INTERNATIONAL TRANSACTIONS

Valuations can be required with international transactions that involve transfer pricing or where businesses must value goods transported into the U.S. for customs duties.

Transfer Pricing

IRC Section 482 contains complex rules designed to prevent related companies from avoiding income taxes by shifting income or expenses between themselves. Transfers of tangible and intangible property, as well as loans and services, are all potentially subject to Section 482. The regulations provide specific pricing methods from which the taxpayer must select. The Section 482 rules allow the IRS to reapportion income and/or expenses among related taxpayers to reflect the amount of tax that would have been paid if the entities had been unrelated.

Customs Valuations

Treaties standardize valuation methods among the participating countries to enable the determination of the value of imported goods for the purpose of imposing import duties. The General Agreement on Tariffs and Trade (GATT) contains some of the treaty provisions that govern customs valuations. Countries must select from defined valuation methods, to which they then each apply their country specific ad valorem import duty.