Discussions held at the June 2025 sessions of the WCO Council, the governing body of the organization, shed light on the need to continue expanding the work on the use of transfer pricing documentation to assist in verifying declared prices or determining Customs value. Cooperation between Customs and tax authorities was deemed critical by participants to achieve convergence in approaches leading to appropriate pricing, and tax collections, of both income tax and Customs duties. Such a convergence would also provide more certainty for a business that the approach it takes in establishing prices will satisfy both tax and Customs administrations.

A panel organized during the 2025 Council sessions brought together representatives of the French Customs Administration, the Organisation for Economic Co-operation and Development (OECD) and the International Chamber of Commerce (ICC) around the topic of Transfer Pricing and Customs valuation.

Transfer pricing at a glance

Transfer pricing involves the pricing of goods, services, and intangibles exchanged between related entities within a multinational corporation, which in turn determines how much tax it pays and in which country.

Tax authorities worldwide apply the arm's length principle, which requires that related-party transactions be priced as if conducted between independent parties. This principle is embedded in more than 3,600 bilateral tax treaties based on the OECD and UN Model Tax Conventions.

The OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations' on the application of the arm's length principle provide detailed, globally recognized standards on applying this principle, covering areas such as transaction delineation, pricing methods, comparability analysis, documentation, and dispute resolution. These guidelines were most recently updated in 2022, while an annex was developed in 2024 addressing new developments under the global tax reform efforts known as the Two-Pillars Solution to Address the Tax Challenges of the Digitalisation of the Economy.

Transfer pricing data can be used in Customs valuation

Customs valuation, governed by the WTO Customs Valuation Agreement (Agreement), prioritizes the transaction value of goods at importation to determine duties.

The OECD representative explained that, while Customs valuation methods are not considered transfer pricing methods, there is value in mutual information sharing between Customs and tax authorities. Transfer pricing data may help Customs understand the commercial context of transactions, while Customs often has contemporaneous data that may benefit tax authorities.

As a matter of fact, four Case Studies adopted by the Technical Committee on Customs Valuation (TCCV) demonstrate how transfer pricing data can be used legally and practically in Customs valuation. The WCO also published a Guide to Customs Valuation and Transfer Pricing which explores the linkages and the possibilities for Customs to use transfer pricing information in examining related party transactions.

The French Customs representative stressed that transfer pricing documentation can support Customs valuation if detailed transaction-level data specific to imports is provided. Otherwise, Customs may reject declared values and determine the Customs value using alternative valuation methods in the Agreement, which can result in disputes and increased costs. She further noted that a key challenge lies in the timing, where the transfer prices are often not finalized at the moment of importation, as they are typically adjusted at the end of the fiscal year. As a result, operators may need to declare provisional values and later revise them, an approach that requires a clearly documented and transparent link between fiscal data and each imported good.

The representative emphasized the value of the WCO Guide on Customs Valuation and Transfer Pricing, along with four case studies adopted by the TCCV. She stated that these tools serve as practical resources for aligning tax and Customs perspectives, offering a legal and operational framework that helps businesses justify transfer pricing in Customs declarations and avoid costly disputes.

Cooperation mechanisms between Customs and tax authorities need to be strengthened

Although both Customs and tax authorities seek to assess real economic values, their differing methods and timing requirements often create challenges. Panelists agreed that improving cooperation between Customs and tax administrations is essential but remains a work in progress.

The OECD expert highlighted that legal frameworks vary across countries. Some jurisdictions allow Customs to participate in Advance Pricing Agreements (APAs), enabling taxpayers to address both tax and Customs valuation concerns simultaneously. However, many countries lack this legal basis, signaling the need for reform and capacity building. Early-stage collaboration, before audits or disputes arise, was emphasized as critical to avoiding contradictory outcomes and reducing compliance burdens. Joint training for Customs and tax officials is also necessary to foster shared understanding and technical competence.

Challenges faced by businesses

The ICC representative shared the private sector perspective, highlighting several persistent challenges:

• Misconceptions: Transfer pricing is often viewed skeptically by authorities despite widespread adherence to international standards by multinational enterprises (MNEs).
• Timing mismatch: Tax transfer pricing studies are typically prepared annually, whereas Customs requires immediate transactional data at import clearance.
• Post-import adjustments: Year-end transfer pricing adjustments complicate Customs valuation, especially in jurisdictions without clear legal frameworks for retroactive changes.
• Capacity gaps: Customs officials often lack training on transfer pricing concepts, limiting their ability to properly assess related-party imports.

Way ahead: enhancing dialogue, developing practical tools, and establishing collaborative frameworks

As global trade becomes increasingly complex and interconnected, the importance of aligning transfer pricing and Customs valuation cannot be overstated. Without effective cooperation, inconsistencies between tax and Customs regimes risk undermining revenue collection, increasing compliance costs for businesses, and creating opportunities for abuse.

This panel discussion reaffirmed the shared commitment of Customs, tax authorities, and the private sector to close the "gap" through enhanced dialogue, practical tools, and collaborative frameworks. The path forward involves bridging regulatory silos, promoting transparency, and fostering a culture of cooperation - ensuring a fair, efficient, and predictable environment for all trade participants.

WCO Members Customs administrations are encouraged to submit questions related to transfer pricing to the Technical Committee on Customs Valuation (TCCV) for examination, which will enable the WCO to continue developing practical guidance in this matter.

The panel discussion was moderated by Ms. Gael Grooby, Acting Director of Tariff and Trade Affairs at the WCO Secretariat at the time, with the following participants:

• Ms. Marion Gillet, French Customs Administration
• Ms. Gabriela Capristano Cardoso, Tax Policy Advisor, OECD
• Mr. Arnaud Fendler, partner at DS Avocats