The 15-Second Definition
A related-party transaction occurs when the buyer and seller of imported goods have a relationship that falls within U.S. customs rules. This can include companies with common ownership, control, or other qualifying relationships.
Being related does not automatically prevent an importer from using the transaction value method. The importer may still use the price paid or payable for the goods if the applicable customs requirements are satisfied.
Why It Matters
Related-party transactions are common in global supply chains, particularly when a U.S. company purchases goods from a foreign parent, subsidiary, or affiliated manufacturer.
Because the parties are related, CBP may examine the pricing more closely when determining whether the declared transaction value is acceptable.
For companies sourcing from foreign affiliates, this makes the documentation supporting the pricing arrangement particularly important.
How It Works
An importer generally has two ways to establish that its related-party price is acceptable for customs valuation.
The first is to demonstrate that the relationship did not influence the price. This can involve showing that the parties established their prices using ordinary commercial practices.
The second is to compare the declared price with certain test values under the customs valuation rules. A sufficient match with an appropriate test value can help establish that the relationship did not affect the price.
Which approach is appropriate depends on the transaction and the evidence available to the importer.
In Practice
Imagine a U.S. apparel company buys garments from a foreign subsidiary for $8 per unit.
The importer may be able to use the $8 price as its transaction value if it can demonstrate that the price meets the applicable related-party requirements.
For example, the company might show that the subsidiary uses comparable pricing when selling similar merchandise to unrelated customers, or provide other evidence supporting the way the $8 price was established.
If the relationship cannot be adequately addressed under the customs rules, the importer may need to establish customs value using another valuation method.
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