Related parties are businesses or individuals with a close ownership, control, family, management, or financial relationship that may influence a transaction. In customs and international trade, related-party transactions are important because customs authorities may review whether the declared import value reflects an arm’s-length price. Related parties can include parent companies, subsidiaries, affiliates, shareholders, directors, officers, partners, or family members involved in buying, selling, importing, or exporting goods. In the U.S., CBP scrutinizes related party transactions to ensure the declared transaction value reflects an arm’s-length price rather than an artificially low intercompany transfer price.
- Parent company and subsidiary
- Affiliated companies with common ownership
- Companies with exclusive distributor relationships
- Employee and employer
CBP’s Test for Related Party Transactions
CBP will accept the transaction value in a related party transaction if it can be shown the price was not influenced by the relationship, either by comparing to unrelated party transaction values or by meeting one of CBP’s test values.
Related terms: Customs Valuation, Commercial Invoice, Non-Reimbursement Statements.
