global edge: kpmg s trade & customs services · through kpmg’s international network of...

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Global edge: KPMG’s Trade & Customs Services

Fortunately, living with change does not mean abandoning control. KPMG LLP’s (KPMG) Trade & Customs (T&C) Services practice helps multinational companies achieve a global edge by helping them implement import and export operations that keep costs down, maintain strategic and competitive advantages, and help ensure compliance with local regulations associated with import-export operations.

Learn how our T&C Services professionals can help your organization realize the benefits of:

— A global trade strategy that takes advantage of import tax benefits and aligns to overall business goals

— A compliance infrastructure that meets increasingly complex global trade requirements, including local laws and customs regulations

— Standardized, automated global trade processes that reduce trade costs and move goods faster, cheaper, and with less risk.

Who we areKPMG’s T&C Services professionals have extensive experience working with U.S. companies and their subsidiaries and interacting with global customs officials on various trade programs.

Our dedicated team includes:

— Former U.S. Customs and Border Protection (CBP) import specialists and field auditors

— Former Bureau of Industry and Security (BIS) personnel

— Customs brokers

— Professionals with advanced degrees in business and economics

— Experienced technology, transportation, and logistics professionals.

The T&C Services practice has a presence in more than 60 countries through KPMG’s international network of member firms.

If your company buys or sells products in multiple countries, you know that establishing and maintaining efficient cross-border operations poses a complex challenge. The dynamic global environment—with shifting regulations and trade policy as well as variable economic, market, and competitive forces—compels global companies to continually adapt to changing rules. This persistent change impacts speed to market and competitive advantage while introducing new risks and inefficiencies.

© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. NDPPS 593485

What we doLooking to add value to your global operations? That is where KPMG’s T&C Services practice comes in.

We help global companies manage import and export costs and compliance obligations in the United States and globally. How? By providing the necessary leadership, vision, and practical guidance to identify and remedy compliance gaps, anticipate the impact of regulatory changes, make processes more efficient, and achieve cost savings.

Our four core service areas—Global Trade Transformation, Import Cost Reduction, Trade Risk Mitigation, and Trade Automation Support—are described in detail in the following pages.

— Global Governance Design

— Best Practice Analysis

— Business case development

— RASCI model development and implementation

— Centers of excellence

— Managed services

— Import and export compliance reviews compliance standards

— DDTC consent agreement obligations

— Customs audit support

— C-TPAT

— ISA

— First Sale for Export

— Valuation Unbundling

— Classification Reengineering

— Free Trade Agreements

— Foreign Trade Zones

— Duty Drawback

— Self-filing

— Protest and Duty Refund Programs

— Global trade automation needs assessment

— Return on investment (ROI) calculations

— Trade analytics

— Trade solution selection

— Design, deployment support, and testing

Global Trade Transformation

Trade Risk Mitigation

Import Cost Reduction

Trade Automation Support

3Global edge: KPMG’s Trade & Customs Services


Our services

Global Trade Transformation

Global companies are witnessing an extraordinary pace of change to many aspects of their business, including global trade operations. To meet the evolving challenges of import and export compliance, companies need a multiyear trade strategy that addresses disruption and carefully aligns with broader commercial goals.

T&C’s trade transformation and technology services help companies develop a more effective business vehicle for their global trade strategy.

We help companies in the following areas:

— Determine efficient trade organizational and governance structure given specific footprints, resources, and business goals

— Analyze and benchmark against industry leading practices for trade

— Develop efficient business case models and return on investment (ROI) for transformation

— Develop and implement responsibility assignment matrix (RASCI) model for trade-related business processes

— Establish centers of excellence and shared services

— Manage services for trade operation areas such as classification, free trade agreements, postentry reviews, daily foreign trade zone (FTZ) management, and drawback.

The backgroundFollowing a spin-off, a multibillion-dollar healthcare company sought to build a global trade structure from the ground up.

The projectT&C Services professionals conducted detailed analysis of requirements, not just at a global level, but also regionally and locally in over 50 countries.

