What Is The First Rule Of Selling?
The “First Sale” rule is a collaborative and proper legal process available to U.S. textile and apparel (and other) importers and global exporters to substantially reduce duties and taxes.
Incorporating the First Sale rule (middleman pricing) into an import strategy is based on established law and is a sound business technique. But as with any complex business practice, the user must be able to legally substantiate that it is entitled to reap its benefits.
The importer must be able to prove the bona fides of the transaction upon which first sale is asserted. Purchase orders, invoices, payments, and any many other elements of customs valuation must comport with the first sale rules.
First Sale valuation requires a great amount of trust and transparency. It works best in cases where the importer and the vendor plan on a long-term relationship and consider each other trusted business partners.
What is the first sale rule?
The “First Sale” rule is a collaborative and proper legal process available to U.S. textile and apparel (and other) importers and global exporters to substantially reduce duties and taxes.
Simply stated, the First Sale rule can be applied when there are two or more sales that give rise to an importation of merchandise. As long as all the rules substantiating first sale are met and documentation is established, the basis for dutiable value can be the first sale between the factory and the middleman/vendor, …
First Sale valuation requires a great amount of trust and transparency. It works best in cases where the importer and the vendor plan on a long-term relationship and consider each other trusted business partners.
Three factors must be present to establish the first sale as the basis for import valuation. First, the transaction upon which the value is based must be a bona fide sale for export; second, the goods must be destined for the United States; and third, the transaction must be at arm’s length, meaning the parties must behave …
What’s remarkable about using first sale import pricing is that it benefits every tier of a multi-tiered transaction. Factories and vendors do not have to lower their prices — or their margins — in order to attract U.S. buyers, and U.S. importers are able to reduce the landed cost of their goods.
First Sale is even allowed when all the parties to the transaction are related (have common ownership, share officers, etc.) as long as the rules and documentation requirements are met. Substantiating the right to First Sale. Incorporating the First Sale rule (middleman pricing) into an import strategy is based on established law …