It has been a practice for multinational companies to set transfer price in its SAP or other enterprise management systems, from which an invoice with the same price can be derived. Therefore, the SAP price is normally consistent with the price of the commercial invoice for a given related import transaction
In reality, however, the invoice price for the imported goods may be not consistent with the SAP price due to reasons of systematic problems or manual mistakes. If this abnormality occurs, the importer may out of instinct admit to the Customs the declared invoice price was a wrongful one, and submit a new set of invoices bearing a right price consistent with the SAP price to substantiate the incorrectness of previous invoice price. Such improper responses to a customs inquiry will put the importer into the trouble of unnecessary administrative or even criminal liabilities for under-declaration of import price.
Under PRC Customs laws and regulations, the importer has the obligation to declare truthfully the import price, and as long as the importer declares the actual transactional price as agreed by the parties to the import transaction, it will be treated as a truthful declaration of the import price. It is a truthful declaration of the import price if the declared price is the price in the commercial invoice issued by the exporter of the same transaction, even though it is inconsistent with the price in SAP system. Such truthful declaration of the commercial invoice will be most often immune from the charge of administrative violation or smuggling. In other words, the importer has no obligation to declare the SAP price, nor any other price than the commercial invoice price.
If it is a truthful declaration for the price, the Customs does not accept such declared price in ascertaining the dutiable value, it only has the power to revaluate the dutiable price. However, such price revaluation can only be triggered by an official notice of price challenge and conducted according to the regulated procedure and supported by genuine and quantified data proved by the Customs. If the revaluation leads to a higher dutiable price, the importer only needs to make up for the additional import duties, from which no administrative or criminal liabilities may ensue, and the importer does not need to make extra payment to the exporter as the invoice value remains