Archive for the ‘Canada Customs’ Category


 

The Most Commonly Overlooked Area of a Customs Audit – Valuation

Customs Audit - Valuation

In-depth compliance verifications by Canada Border Services Agency (CBSA) in recent years require that both importers and exporters establish adequate internal controls as well as maintain well-documented compliance procedures.

The majority of Canada Border Services Agency (CBSA) audits cover one or more of three topics:  tariff classification, valuation, and verification of origin. There are two post-release verification processes:

  1. Some audits are Random verifications where an importer is randomly chosen to undergo an audit. Random verifications are designed to measure compliance rates and revenue loss and the results may be used for many purposes, including risk assessment, revenue assessment, and promoting voluntary compliance.
  2. The other audit practice employed by CBSA is through Verification priorities where they target specific industries or products. In both situations, CBSA is examines importers for compliance and observing all rules and regulations.

Out of the major areas audited, the one most commonly overlooked by importers is the subject of valuation.

What is Valuation?

As it relates to imported goods, valuation means determining the correct value to declare to Customs. This is also known as the value for duty. There are 6 methods of determining Value for Duty.

The most common valuation method used is transaction value, however the final value for duty could be influenced by:

  • The relation between the parties involved (i.e. a related buyer and seller)
  • Conditions where the goods were not purchased by the Canadian recipient (i.e. consignment)
  • Allowable deductions to the price paid
  • Additions or other costs which must be added to the price before customs duty and taxes are calculated
  • Used goods
  • Goods sold while in Canada on a temporary basis

Valuation Topics Overlooked in Customs Declarations

While this subject is extensive, let’s review a couple of the key valuation topics that may have been easily overlooked when making customs declarations.

1.  Assists

An “assist” is defined as goods or services provided free or at a reduced charge by the purchaser for use in the production of imported goods.

  • Materials, components, parts and other goods incorporated in imported goods.
  • Tools, dies, moulds, and other goods utilized in the production of imported goods.
  • Any materials consumed in the production of imported goods.
  • Engineering, development work, art work, design work, plans and sketches undertaken elsewhere than in Canada and necessary for the production of imported goods.

For example, if a Canadian purchaser contracted a U.S. company to bottle juice where the Canadian company provided the packaging materials, the additional costs of the packaging would need to be included in the declared value of the juice.

2. Parties involved in a transaction

Many transactions involve two parties – a buyer and a seller, which usually makes it is easy to determine the value for duty. However sometimes there are numerous parties: manufacturers, exporters, distributors, buying and selling agents, vendors, consignees and purchasers. The involvement of many parties could make it difficult to identify the correct value for duty and additional care should be exercised.

In many cases, the results of assigning correct values can be “revenue neutral” with CBSA; in other words, the goods may be duty free which means that the importer will not incur additional expenses. Like all importations however, the onus is still on the importer to make accurate customs declarations or potentially expose themselves to fines and penalties under the Administrative Monetary Penalty System (AMPS).

 

Why should an importer or exporter be concerned?

1. Primarily due to the fact that Valuation is an area that is reviewed and regulated by CBSA. Importers generally spend the least amount of time worrying about valuation, but it is still an area where you are expected to be compliant.

For a detailed version of the current targeted priorities, visit this CBSA webpage Trade Compliance Verifications.

2. Secondly, there are over 40 memorandums in the CBSA D Series that deal with valuation. It can be an intricate area to navigate if your foreign purchases involve situations which could change the declared value to Canada Customs.

Will your business undergo a customs audit?

Whether your business is importing or exporting goods, you should be aware that at some point you are likely to be selected for an audit.

 

Customs Audit Assistance Services

If you have reason to believe that you have valuation situations which have the potential to raise flags during an audit, please give us a call to discuss this further. We have the expertise to guide your company through the audit process.

 

Preparing for a Customs Audit

Businesses that do not plan for a potential customs audit do so at their own risk. To learn more and gain insight on the customs audit process and what CBSA is assessing, consider attending an upcoming  Canadian Trade Compliance Seminar. For an in-depth session that will guide you through the maze of regulations that determine transaction value attend our upcoming Customs Valuation Seminar. If you are importing and exporting goods into the United States, you will find our U.S. Trade Compliance Seminar of interest.

