First Sale for Export

Transcription

1 First Sale for Export Recent Development and Updates in US Customs William Marshall March 2018

2 Introduction to First Sale for Export

3 Scenario I: Non-First Sale U.S. Inbound Transaction Flow Diagram Example Vendor Invoice Vendor Factory Invoice Duty payable on Vendor Invoice value Importer USA Factory(ies) Goods Delivery/Drop Shipment Vendor sells to US importer. Goods are produced for export by one of the vendors related or unrelated factories which may not be readily apparent to the importer. Vendor price to US importer includes all cost including production, sales and marketing, foreign inland freight and a profit. US customs duties assessed on vendor sale price to US importer.

4 Scenario II: First Sale for Export U.S. Inbound Transaction Flow Diagram Example Duty payable on Factory(ies) (Production) First Sale Invoice $100 Vendor (Sales and Marketing) Second Sale Invoice $120 Invoice value of $100 Importer USA Establish First Sale Transaction (Factory to Vendor) Goods Delivery/Drop Shipment US customs duties assessed on First Sale Price to vendor ($100 vs $120) Compared to non-first sale scenario, importer in the US pays less duty.

5 FSFE Key Concepts For FSFE to be viable, certain conditions must be met: First-Sale for Export Requirements CBP Requirements CBP has accepted the following as evidence: Bona Fide Sale Clearly Destined for Export Arm s Length Transaction Circumstances of the transaction indicate that the parties are functioning as a buyer and seller. The goods must be clearly destined for export to the U.S. at the time of the first sale. The first sale (between the factory / manufacturer and the vendor / middleman) must be an arm s length transaction Intent of parties involved Actual payment of goods Evidence of ownership of and control over the goods Transfer of title and risk of loss of the middleman The goods are specifically designed or labeled to meet U.S. specifications or standards The goods were shipped directly form the manufacturer to the U.S. The goods are manufactured to the specifications of the importer Circumstances of Sale Test Circumstances of transaction indicates the relationship between the buyer and seller did not influence the price (i.e., evidence of negotiation on such as s, etc.) Profitability Test Upon request by CBP (US Customs and Border Protection), the importer must be able to provide all relevant documentation to support the first-sale of export requirements.

6 6 William Marshall & Co. is an independent law firm registered with the Law Society of Hong Kong, specialize in international trade, customs, compliance and supply chain matters in Hong Kong, China, Thailand, and around the Asia Pacific. Please visit our website at and connect with us on LinkedIn or by signing-up for our newsletters and client alerts related to trade in Asia. This communication contains general information only, and is not intended to be rendering processional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional advisor. William Marshall shall be responsible for any whatsoever sustained by any person who relies on this For information, contact William Marshall at william@williammarshall.com