Russian Ministry of Finance issues new clarifications on inclusion of dividends in customs value

Letter No. 27-01-21/11349 of the Russian Ministry of Finance dated February 10, 2025 was recently published, which is another attempt to clarify the procedure for including dividends in the customs value of goods.

The Russian Ministry of Finance, like the Russian Supreme Court before it, points out that in a situation where goods are imported as part of transactions between members of the same group of companies, and the income (revenue) of a Russian buyer is primarily derived from the sale of imported goods, the decision to pay dividends is solely at the discretion of the foreign group of companies, which creates a risk of manipulation of the customs value.

If the customs authorities find that the payments described as dividends are such only in form, but in essence ensure that the seller, which is a member of the same group of companies with members of the company, receives part of the income (revenue) due to it from the sale of imported goods, such payments will be included in the customs value of the goods pursuant to Article 40(1)(3) of the EAEU Customs Code.

In this new letter, the Russian Ministry of Finance describes the circumstances that the declarant must confirm for the declared customs value of the imported goods to be recognized as valid. The Russian Ministry of Finance states that the declarant is required to confirm that the price actually paid or payable for the goods was formed in the ordinary course of trade—i.e., the goods were purchased under competitive market conditions. Simply put, the importer must show that any person can purchase the goods at the same price and under the same conditions as the importer that pays dividends, but without a shareholder relationship and without the payment of dividends. In practice, this can be quite difficult in a situation where the sale of goods is arranged through the importer’s own network of local subsidiary distributors.

What is interesting about the new clarifications is that in the letter the Russian Ministry of Finance takes the position that dividends should also be included in the customs value of goods:

• if the declarant fails to provide information on the exporter’s pricing methodology; or
• if there is no evidence of the market level of the price, including due to a limited number of buyers of such goods.

In practice, when the customs authorities check for the inclusion of dividends, they often (but not always) disregard the declarant’s arguments that the price of the imported goods corresponds to the market price level.

Therefore, the new clarifications of the Russian Ministry of Finance give hope that in the future, when conducting inspections, the customs authorities will take into account the fact that the price of the imported goods corresponds to the market level and, consequently, there is no manipulation of the price, no understatement of the customs value and no reasons for revising it.

Furthermore, it is the declarant that bears the burden of proving the market level of the price, the method of its formation, taking into account the usual market factors, the submission of transfer pricing documentation, and the calculation of such price elements as  the production cost, the markup that covers expenses and provides a market markup for a relevant product, etc. In this regard, it will be crucial to prepare a detailed response to the very first request from the customs authorities.

If you have any questions or you would like to discuss something, please send an email to Julia Talagaeva.