Next, they applied KPMG’s Target Operating Model (TOM) methodology, which the firm developed to assist companies in designing the trade function. The goal of the TOM methodology is to answer four key questions: What should be done? Who should do it? Where should it be done? How should it be done?

After answering these key questions, we helped the client centralize key functions; establish Centers of Excellence (COEs) around global classification, country of origin, and valuation; and introduce advanced technologies to support global trade compliance processes.

The resultsThe company established a lean, effective global trade structure that helps it maintain compliance while reducing compliance costs. The new structure:

— Establishes specific responsibility for monitoring activities around compliance and savings opportunities

— Appropriately allocates tasks between a global COE and local country resources, avoiding duplication of efforts

— Leverages technology to centralize and harmonize information, freeing up people to deal with more strategic tasks, including addressing specific country requirements.

Healthcare giant builds lean trade structure


Import- and export-related expenses are among the most significant costs for multinationals. But from decreasing duties and fees to increasing operational efficiency, there are a number of strategies that can reduce trade costs and bring dollar-to-dollar savings.

T&C Services professionals help companies identify, implement, and manage cost-saving opportunities related to global trade, including:

— Implement First Sale for Export (FSFE) import duty savings opportunities

— Product valuation unbundling assessment for compliant reduction of import duty basis

— Product import classification reengineering and analysis

— Free trade agreement analysis and process implementation

— FTZ analysis and implementation for reduction of import duties, fees, and increased cash flow

— Duty drawback refund requests for duty paid exported goods (same condition and manufacturing)

— Support self-filing initiatives for reduction of customs brokerage fees

— Protest and duty refund submissions with CBP

The backgroundA nationwide discount retailer and top importer into the United States sought to decrease duties by using the FSE method of appraisement. However, it was unable to meet first-sale requirements and implement required policies and procedures.

The projectT&C Services professionals helped the importer implement KPMG’s proprietary LINK 360 tool for first sale, which standardizes and facilitates information requests and communication with foreign vendors. In addition, we helped onboard each of the client’s foreign vendors to LINK 360, even inviting each vendor to KPMG’s First Sale for Export seminars, designed to educate foreign vendors on first sale and customs valuation requirements.

The team also conducted in-depth analysis of the client’s exports, including gathering relevant documentation, reviewing transactions, determining and documenting whether first-sale requirements were met, and conducting an arm’s-length analysis for related-party transactions.

The resultsThe importer established a robust, compliant FSFE program and realized substantial savings.

Top importer saves on duties with robust first sale program

Import Cost Reduction



The backgroundA major footwear and apparel manufacturer sought assistance identifying and implementing savings opportunities related to its trade operations. The company imports a significant volume of footwear and apparel annually into the United States for distribution to customers in North America. Under its existing import structure, the company incurred duties and transactional fees for each customs entry filed in the United States. In this challenging economic environment, the company determined that its current import structure was too costly.

The projectT&C Services professionals helped the company analyze potential savings opportunities and determined the company could gain significant savings with the use of an FTZ. KPMG helped the company with a business case and internal budget approval process. KPMG assisted in developing an application to the FTZ board, local FTZ grantee, and customs port for its U.S. distribution facility to participate in the FTZ program and obtained approvals for FTZ operations from all parties involved.

The benefitThrough the FTZ program, the company realized transactional savings in the area of reduced merchandise processing fees by filing just one customs entry per week, rather than filing entries on a per-shipment basis. In addition to transactional savings, the company eliminated payment of customs duties on all merchandise exported from the FTZ. Finally, the company benefited from enhanced cash flow from the deferral of duty payments for merchandise destined to U.S. customers. As a result of the company’s use of the FTZ program, the company has substantially reduced importation costs as well as streamlined its supply chain on inbound products.

