What is a First Sale Declaration?
A First Sale Declaration is a U.S. Customs and Border Protection (CBP) procedure that allows importers to declare the "first sale" in a multi-tiered transaction as the transaction value for customs purposes. This often results in a lower duty assessment, as the "first sale" price is typically lower than subsequent sales prices in the supply chain. The "first sale" refers to the initial sale of goods in a series of transactions that eventually lead to the importation of the goods into the United States.
How Does It Work?
In international trade, goods may pass through several hands before reaching the final U.S. importer. For example, a manufacturer might sell goods to an intermediary, who then sells them to the U.S. importer. With a First Sale Declaration, the importer can use the price paid by the intermediary to the manufacturer as the customs value, rather than the higher price paid by the importer to the intermediary.
Key Requirements for First Sale Declaration
To use the First Sale Declaration, several criteria must be met:
Bona Fide Sale: There must be a genuine sale between the manufacturer and the intermediary.
Arm’s Length Transaction: The sale must be conducted at arm’s length, meaning that both parties are independent and act in their own self-interest.
Goods Clearly Destined for Export: At the time of the first sale, the goods must be clearly intended for export to the United States.
Benefits of First Sale Declaration
The primary benefit of using a First Sale Declaration is the potential reduction in customs duties, which can lead to significant cost savings for importers. By declaring a lower transaction value, the duty paid on the imported goods is reduced, directly impacting the importer’s bottom line.
Compliance and Documentation
Importers using the First Sale Declaration must maintain detailed records to support the declared value, including sales contracts, invoices, and proof that the goods were intended for export to the United States at the time of the first sale. Proper documentation is essential to comply with CBP regulations and to avoid potential penalties or audits.
For personalized assistance in navigating the First Sale Declaration process or any other customs procedures, Concord Solutions Group is here to help. Our team of experts is ready to guide you through every step, ensuring compliance and maximizing your cost savings.