Royalty Adjustment For Customs Valuation

Recently, the High Court in UC Sdn Bhd v Ketua Pengarah Kastam, Malaysia set aside the uplifting of customs value by including royalty payments by the Customs. We successfully represented the taxpayer in this appeal.

Facts

(a) Among others, the taxpayer imported and distributed baby care products in Malaysia. The taxpayer executed a Licence Agreement with the foreign holding company for the exclusive use of trademarks owned by the latter. The taxpayer also obtained marketing know-how and techniques. In return, the taxpayer paid royalty equal to 1% of the net sale price of the products.

(b) The taxpayer also obtained the rights to use cartoon characters belonging to a third party on its products. Royalty was paid to the third party for this.