What is First Sale and when do I report it?

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Issue 71, November 18, 2008

First sale reporting is currently in effect and DHL would like to remind our clients that if you are valuing your products using first sale you must inform Customs of how you arrived at your value. However, it is important that all importers be aware of what First Sale is, and whether or not their shipments are being entered with benefit of first sale pricing. Many of our clients still have questions regarding First Sale. We will attempt to answer some of the questions in this Spotlight.

IS MY TRANSACTION A FIRST SALE TRANSACTOIN?
If the only two people involved in the transaction are the seller and the buyer First Sale is not being used. In order for there to be an entry using First Sale values, there must be a middleman, usually, but not always, a buying agent.

WHAT IS FIRST SALE VALUE?
As a general rule, the First Sale value is the price that was paid to the exporter by the middleman (i.e. buying agent), not the price paid to the middleman.

IS IT REQUIRED THAT I USE FIRST SALE VALUE IN A MIDDLEMAN TRANSACTION?
Customs assumes that the transaction value is the value that was paid by the importer unless the importer can prove otherwise. First Sale does not mean that the importer is REQUIRED to demonstrate a middleman price, only that it is acceptable to do so if you can prove it.

That means that if you don’t know if you need to declare First Sale valuation you probably do not, since additional paperwork would be required.

For more information on first sale, and how to claim it, go to

http://www.cbp.gov/linkhandler/cgov/trade/legal/informed_compliance_pubs/icp010r2.ctt/icp010r2.pdf

The entire booklet is relevant, but pay particular attention to sections 15 to 23 and the section entitled “Determining Transaction Value in Multi-Tiered Transactions”.

If you require additional information or clarification, please contact your local DHL Global Forwarding representative.

Sincerely,

Karl F. Krueger
Regulatory Compliance Consultant
Licensed Customs Broker
NCBFAA Certified Customs Specialist