- Indonesia
- Japan
- Korea
- Mainland China
- Malaysia
- Philippines
- Singapore
- Taiwan R.O.C
- Thailand
- Vietnam
Indonesia
- Would retroactive transfer price adjustment affect the customs value declared?
Yes unless the company can prove the adjustment is not related to import price and/or goods.
- Is there any standard process to disclose the customs value adjustment to Customs
- Retroactive upward adjustment in import price
Voluntary disclosure cannot be used for retroactive TPA. Eligible companies can file a voluntary payment for a retroactive upward customs value adjustment. Eligible companies include low risk importers, AEO companies and KITE companies. Note a voluntary payment may invite customs audit. Import VAT and Income Tax Article 22 paid may not be recoverable.
- Retroactive downward adjustment in import price
Not mandatory and refund of customs duty is practically not possible.
- Retroactive upward adjustment in import price
- Lead-time
1-3 months to complete a voluntary payment for upward import price adjustment. The lead time depends on the eligibility assessment, complexity of such adjustments, amount of declarations affected, and customs officials' workload.
- When do you need to make the disclosure
No specific timeframe requirement.
- Financial penalties applicable from Customs for failure to make the disclosure?
Yes, financial penalties apply. The penalty ranges from 100%-1000% of underpaid import duty depending on the % of duty paid compared to duty underpaid.
Japan
- Would retroactive transfer price adjustment affect the customs value declared?
Yes unless the company can prove the adjustment is not related to import price and/or goods.
- Is there any standard process to disclose the customs value adjustment to Customs
- Retroactive upward adjustment in import price
No standard process in place. In practice, companies are required to make voluntary disclosure on retroactive upward adjustment in import price. The disclosure requires preparation of import data for the target period in order to file amended declarations.
- Retroactive downward adjustment in import price
Not mandatory and refund of customs duty is practically very difficult.
- Retroactive upward adjustment in import price
- Lead-time
3 - 12 months to complete an upward import price adjustment. The lead time depends on the complexity of such adjustments, amount of declarations affected, and customs officials' workload.
- When do you need to make the disclosure
A voluntary disclosure is supposed to be made to Japan Customs upon the retroactive upward adjustment of import prices. In practice, it can be made any time before post clearance audit from Customs.
- Financial penalties applicable from Customs for failure to make the disclosure?
Yes, financial penalties will apply in case companies a retroactive upward adjustment in import price is disclosed after receiving the audit notification. The financial penalty equals to 10% of import tax shortfall, or 5% of import tax shortfall if disclosure is made after customs audit notice is received but before commencement of the audit.
Korea
- Would retroactive transfer price adjustment affect the customs value declared?
Yes unless the company can prove the adjustment is not related to import price and/or goods.
- Is there any standard process to disclose the customs value adjustment to Customs
- Retroactive upward adjustment in import price
Standard voluntary disclosure program in place. Companies are required to declare retroactive upward customs value adjustments to Customs.
- Retroactive downward adjustment in import price
Not mandatory and refund of customs duty is practically not possible.
- Retroactive upward adjustment in import price
- Lead-time
1-3 months to complete an upward import price adjustment. The lead time depends on the complexity of such adjustments, amount of declarations affected, and customs officials' workload.
- When do you need to make the disclosure
No specific timeframe and voluntary disclosure can be made any time before a customs investigation. Companies are suggested to make the disclosure ASAP to mitigate under-payment penalty (daily compounding interest) for retrospective upward adjustment.
- Financial penalties applicable from Customs for failure to make the disclosure?
Yes. Financial penalty (10% of underpaid duty and import VAT) and a compound interest will be imposed.
Mainland China
- Would retroactive transfer price adjustment affect the customs value declared?
Yes retroactive upward import price adjustment unless the company can prove the adjustment is not related to import price and/or goods.
Retroactive downward import price adjustment is generally regarded as not influencing the customs value.
- Is there any standard process to disclose the customs value adjustment to Customs
- Retroactive upward adjustment in import price
Companies would not be able to make the retroactive upward import price adjustment without a voluntary disclosure and declaration to China Customs due to Forex control in China. Feasibility of the adjustment is determined by authorities on a case-by-case basis.
- Retroactive downward adjustment in import price
A downward adjustment is not required to be declared to China Customs. Refund of customs duty is practically not possible.
- Retroactive upward adjustment in import price
- Lead-time
At least 6 months to complete an upward price adjustment. The lead time depends on the complexity of such adjustments, amount of declarations affected, and customs officials' workload.
- When do you need to make the disclosure
Prior to making the retroactive upward TPA in import prices.
- Financial penalties applicable from Customs for failure to make the disclosure?
N/A as retroactive upward import price adjustment cannot be made without disclosure to Customs.
Malaysia
- Would retroactive transfer price adjustment affect the customs value declared?
Yes unless the company can prove the adjustment is not related to import price and/or goods.
- Is there any standard process to disclose the customs value adjustment to Customs
- Retroactive upward adjustment in import price
No standard process in place, but companies may voluntarily declare retroactive upward customs value adjustments to Customs.
- Retroactive downward adjustment in import price
Not mandatory to be disclosed to Customs. Refund of customs duty can be explored with Malaysia Customs.
- Retroactive upward adjustment in import price
- Lead-time
1-3 months to complete an upward import price adjustment. The lead time depends on the complexity of such adjustments, amount of declarations affected, and customs officials' workload.
- When do you need to make the disclosure
No specific timeframe requirement by law.
- Financial penalties applicable from Customs for failure to make the disclosure?
Unlikely to attract financial penalties now. Malaysia Customs has growing awareness on retrospective TPA and companies are suggested to voluntarily disclose retrospective TPA to maintain compliance.
