We are a UK manufacturer that is considering opening a USA subsidiary.
When sending inventory from the UK to our US subsidiary do we avoid some or all of the import duty?
Hi Steve, from my experience with my previous company we had to pay import duty even though it was a subsidiary of ours.
You can get up to date information from UKTI in USA who also posted already on this website two articles which are relevant,
You will find their contact details in these articles.
Information on the Customs requirements for exporting is given in HMRC Public Notice 275. All notices can be found on our website www.hmrc.gov.uk under Quick Links > Library > Official Statistics – Publications – Notices, Info Sheets & Other Reference Materials > Import, Export & International Trade. The Public Notices are in numerical order.
I would also suggest that you contact the American Customs Authorities to ascertain if there are any import restrictions on such items.
HM Revenue & Customs
Customs International Trade & Excise
Your question concerns the topic of transfer pricing and customs valuation.
Firstly you have to find the correct tariff code for each of your products. This will tell you the import duty rate applicable for each product.
However import duty is a percentage based on the value of the items being imported plus and minus various other costs / discounts / commissions etc.
Whilst customs valuation is quite complex the basic idea is that the price stated should be the market value of the item as if it were being sold to a third party. So you are not allowed to export the items between related companies at a lower price.
The above is the basic idea there are a lot of elements you can work on to get a legally acceptable price in order to correctly predict the amount of import duty you will pay.
If you need any further information my contact details are below.
(T) 0784 1133027