Customs attorney, how should I apply for an advance ruling on customs valuation?

Hello. This is a customs attorney at Daeryun Law LLC.

An advance ruling on customs valuation is a system that allows a person, where there is doubt regarding the determination of the dutiable value of imported goods, to request a review in advance from the Commissioner of the Korea Customs Service (the Director of the Customs Valuation and Classification Institute) before filing.

In particular, where the supplier is a related party, the transaction price may differ from the arm's length price, so the Advance Customs Valuation Arrangement (ACVA) procedure, which confirms this in advance, is used.

Unlike an ordinary advance ruling, the documents to be submitted are more detailed, and you must systematically prepare the trading parties' organization, finances, contracts, and the basis for calculating prices, among others.

The main documents to be submitted when applying for an Advance Customs Valuation Arrangement are as follows.

1. Explanatory materials on the trading parties' business history, business activities, organization, and investment relationships

2. Financial statements for the most recent three years, and a report on the calculation of the arm's length price

3. The contract concerning the import transaction of goods and ancillary documents

4. Materials specifically explaining the method of calculating the price of the imported goods

5. Documents related to the National Tax Service's APA approval (if applicable)

6. Where there is a transfer pricing report prepared by an accounting firm, that report (including the basis-of-calculation materials and analytical materials on assets, and on factors affecting trade prices)

7. Materials confirming that the related-party relationship did not affect the transaction price

8. Sales by imported item for the most recent three years, and the cost of sales

9. Other documents necessary to confirm the method of determining the dutiable value

The result of the review is provided in the form of a reply concerning the determination of the dutiable value, and because the procedure is complex and the documents to be submitted are voluminous, it is safe to establish a strategy together with a customs attorney from the early stages.

Through this, you can systematically prepare the documents to be submitted, prevent unnecessary misunderstandings or disputes during the review, and minimize risks in future customs declarations.