Latest news with #MossAdams
West Australian
5 days ago
- Business
- West Australian
Businesses are finding a workaround for tariffs — and it's entirely legal
Businesses are finding a workaround to minimise the most significant hit from tariffs, using a decades-old piece of legislation known as the 'first sale rule'. Within US customs law, the first sale rule allows US importers to use the price of the first sale in a number of transactions to calculate customs duties. For instance, a Chinese manufacturer sells a T-shirt to a Hong Kong vendor for $US5. That Hong Kong vendor then sells the T-shirt to a US retailer for $US10. That US retailer then sells the T-shirt to consumers for $US40. Under the first sale rule, the US retailer can pay the import duty on the initial $US5 price of the good, rather than the vendor's inflated $US10, thus stripping out the cost associated with the middleman's profit. 'What the rules allow you to do is use that initial sales price from the factory to the vendor to determine the final duty price,' Brian Gleicher, senior lawyer and member at Miller & Chevalier Chartered, said. The first sale rule has been around since 1988, but gained renewed attention under US President Donald Trump's first administration and, now, during his latest tariff regime. 'When the first administration had 25 per cent tariffs [on China in 2018], that's when we started getting calls. Now with the new tariffs, the first sale rule has started coming up again,' Sid Paruthi, partner at US consulting firm Moss Adams, said. 'It's been around for a very long time but ... everybody's beginning to explore it with more interest,' Gleicher said. Here are the criteria businesses must fulfil to apply the rule: For some companies, that can be easier said than done. Typically, the default duty imposed by US customs is based on the import price of a good, putting the burden of proof on the importer to demonstrate the initial cost of that item. That may not always be something a vendor is willing to reveal. 'If you're an importer, you need to get that first sale price. You need to have the data,' Gleicher said. 'Vendors may not want to give that information.' Rich Taylor, a corporate business development consultant based in Chinese hub Ningbo who has been advising Fortune 500 companies on the first sale rule since Trump's first term, noted 'there has to be a level of trust between all parties' because of the risks involved. Nevertheless, the additional complexities can be worthwhile, given the potential cost savings. 'You [suppliers] are keeping your customer. You're showing them that you're trying to give them every tool to reduce their cost,' Taylor said. 'If you don't use it, then the end cost is going to go up. And if your competitor is using the [first sale] rule, then you're going to lose you that advantage over them.' Companies appear to be cluing into that. While the first sale rule is broadly applicable across products and industries, it is considered particularly useful in higher-value consumer goods and luxury products, where margins are greater. Last month, Italian luxury fashion brand Moncler flagged the first sale rule as providing 'significant benefit' to its cost structure. 'First cost [sale], of course, the industrial cost ... is much lower than the retail price, and it is about 50 per cent of the intercompany price. So, of course, it's a significant benefit,' Luciano Santel, executive director and chief corporate and supply officer at Moncler, told investors during an April 16 earnings call. Swiss-headquartered biotech Kuros Biosciences earlier this month said that it was altering its operations, which would allow it to adopt the first sale policy. 'What we will now do is we will switch in between Zurich as a wholesaler hub ... which in essence means we can adapt the so-called first sale method,' Daniel Geiger, chief financial officer of Swiss-headquartered biotech Kuros Biosciences, said during a May 13 earnings call. During first-quarter earnings calls, US BBQ-maker Traeger and manufacturing firm Fictiv also both cited first sale as 'supply chain mitigants' and means to 'minimise tariff and duty costs,' respectively. Use of the first sale rule, while perfectly legal, nevertheless could undermine the Trump administration's efforts to boost tariff revenue and boost onshoring of manufacturing. The White House did not respond to CNBC's request for comment on use of the first sale rule and its implications for tariff policy. US Customs and Border Protection said it could not provide data on the recent use of the first sale rule by importers. CNBC