 

Have questions around a customs audit? Ask our Trade Advisors. Leaving your comments below or email Ask Your Broker.

 

Additional Resources:

Infographic: ACI eManifest AMPS Penalties in Effect

 

January 11, 2016 marked the start of ACI eManifest monetary penalties phase. In an earlier blog post on  Hefty AMPS Penalties for ACI eManifest Non-Compliance we elaborated on the CBSA penalty system for non-compliance known as the Administrative Monetary Penalty System or AMPS. The infographic below features the fines that may be applied against a highway carrier or self-carrying importer who is non-compliant with ACI eManifest.
Note: These penalties are issued per shipment or per submission of data.

 

PCB-Borderpro-ACI-eManifest-AMPS-Penalties-InforgraphSource: Canada Border Services Agency

Click image above to enlarge for a full view of the infographic.

Download a printable version of this infographic here.

 

eManifest Filing Services

Our Border Pro for Carriers eManifest filing services can assist you in submitting all relevant information to Canada Customs within the required time period to ensure your trucks cross the border as quickly and efficiently as possible.

Have questions?

If you have any questions about ACI eManifest, please do not hesitate to contact our Carrier Relations Liaison at 855.542.6644 or via email at carrierhelpdesk@pcb.ca.

 

We also welcome your questions and comments in our comments section below.

 

Update to the Canadian Import Requirements for Corn on the Cob

Corn on the CobAfter continual conversations with the Canadian Food Inspection Agency in reference to the updates to the import requirements for corn on the cob, we have received the following details.

 

When Originating from European Corn Borer Infested State

If the product destined to British Columbia, originates from a European corn borer, Ostrinia nubilalis (ECB) infested state, then a Phytosanitary Certificate is required.

 

List of ECB Infested States:

A list of ECB infested states as per directive D-95-28: Plant Protection Import and Domestic Movement Requirements for Corn (Zea mays) can be found below.

United States: Alabama, Arkansas, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, West Virginia, Wisconsin, and Wyoming.

Please note this list is subject to change without notice as the CFIA updates their regulations. We recommend referring directly to D-95-28: Plant Protection Import and Domestic Movement Requirements for Corn (Zea mays) for the most up-to-date information.

 

When Originating from A Non-Infested State

If the corn on the cob originates in a non-infested state such as California, then a Certificate of Proof of Origin, signed and stamped by an authorized State Authority must be provided.  A certificate of proof of origin can be any official USDA document which states where the corn was grown.  The CFIA has also advised that should the appropriate state agricultural authority complete a certificate similar to those found in Directives D-05-02 and D-06-03 it will be acceptable.
Please note, these requirements apply to all fresh corn on the cob, whether it is still in the husk, or if the husk has been removed and packaged for retail sale.

For more information visit: D-95-28: Plant Protection Import and Domestic Movement Requirements for Corn (Zea mays)

 

This post is co-authored by Gloria Terhaar and Crystal Higgs.

How to Accurately Complete a NAFTA Certificate of Origin

How to Accurately Complete a NAFTA Certificate of OriginIn January 1994, Canada, the United States and Mexico launched the North American Free Trade Agreement (NAFTA) and formed the world’s largest free trade area. Its intent was to reduce trading costs, increase business investment, and help North America be more competitive in the global marketplace. In order for commodities produced in one of the three NAFTA territories to qualify for reduced duty rates, a valid NAFTA certificate must be provided. For items not wholly grown or produced of items wholly grown or manufactured in a North American Free Trade Agreement area, they must meet certain predetermined criteria in order to qualify for reduced duty rates. These criteria are found in the Rules of Origin section of the NAFTA Agreement.

Who is responsible for completing the certificate?

The NAFTA Certificate of Origin should be provided by the exporter to the importer to support the importer’s claim for duty-free entry. The form can also be provided by the producer for use by the exporter.

