Important Document Alerts Inappropriate Practices in Import Valuation

In October 2015 the International Chamber of Commerce (ICC) issued a declaration which examines certain practices carried out by some customs administrations of developing countries that are in violation of the commitments undertaken by them in import valuation matters.

The declaration refers to the Customs Valuation Agreement of 1979, replicated in 1994 when the international agreements which allowed for the creation of the WTO (Marrakesh Agreement, passed in Argentina by Law N° 24.425) were approved.

The document issued by the ICC refers to tax authorities that, through databases, set “reference pricing”, “indicative pricing” or “criterion pricing”.

According to this document, the customs administrations allege the use of “criterion pricing” as a tool for risk management; i.e., for the detection of operations in which there is reason to doubt the truth or accuracy of the declared price of the imported goods. However, the business community finds and reports a different reality.

The practices reported by the ICC include the case of countries that publish “criterion pricing” to be compared with the price declared by the importers. Thus, when the inferior prices are declared, they are automatically challenged by the customs administration, resulting in delays in the clearance of the goods, higher trade costs and an obligation for the importer to go through burdensome and expensive procedures for the defense of the declared value.

The document issued by the ICC contains a description of cases and situations in which a price that is lower than the price that prevails in the market for identical goods is influenced for legitimate business reasons that explain and give an economic sense to said price. The ICC emphasizes that the Customs Valuation Agreement stands for a positive basis of the price actually paid or payable for the goods. Hence, those prices should be accepted by customs administrations or else this would lead to the return to the “normal value” as conceived by the Brussels Definition of Value, discarded in 1979.

Stating that the misuse of databases practices is arbitrary and unreliable, the ICC expresses a deep concern and promotes a more accurate application of the rules agreed upon by the WTO.

This important document should be taken into consideration by the administrative and judicial authorities of Argentina.