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The First Sale Rule is one valuation approach that importers might employ to reduce the claimed value of products and lessen the cumulative effect of higher taxes. The First Sale Rule enables importers to base the amount of the customs tax that must be paid on the price that was paid in the first or earlier sale. Many importers make purchases via a middleman seller who acts as a go-between between the manufacturer and the importer during the second sale.
This second sale has a higher price tag. Particularly for the textile and footwear sector, where clothes and shoes are subject to higher duty rates, paying taxes on a lower, initial selling price gives a significant possibility for cost savings.



An importer must make sure that all necessary inspections and documentation are in place for Customs approval before beginning to implement the First Sale regulation. Adherence to the strict requirements established by Customs is necessary for implementation, as is confidence and faith in the direct manufacturer, who will eventually be disclosing their produced cost. Sound documentation of the genuine transaction, made possible through verifiable electronic communications of sales contracts, purchase orders, shipping contracts, payments, and/or proofs of purchase, is crucial to implementation. It is essential to have complete tracing and tracking documentation proving that the purchase order was placed directly with the First Sale manufacturer and that the goods is intended for export, together with any necessary supporting paperwork.

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