 

Types of NAFTA Certificates of Origin

There are two types of NAFTA certificates:

  1. Low Value NAFTA Certificate of Origin – used for shipments valued at less than $2,500 CAD
  2. NAFTA Certificate of Origin (Form B232E) – used for shipments valued over $2,500 CAD

Importance of a Valid NAFTA Certificate of Origin:

Correctly completing a NAFTA Certificate of Origin can be confusing for those who have never done it before or do not understand the requirements of each field. The NAFTA Certificate of Origin must be completed and certified by an authorized signatory of the producer or exporter of the goods who has enough knowledge of the information provided in all fields.

On a daily basis, customs brokers are faced with informing their clients of inaccuracies made when completing a NAFTA certificate. An incomplete or incorrectly completed certificate invalidates the ability to claim the lower preferential rate of duty that would have been awarded with a valid certificate.

Instructions on Filling out the Certificate of Origin

Below are the instructions outlining how to correctly complete each field of a NAFTA certificate, as well as some of the most common errors customs brokers identify when validating certificates.

1. Low Value NAFTA Certificate of Origin

The low Value NAFTA Certificate of Origin is a confirming statement that certifies the commodities in the shipment meet the requirements under the Rules of Origin specified by the NAFTA Agreement. It can only be used for shipments valued under $2,500.00 CAD; and contains no blanket period, therefore it must be completed for each individual shipment. It is a much more straight forward form to complete, requiring only the producer’s or exporter’s name, address and signature to be completed.

2. NAFTA Certificate of Origin (Form B232E )

Field 1 – Exporter Name and Address

State the full legal name, address (including country) and legal tax identification number of the exporter.

Legal tax identification number is:

  • In Canada –  employer number or importer/exporter number assigned by Revenue Canada
  • In Mexico –  federal taxpayer’s registry number (RFC)
  • In the United States  –  employer’s identification number or Social Security Number

Field 2 – Blanket Period

Complete field if the Certificate covers multiple shipments of identical goods as described in Field 5 that are imported into a NAFTA country for a specified period of up to one year (blanket period).

  • FROM – the date upon which the Certificate becomes applicable to the good covered by the blanket Certificate (it may be prior to the date of signing this Certificate).
  • TO – the date upon which the blanket period expires. The importation of a good for which preferential tariff treatment is claimed based on this Certificate must occur between these dates.

Common Error: It is not uncommon to find that the DATE field is completed inaccurately to reflect a blank period covering a year and one (1) day. 01/01/10 to 01/01/11 is in fact one (1) year plus one (1) day of the next year. To be sure that the blanket period is valid, this field must read the same year in both start and end date of the blanket period.

Field 3 – Producer’s Name and Address

State the full legal name, address (including country) and legal tax identification number, as defined in Field 1, of the producer. If more than one producer’s good is included on the Certificate, attach a list of the additional producers, including the legal name, address (including country) and legal tax identification number, cross referenced to the good described in Field 5. If you wish this information to be confidential, it is acceptable to state “Available to Customs upon request”. If the producer and the exporter are the same, complete field with “SAME”. If the producer is unknown, it is acceptable to state “UNKNOWN”.

Field 4 – Importer’s Name and Address

State the full legal name, address (including country) and legal tax identification number, as defined in Field 1, of the importer. If importer is not known, state “UNKNOWN”; if multiple importers, state “VARIOUS”.

Field 5 – Description of Goods:

Provide a full description of each good. The description should be sufficient to relate it to the invoice description and to the Harmonized System (HS) description of the good. If the Certificate covers a single shipment of a good, include the invoice number as shown on the commercial invoice. If not known, indicate another unique reference number, such as the shipping order number.

Tip: For a blanket certificate, part or item numbers identifying each commodity covered by the certificate should be included to guarantee that there is no confusion as to which products are covered and which are not.

Field 6 – H.S. Tariff Classification Number:

For each good described in Field 5, identify the H.S. tariff classification to six digits. If the good is subject to a specific rule of origin in Annex 401 that requires eight digits, identify to eight digits, using the H.S. tariff classification of the country into whose territory the good is imported.

Tip: Applying accurate H.S. tariff codes requires in depth knowledge of the commodities being imported, the Customs Tariff and NAFTA Rules of Origin. If you are unsure if the code is correct, contact a customs broker before completing the certificate.