Major footwear and apparel manufacturer saves millions with FTZ


The backgroundCBP sought to verify, via a Quick Response Audit, whether a major healthcare equipment company’s related-party import transactions were acceptable from a customs perspective. The company’s transfer prices were determined pursuant to arm’s-length tax laws. After several discussions and document exchanges with the company, CBP continued to challenge whether the transfer prices satisfied Customs’ arm’s-length rules.

The projectT&C Services professionals assisted with analyzing the transfer pricing methodology and financial data and helped identify pertinent information to satisfy the Customs-specific rules. KPMG prepared contemporaneous CBP documentation, evaluated potential administrative options with the company (including possibly seeking a binding ruling from CBP), and assisted the company with implementing leading compliance practices. KPMG also assisted with discussions with CBP officials to resolve the controversy. Throughout the project, KPMG worked with the company’s compliance team and became an integral component of the company’s exercise of reasonable care over its customs valuation matters.

The resultsThe company was able to satisfy CBP’s requirements and support its transfer prices. It also met CBP’s circumstances of sale requirements. As a result, the company was able to continue to declare intercompany invoice prices in import transaction and did not need to comply with more burdensome valuation requirements.

Global conglomerate aligns transfer pricing and customs valuation requirements

Establishing and maintaining cross-border operations presents a host of risks for management. Companies must keep costs down to maintain strategic advantage as well as comply with local laws and customs regulations associated with cross-border trade.

T&C Services professionals can offer a number of services that can help companies manage and reduce their global customs risks:

— U.S. and global import and export process compliance reviews

— Development of U.S. and global compliance requirements

— Support in BIS consent agreement obligations

— Customs audit (focused assessment) preparation and defense (penalty mitigation)

— Assistance with enrollment and maintenance of the Customs-Trade Partnership Against Terrorism (C-TPAT) supply chain security program

— Assistance in obtaining Importer Self-Assessment (ISA) status and maintaining compliance obligations under this program, which allows companies that show acceptable controls to be removed from the Customs Focused Assessment audit pool

— Assistance with Customs’ voluntary disclosures for penalty mitigation

— Product customs classification reviews and ruling requests

— Alignment of customs-related party pricing requirements and transfer pricing policy.

Trade Risk Mitigation



The backgroundThe A global aerospace and defense company had negotiated a Consent Agreement with the U.S. Department of State. The Consent Agreement required the company to hire an external service provider to conduct both a first and second audit of the company’s ITAR compliance program. The company had already completed the first Consent Agreement Audit.

The projectT&C Services professionals conducted the Consent Agreement audit of the company. The project involved over 15 audits of the ITAR compliance programs at the company’s locations in the North America and Europe. KPMG assessed progress made against the first Consent Agreement audit findings as well as the company’s overall ITAR compliance program.

The resultsWith the assistance of KPMG, the company was able to satisfy a key requirement of the Consent Agreement and could better understand its level of compliance in relation to the Consent Agreement requirements.

Global aerospace and defense company audits its overall ITAR compliance program


Trade Automation Support

Global trade management (GTM) systems provide an enormous opportunity to transform how global companies manage import and export transactions. By automating the trade process, GTM systems liberate trade specialists from the manual, routine tasks associated with traditional trade so they can focus on strategic, value-add activities such as lowering inventory buffer stock; reducing duties, fees, and taxes; maintaining compliance; and reducing the cost of sourcing goods.

T&C Services professionals combine the strategic and operational global trade experience with leading global trade automation solutions to help companies move goods internationally faster, cheaper, and with less risk.

Our capabilities include:

— Assess trade automation needs, requirements, and benefits

— GTM “health check” to review existing trade technology and identify potential gaps and inefficiencies

— Develop business case including return on investment for GTM implementation and upgrades

— Assist with a GTM system selection from development of RFPs to benchmarking of responses

— Conduct GTM “phase zero” assessment to identify system implementation roadblocks (such as inaccurate master data) and address prior to implementation

— Deployment of Thomson Reuter’s and SAP’s GTM solutions, from determining future state to configuring to specific business requirements to testing and training.

