transfer price results in lower duties and higher income taxes.
Thus, corporate taxpayers who source their imported goods from their related foreign suppliers should ensure that they do not only comply with Transfer Pricing (TP) rules but also with the rules pertaining to valuation of imported goods for customs purposes.
At the end of this course, you should be able to:
ATTY. MARK ANTHONY P. TAMAYO
Partner, MTF Counsel
Mark is a CPA-Lawyer and a well-known Tax/Global Trade & Customs professional. He was a Tax Partner at SGV & Co., a member firm of Ernst & Young Global Limited, where he served as the Indirect Tax Country Leader as well as the head of the Global Trade & Customs practice. Mark has over 27 years of experience in providing expert counsel to various local and multinational companies engaged in diverse business activities from various industry sectors. His expertise includes, among others, customs and international trade advisory, planning, and controversy; tax advisory and controversy; cross border tax planning; corporate organization, reorganization, and restructuring; and investment incentives.