Field 7 – Preference Criterion:

For each good described in Field 5, state which criterion (A through F) is applicable. The rules of origin are contained in Chapter Four and Annex 401. Additional rules are described in Annex 703.2 (certain agricultural goods), Annex 300-B, Appendix 6A (certain textile goods) and Annex 308.1 (certain automatic data processing goods and their parts).
Note: In order to be entitled to preferential tariff treatment, each good must meet at least one of the criteria below.

A) The good is “wholly obtained or produced entirely” in the territory of one or more of the NAFTA countries, as referred to in Article 415. Note: The purchase of a good in the territory does not necessarily render it “wholly obtained or produced”. If the good is an agricultural good, see also criterion F and Annex 703.2. (Reference: Article 401(a) and 415)

B) The good is produced entirely in the territory of one or more of the NAFTA countries and satisfies the specific rule or origin, set out in Annex 401, that applies to its tariff classification. The rule may include a tariff classification change, regional value-content requirement or a combination thereof. The good must also satisfy all other applicable requirements of Chapter Four. If the good is an agricultural good, see also criterion F and Annex 703.2. (Reference: Article 401(b))

C) The good is produced entirely in the territory of one or more of the NAFTA countries exclusively from originating materials. Under this criterion, one or more of the materials may not fall within the definition of “wholly produced or obtained”, as set out in Article 415. All materials used in the production of the good must qualify as “originating” by meeting the rules of Article 401(a) through (d). If the good is an agricultural good, see also criterion F and Annex 703.2. (Reference: Article 401(c))

D) Goods are produced in the territory of one or more of the NAFTA countries but do not meet the applicable rule of origin, set out in Annex 401, because certain non-originating materials do not undergo the required change in tariff classification. The goods do nonetheless meet the regional value-content requirement specified in Article 401(d). This criterion is limited to the following two circumstances:

D-1) the good was imported into the territory of a NAFTA country in an unassembled or disassembled form but was classified as an assembled good, pursuant to HS General Rule of Interpretation 2(a); or

D-2) the good incorporated one or more non-originating materials, provided for as parts under the HS, which could not undergo a change in tariff classification because the heading provided for both the good and its parts, and was not further subdivided into subheadings, or the subheading provided for both the good and its parts and was not further subdivided.

Note: This criterion does not apply to Chapters 61 through 63 of the HS (Reference: Article 401(d))

E) Certain automatic data processing goods and their parts, specified in Annex 308.1, that do not originate in the territory are considered originating upon importation into the territory of a NAFTA country from the territory of another NAFTA country when the Most-Favoured-Nation Tariff rate of the good conforms to the rate established in Annex 308.1 and is common to all NAFTA countries. (Reference: Annex 308.1)

F) The good is an originating agricultural good under preference criterion A, B or C above and is not subject to a quantitative restriction in the importing NAFTA country because it is a “qualifying good” as defined in Annex 703.2, Section A or B (please specify). A good listed in Appendix 703.BB.7 is also exempt from quantitative restrictions and is eligible for NAFTA preferential tariff treatment if it meets the definition of “qualifying good” in Section A of Annex 703.2.

Notes:

  • This criterion does not apply to goods that wholly originate in Canada or the United States and are imported into either country.
  • A tariff rate quota is not a quantitative restriction.

Field 8 – Producer:

For each good described in field 5, state “YES” if you are the producer of the good. If you are not the producer of the good, state “NO” followed by (1), (2), or (3), depending on whether this certificate was based upon:

(1) your knowledge of whether the good qualifies as an originating good;

(2) your reliance on the producer’s written representation (other than a Certificate of Origin) that the good qualifies as an originating good; or

(3) a completed and signed Certificate for the good, voluntarily provided to the exporter by the producer.

