CBP Says No Need to Report Refunds of Indian Taxes Within Price Paid

Taxes paid to a foreign government that are later refunded upon export to the U.S. need not be included within the transaction value report upon import, CBP said in a June 4 ruling. Richard Furman, a lawyer who represents Robert Graham Designs (RGD), requested a CBP ruling on whether such taxes and levies “are deductible from the transaction value of apparel imported from India,” the agency said. The company is an importer, designer and wholesaler of apparel.

The foreign vendor in India is required to collect Indian taxes when RGD purchases the goods, but those expenses can be refunded by the country upon export from India, the company told CBP. The company said it believes the refunded taxes shouldn't be part of the transaction value it reports to CBP upon import. CBP said past court decisions and customs rulings have found that internal foreign taxes should not be included in the transaction value.

Here, “the importer paid internal Indian taxes/levies for the purchase of the apparel” and the taxes “were separately identified in the shipping bill for export submitted to us,” CBP said. Other than a notice on the documentation that the importer intends to claim a refund, there's not proof that the refund occurred, CBP said. But, “assuming that the Indian taxes/levies were refunded to the importer, they are not included as part of the price actually paid or payable for the merchandise,” it said.