Customs Valuation and Transfer Pricing: Legal Rules, Practices - A China Case Study - and Proposals to Address the Significant Concern for Cost-Efficient Compliance and Trade Facilitation

Abstract

The intertwined relationship between Customs valuation and transfer pricing has caused significant concern of costs for international trade compliance and efficiency. There are sets of international and national rules for the two related matters of similar purpose, and the gap between the rules and administrations is obvious and room to improve significant. The China case study calls the public and private sectors to work together for a better business climate for compliance and efficiency in this regard. Especially, we propose that the public sector to improve: (1) Awareness and willingness of rule-based fair and efficient administration; (2) Capacity Building; (3) International Model Legislation; (4) Transparency and Consistency with Detailed Implementing Rules and Reasoning-based Ruling Program; (5) Data Sharing and Risk Management; (6) Inter-agency Cooperation; (7) Functional Reorganization; (8) Standards, Methods, Documentation Compliance Requirements and Liabilities for Encouraging Compliance; (9) Analysis from the Legal and Reasoning Perspectives; (10) Reconciliation and Refund Mechanism.