Field 9 – Net Cost:

For each good described in Field 5, where the good is subject to a regional value content (RVC) requirement, indicate “NC” if the RVC is calculated according to the net cost method; otherwise, indicate “NO”. If the RVC is calculated according to the net cost method over a period of time, further identify the beginning and ending dates (DD/MM/YY) of that period. (Reference: Articles 402.1, 402.5)

Common Error: Many NAFTA certificates are found to be invalid due to the exporter stating the actual cost of the commodities in this field. As stated above, the net cost field is not asking for actual cost of the good but which method is being used to ascertain that the commodities being imported meet the NAFTA Rules of Origin.

Field 10 – Country Of Origin:

Identify the name of the country (“MX” or “US” for agricultural and textile goods exported to Canada; “US” or “CA” for all goods exported to Mexico; or “CA” or “MX” for all goods exported to the United States) to which the preferential rate of customs duty applies, as set out in Annex 302.2, in accordance with the Marking Rules or in each Party’s schedule of tariff elimination.

For all other originating goods exported to Canada, indicate appropriately “MX” or “US” if the goods originate in that NAFTA country, within the meaning of the NAFTA Rules of Origin Regulations, and any subsequent processing in the other NAFTA country does not increase the transaction value of the goods by more than 7%; otherwise indicate as “JNT” for joint production. (Reference: Annex 302.2)

Common Error: The NAFTA certificate is invalid and ineffective if the commodities listed are not produced in a participating country in the agreement. Many people do this so that whoever is clearing the goods knows where the items are made. However, the correct thing to do is indicate the country of manufacture on the invoice and back up the NAFTA qualifying items with a NAFTA certificate.

Field 11 – Certification:

This field must be completed, signed and dated by the exporter.  When the Certificate is completed by the producer for use by the exporter, it must be completed, signed and dated by the producer. The date must be the date the Certificate was completed and signed.
In many cases, the number of pages is left blank or it is signed by a person in an administrative position. The Canada Border Services Agency (CBSA) has been known to question the validity of the certificate when signed by someone with questionable knowledge of the information.

 

How long should copies of the Certificate of Origin be retained?

Valid NAFTA certificates used for the relief of customs duties must be kept as part of the importer’s records that are required to be kept for seven (7) years following the customs clearance.

 

Pacific Customs Brokers and NAFTA

Pacific Customs Brokers offers a wide range of FTA related services and resources.

Free Trade Agreement Advisory Services:

  • FTA Concierge Services  – For clients with time constraints, we offer convenient FTA Concierge Services. We can solicit FTA certificates directly from your exporters allowing you to do what you do best – run your business.
  • Tariff Classification Consulting – We offer expert analysis for clients seeking guidance on tariff classification. You may know the ins and outs of your business, but we know the intricacies of trade and always look out for our clients bottom line.

NAFTA Workshop and Webinars

  • NAFTA Workshop – In this full-day workshop we will provide you with a comprehensive field-by-field guide to completing a NAFTA certificate. We will assist you in understanding product eligibility, rules of origin, common errors and the importer’s responsibilities under the program to maximize savings.

Learn more or register now!

  • NAFTA Webinar Series – Join this two-part webinar series to learn about rules of origin under the North American Free Trade Agreement. Each part in the series is 75-minutes in length and will clarify a common assumption that all products manufactured in Canada, the United States or Mexico are eligible for duty free status.

Learn more or register now!

If you have any questions regarding NAFTA certificates post them in our comments section below or email us at Ask Your Broker.

11 Steps to Importing Canadian Entrepreneurs Must Know

Importing into Canada for EntrepreneursWhether you’re looking to diversify your product line or leverage cheaper-made merchandise, importing into Canada can be an important business activity for many Canadian entrepreneurs.

As a prospective entrepreneur or new business owner in Canada, consider the following steps as you navigate through the complexities of international markets.

 

1. Develop a strategic business plan.

A viable business plan is not only vital to your success but also a tool in measuring your business’ progress. As you start writing your plan, you’ll want to make a number of key business decisions such as:

  • Decide if you will be importing into or exporting from Canada
  • Identify the risks associated with your import or export activity
  • Choose the right name for your business

 

2. Register your business for import activities.

It is a good idea to be proactive and tend to all your registration and licensing requirements with municipal, provincial and federal governments early in the process. Once you complete these steps, you will have the necessities such as a Business Number (BN), registered business name and a GST/HST account. Your Business Number is your single account number for dealing with the federal government regarding taxes, payroll, import/export and other activities.

