What Are Related Parties in Trade and Customs?
Related parties are entities or individuals that have a special relationship that may influence the terms of a transaction—such as price, payment terms, or decision-making. In international trade, U.S. Customs and Border Protection (CBP) closely examines transactions between parties to ensure declared values reflect fair market conditions.
Common relationships include parent companies, subsidiaries, joint ventures, business partners, and family members involved in business transactions.
Why This Status Matters
Transactions between related parties are subject to additional scrutiny under customs valuation rules, especially when determining transaction value for duty purposes. CBP wants to ensure the price paid for imported goods isn’t artificially low or manipulated to reduce duty liability.
Examples of Related Parties
- A U.S. importer purchasing from its foreign subsidiary
- A parent company shipping parts to its U.S. branch
- Two companies where one owns 5% or more of the other
- Family-run businesses where owners are related by blood or marriage
Customs Compliance Requirements
- Related parties must disclose their relationship on the customs entry
- Importers must prove that the transaction value is acceptable, often using one of the alternative valuation methods outlined by CBP (e.g., identical goods, deductive value, computed value)
- Documentation and transfer pricing studies may be required to justify the declared value