CNBC
6 days ago
- Business
- CNBC
Businesses are finding a workaround for tariffs — and it's entirely legal
Businesses are finding a workaround to minimize the most significant hit from tariffs, using a decades-old piece of legislation known as the "first sale rule." Within U.S. customs law, the first sale rule allows U.S. importers to use the price of the first sale in a number of transactions to calculate customs duties. For instance, a Chinese manufacturer sells a t-shirt to a Hong Kong vendor for $5. That Hong Kong vendor then sells the t-shirt to a U.S. retailer for $10. That U.S. retailer then sells the t-shirt to consumers for $40. Under the first sale rule, the U.S. retailer can pay the import duty on the initial $5 price of the good, rather than the vendor's inflated $10, thus stripping out the cost associated with the middleman's profit. "What the rules allow you to do is use that initial sales price from the factory to the vendor to determine the final duty price," Brian Gleicher, senior lawyer and member at Miller & Chevalier Chartered, told CNBC over the phone. The first sale rule has been around since 1988, but gained renewed attention under U.S. President Donald Trump's first administration and, now, during his latest tariff regime. "When the first administration had 25% tariffs [on China in 2018], that's when we started getting calls. Now with the new tariffs, the first sale rule has started coming up again," Sid Paruthi, partner at U.S. consulting firm Moss Adams, said over video call. "It's been around for a very long time but ... everybody's beginning to explore it with more interest," Gleicher said. Here are the criteria businesses must fulfil to apply the rule: For some companies, that can be easier said than done. Typically, the default duty imposed by U.S. customs is based on the import price of a good, putting the burden of proof on the importer to demonstrate the initial cost of that item. That may not always be something a vendor is willing to reveal. "If you're an importer, you need to get that first sale price. You need to have the data," Gleicher said. "Vendors may not want to give that information." Rich Taylor, a corporate business development consultant based in Chinese hub Ningbo who has been advising Fortune 500 companies on the first sale rule since Trump's first term, noted "there has to be a level of trust between all parties" because of the risks involved. Nevertheless, the additional complexities can be worthwhile, given the potential cost savings. "You [suppliers] are keeping your customer. You're showing them that you're trying to give them every tool to reduce their cost," Taylor said. "If you don't use it, then the end cost is going to go up. And if your competitor is using the [first sale] rule, then you're going to lose you that advantage over them." Companies appear to be cluing into that. While the first sale rule is broadly applicable across products and industries, it is considered particularly useful in higher-value consumer goods and luxury products, where margins are greater. Last month, Italian luxury fashion brand Moncler flagged the first sale rule as providing "significant benefit" to its cost structure. "First cost [sale], of course, the industrial cost ... is much lower than the retail price, and it is about 50% of the intercompany price. So, of course, it's a significant benefit," Luciano Santel, executive director & chief corporate and supply officer at Moncler, told investors during an April 16 earnings call. Swiss-headquartered biotech Kuros Biosciences earlier this month said that it was altering its operations, which would allow it to adopt the first sale policy. "What we will now do is we will switch in between Zurich as a wholesaler hub... which in essence means we can adapt the so-called first sale method," Daniel Geiger, chief financial officer of Swiss-headquartered biotech Kuros Biosciences, said during a May 13 earnings call. During first-quarter earnings calls, U.S. BBQ-maker Traeger and manufacturing firm Fictiv also both cited first sale as "supply chain mitigants" and means to "minimize tariff and duty costs," respectively. Use of the first sale rule, while perfectly legal, nevertheless could undermine the Trump administration's efforts to boost tariff revenue and boost onshoring of manufacturing. The White House did not respond to CNBC's request for comment on use of the first sale rule and its implications for tariff policy. U.S. Customs and Border Protection said it could not provide data on the recent use of the first sale rule by importers.