Philippines
- Would retroactive transfer price adjustment affect the customs value declared?
Yes unless the company can prove the adjustment is not related to import price and/or goods. Convicing local Customs the TP adjustment does not relate to products will be challenging in practice.
- Is there any standard process to disclose the customs value adjustment to Customs
- Retroactive upward adjustment in import price
While there is no formal process or mechanism in place specifically for TPA, companies are strongly encourage to submit a voluntarily disclosure for any retroactive upward customs value adjustments under the Prior Disclosure Programme (PDP) to pay the additional import taxes (and interest) to Customs.
- Retroactive downward adjustment in import price
Not mandatory to report downward adjustment to Philippine Customs. Refund of customs duty is practically not possible.
- Retroactive upward adjustment in import price
- Lead-time
Official guidelines specify that the process for Customs to review and respond to a disclosure under the Prior Disclosure Programme (PDP) should not take longer than 3 month. However, based on our experience Customs can take much longer and in some cases they do not provide a formal response. Instead, they simply accept the payment of additional taxes (and interest when applicable) without any questions.
- When do you need to make the disclosure
Ideally, 30 days from the accrual of TPA. Otherwise, a 20% annual interest based on the import tax shortfall amount will be collected on top of the additional import taxes.
- Financial penalties applicable from Customs for failure to make the disclosure?
Yes, financial penalties will apply. Fines are equivalent to 125% (for negligence) or 600% (for fraud) of the underpaid import taxes.
Singapore
- Would retroactive transfer price adjustment affect the customs value declared?
Yes unless the company can prove the adjustment is not related to import price and/or goods.
- Is there any standard process to disclose the customs value adjustment to Customs
- Retroactive upward adjustment in import price
Most companies are eligible for administrative concession and not required to disclose TPA.
Companies required to disclose a TPA include automotive vehicles importers and companies that cannot fully claim GST. In practice retroactive TPA for automotive vehicles importers is very complicated in Singapore.
- Retroactive downward adjustment in import price
Same as retroactive upward adjustment in Singapore.
- Retroactive upward adjustment in import price
- Lead-time
1-3 months if a voluntary disclosure is required. The lead time depends on the complexity of such adjustments, amount of declarations affected, and customs officials' workload.
- When do you need to make the disclosure
As soon as adjustment is done. Companies should assess whether they qualify for the administrative concession first before reaching out to Singapore Customs.
- Financial penalties applicable from Customs for failure to make the disclosure?
Yes, financial penalties are rare but possible. The financial penalty per offence is capped at SGD 10k.
Taiwan R.O.C
- Would retroactive transfer price adjustment affect the customs value declared?
Yes unless the company can prove the adjustment is not related to import price and/or goods. The TPA needs to apply through the Taiwan Customs, will adjustment the customs value.
- Is there any standard process to disclose the customs value adjustment to Customs
- Retroactive upward adjustment in import price
Companies are required to make the retroactive adjustment following the standard transfer price adjustment program.
- Retroactive downward adjustment in import price
Companies are required to make the retroactive adjustment following the Customs' transfer price adjustment program.
- Retroactive upward adjustment in import price
- Lead-time
Customs' guidelines specify that the process takes 4 months from the date of Customs receiving the application but may extend for a period 2 months depending on complexity of such adjustments, amount of declarations affected, and customs officials' workload.
- When do you need to make the disclosure
Retroactive TPA application is required within one month by the end of fiscal year. Customs declaration during the year needs to follow the specific transfer pricing adjustment methodology requirement, including for example indicating the potential adjustment during declaration.
- Financial penalties applicable from Customs for failure to make the disclosure?
Unlikely to attract financial penalties, but retroactive import price adjustment not aligned with Customs would not be recognized by tax authorities.
Thailand
- Would retroactive transfer price adjustment affect the customs value declared?
Yes unless the company can prove the adjustment is not related to import price and/or goods.
- Is there any standard process to disclose the customs value adjustment to Customs
- Retroactive upward adjustment in import price
No standard process in place. But declaration of retroactive upward adjustment in import price to Thai Customs is mandatory. This can be done via voluntary disclosure process to be aligned with Thai Customs on a case-by-case basis.
- Retroactive downward adjustment in import price
A downward adjustment is not required to be declared to Thai Customs. Refund of customs duty is practically not possible.
- Retroactive upward adjustment in import price
- Lead-time
3 - 12 months to complete an upward import price adjustment. The lead time depends on the complexity of such adjustments, amount of declarations affected, and customs officials' workload.
- When do you need to make the disclosure
A voluntary disclosure is supposed to be made to Thai Customs upon the retroactive TPA (e.g., receiving debit notes). In practice, it can be made any time before post clearance audit from Customs.
- Financial penalties applicable from Customs for failure to make the disclosure?
Yes, financial penalties of maximum two times of the duty shortfall will apply.
Vietnam
- Would retroactive transfer price adjustment affect the customs value declared?
Yes unless the company can prove the adjustment is not related to import price and/or goods.
- Is there any standard process to disclose the customs value adjustment to Customs
- Retroactive upward adjustment in import price
Retroactive customs value adjustment is generally not allowed by Vietnam Customs in practice.
- Retroactive downward adjustment in import price
Retroactive customs value adjustment is generally not allowed by Vietnam Customs in practice.
- Retroactive upward adjustment in import price
- Lead-time
N/A
- When do you need to make the disclosure
N/A
- Financial penalties applicable from Customs for failure to make the disclosure?
Yes, financial penalties will apply if the retroactive TPA affects customs values. Penalty amounts to 20% to 100% of the import tax shortfall on a case-by-case basis.