— Customized trade analytics solutions based on over 100 different metrics applicable across all industries.

The backgroundA global multinational requested KPMG’s assistance in the design of a global product classification process that insures a high percentage of accuracy and consistent HS and ECN assignments for like products.

The projectKPMG architected and deployed a process in the company’s SAP GTS system that allowed classification to be carried out at the chemical substance level and then automatically pushed down to all the relevant products associated with a given substance.

The SAP GTS process also provided the ability to easily identify inconsistencies in classification at the harmonized six-digit level across countries for like products and record reasons for allowed inconsistencies (e.g., binding ruling, China fast lane, and agreements with customs authorities).

The resultsAs a result, the client was able to increase compliance due to fewer missing HS and ECN and fewer inaccuracies and inconsistencies as well as strengthen its internal controls due to reducing manual coding at the product level.

Global multinational automates the classification process and improves compliance


Meet today’s complex trade regulations. Make the most of global opportunities.When it comes to cross-border trade, it is a big world out there filled with big opportunities. T&C Services professionals can help your organization seize them.

Our goal is to help you achieve yours, helping ensure compliance with evolving laws and regulations, locally and federally, while reducing costs, improving efficiency, and mitigating risk issues associated with cross-border operations.

We offer four core service offerings designed with these goals in mind:

— Global Trade Transformation

— Import Cost Reduction

— Trade Risk Mitigation

— Trade Automation Support.

When you work with KPMG’s knowledgeable, experienced, and forward-thinking professionals, you can benefit from processes and approaches that can help you meet the challenges and realize the benefits of cross-border trade—and boost your global edge in the marketplace.

The backgroundA global chemicals company faced a challenge with its North American Free Trade Agreement (NAFTA) program: it could not make claims on products that were eligible for preferential treatment due to the conservative approach of its enterprise resource planning (ERP) system to fungible materials. In this case, if one raw material supplier—out of many—was of foreign origin, then the whole of the raw material was considered foreign.

The projectT&C Services professionals designed and implemented an automated SAP GTS technology solution which used the inventory management average method for determining the value of nonoriginating material. The solution determined the origin of fungible materials withdrawn from materials inventory on the basis of the ratio of originating materials and nonoriginating materials in materials inventory.

KPMG also designed and developed a process to provide historical originating and nonoriginating information associated with a given qualification to support internal and external audits.

The resultsThe company was able to increase its NAFTA savings while at the same time improving its qualification and supporting documentation.

Chemicals company saves more through NAFTA program



For more information about KPMG’s Trade & Customs Services practice, visit our Web sites or contact:

Douglas ZuvichPartner and Global Practice LeaderT: 312-665-1022 E: [email protected] SicilianoPartner and U.S. Practice LeaderT: 631-425-6057 E: [email protected]

John McLoughlin Principal and East Coast Leader T: 267-256-2614 E: [email protected]

Luis (Lou) AbadPrincipalT: 212-954-3094 E: [email protected]

Irina VaysfeldPrincipalT: 212-872-2973 E: [email protected]

Robert WaldropPrincipalT: 212-954-8117 E: [email protected]

Christopher YoungPrincipalT: 312-665-3229 E: [email protected]

George Zaharatos PrincipalT: 404-222-3292 E: [email protected]

Contact us

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The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.

Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates.


Web sites: — Trade & Customs Services

— Trade & Customs Insights

KPMG’s TaxNewsFlash – Trade & Customs is your window to the world of trade, direct to your inbox. Written by senior-level professionals with extensive experience and knowledge of the subject matter, these useful e-mail alerts deliver accurate, up-to-date information on laws and regulations, trends, and methodologies to help you stay current, compliant, and competitive on new trade and customs-related developments. Topics include customs rulings and court decisions, export regulations, proposals for rule or policy changes, and developments in preferential trade agreement programs. To subscribe, e-mail [email protected].

http://www.kpmg.com/us/tradeandcustomsservices

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global edge: kpmg s trade & customs services · through kpmg’s international network of...

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