Yahoo
22-04-2025
- Business
- Yahoo
Baker Tilly and Moss Adams announce plan to merge
Baker Tilly and Moss Adams have announced a merger, creating the 'sixth-largest' advisory compulsory personal accident (CPA) company in the US. Financial terms of the transaction were not disclosed. However, according to the Wall Street Journal, the deal is valued at $7bn. The merger, which is expected to close in early June, will enhance Baker Tilly's advisory, tax and assurance services. It will see Baker Tilly and Moss Adams unite under the Baker Tilly name, strengthening industry specialisation and expanding geographic reach. In a statement, Baker Tilly said the combined group will be 'positioned to help middle-market businesses navigate an increasingly complex environment'. Jeff Ferro, Baker Tilly's CEO, will lead the combined company until his retirement, with Moss Adams CEO Eric Miles named CEO-elect, taking over on 1 January 2026. Ferro said: 'Moss Adams is a great strategic fit with Baker Tilly. We have long respected the firm, its people and its industry-focused approach. By bringing together our strengths, we are expanding our ability to serve middle-market businesses with greater expertise, resources and insights.' Miles added: 'The resources, geographic reach and go-to-market strength of the combined firm magnifies opportunities for our people to grow, collaborate and innovate. 'We are proud to offer our clients these expanded resources to deliver even greater value and set a new standard for advisory services in the middle market.' Private equity firm Hellman & Friedman will increase its investment in Baker Tilly, with Valeas Capital Partners also boosting its stake. Post-merger, the audit business will operate as Baker Tilly US, LLP, and advisory services will fall under Baker Tilly Advisory Group, LP. Simpson Thacher & Bartlett and Vedder Price PC acted as legal counsel to Baker Tilly, while Moss Adams was advised by Deutsche Bank Securities on financial matters and by Dechert on legal affairs. In March 2025, Baker Tilly expanded its state and local tax expertise through the acquisition of Dallas-based company Invoke Tax Partners. "Baker Tilly and Moss Adams announce plan to merge " was originally created and published by International Accounting Bulletin, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
Yahoo
10-04-2025
- Business
- Yahoo
Baker Tilly reportedly weighing acquisition of Moss Adams
Baker Tilly, a US advisory, tax, and assurance firm, is in discussions to acquire local rival Moss Adams in a deal valued at more than $2bn, reported Financial Times, citing sources. The Chicago-based firm, which sold a majority stake to a private equity consortium led by Hellman & Friedman in February 2024, aims to accelerate acquisitions and increase its market share in the rapidly consolidating accounting and consulting sector. The addition of Seattle-based Moss Adams is expected to boost Baker Tilly's annual revenues to more than $3bn. Outside the Big Four accountancies, only RSM would surpass Baker Tilly in size within the US. The merger is being promoted as the creation of a 'powerhouse for the middle market,' although the deal is yet to be finalised, a source said. The sale is anticipated to provide significant returns for the more than 400 partners of Moss Adams. In the past four years, more than one-third of the top 30 firms have moved away from the traditional partnership model, opting for outside capital. Private equity investors are drawn to the stable revenues from audit and tax services and the potential to transform large firms into 'platform' companies capable of acquiring smaller competitors and achieving savings through consolidation. Moss Adams declined to comment on the matter. Baker Tilly stated: 'We have been transparent about our strategy to grow our organisation through strategic mergers' and are 'continually exploring opportunities with respected firms that align with our growth expectations'. The surge in dealmaking has left mid-tier partnerships considering whether to pursue acquisitions at high valuations or sell to a rival. The merger with Baker Tilly will not only expand Moss Adams' scale in the US but also provide access to Baker Tilly's global network of sister firms operating in 143 territories. As small and medium-sized businesses increasingly operate internationally, US accounting firms are strengthening their global networks to offer seamless cross-border services. In March 2025, Baker Tilly acquired Invoke Tax Partners, a state and local tax specialty firm based in Dallas, Texas. "Baker Tilly reportedly weighing acquisition of Moss Adams " was originally created and published by International Accounting Bulletin, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