Canada Revenue Agency’s Business Registration Online is the one-stop-shop for all of your federal business registration requirements.

 

3. Invest early in trade compliance education.

Starting out with a good understanding of customs regulations and requirements, the use of Incoterms® and the means of payment are key to international trade success. Enrolling in trade compliance education in the early stages of planning will help you gain a better understanding of key trade topics, teach you how to manage trade compliance and utilize free trade agreements to your benefit. The substantial knowledge you receive will aid in completing accurate documentation, understanding logistics and getting a feel for how transactions move through the regulatory process.

 

4. Identify the type of goods you want to import or export and research their admissibility.

Besides having an accurate description of the goods you plan to import/ export, you also need to find out if these goods are prohibited, restricted or regulated by other government departments. In addition to Canada Border Services Agency, there are over 10 other government departments (OGDs) that are involved in the importation, in-transit movement and exportation of various commodities in and out of Canada. If your goods are regulated they may require special permits, certificates, licenses, special labeling, or a specific type of packaging (i.e. child resistant) depending on the commodity.

 

Use this search tool by Canada Business to find out what permits and licences your business may need from the federal, provincial and municipal governments.

 

For imports into Canada, in addition to identifying the good you want to import you will need to:

  • Identify the country of origin, manufacturer and export of the goods.
  • Determine whether the goods are controlled, regulated or prohibited by the Canada Border Services Agency (CBSA) or any other government department.
  • Use this Step-by-Step Guide to Importing from the Canada Border Services Agency (CBSA) to find out if the goods you want to import are prohibited or restricted.
  • Canada has a range of goods over which it imposes import controls. These goods are listed in the Import Control List (ICL) of the Export and Import Permits Act.

 

CBSA has compiled the following list of commonly imported commodities that may require permits, certificates, and/or are subject to other requirements:

5. Determine tariff classification, rate of duties and taxes, value for duty

Once you are sure that the goods can be imported into Canada, you must determine the:

  • Tariff classification;
  • Applicable tariff treatment;
  • Rate of duty; and
  • Taxes payable when importing goods.

Every commodity that clears through Customs must have an accurate and correct Harmonized System code (HS code) applied to it. This code identifies the item to Canada Border Services Agency (CBSA), as well as indicates the duty rate payable.   Classifying commodities correctly is key with regards to the importer paying the correct amount of duty and avoiding Administrative Monetary Penalty System (AMPS) penalties, or worse, seizure of your goods.

This Step-by-Step Guide to Importing from the Canada Border Services Agency gives details on all of these and an example of how to calculate duties and taxes.

 

6. Take advantage of free trade agreements (FTAs)

Free trade agreements (FTAs) are agreements made between countries that desire to reduce trade barriers on goods manufactured in their respective countries. FTAs allow for preferential duty treatment to items that qualify from certain countries. They can impact exports by reducing or eliminating duty rates for qualifying goods.

Canada has free trade agreements with the United States, Mexico, Columbia, Chile, Israel, Jordan, Costa Rica, Panama, Peru, Iceland, Liechtenstein, Norway and Switzerland. For more information on the respective Canadian Free Trade Agreements, visit the Trade Negotiations and Agreements section of the Department of Foreign Affairs and International Trade Canada.

 

7. Determine if you will be using the services of a customs broker.

A customs brokers can help you:

  • Obtain documentation that has been prepared for the shipment/contract
  • Review the prepared documentation for completeness and compliance with customs regulations
  • Prepare and submit a declaration to Customs on your behalf at the port of arrival

 

Aside from submitting a declaration on your behalf, customs brokers can also help your company reduce costs, improve efficiency, and mitigate risks related to cross-border trade. Most companies who import goods into Canada find that it is far too expensive and time consuming to travel to the facility or port of arrival where their goods are held awaiting clearance, prepare a formal declaration for Canada Border Services Agency, pay the charges due and then anticipate delivery of their product. It can be worth the investment up-front, to at least consult with a customs broker in the planning stages, so that you can have a clear understanding of your risks and proper tariff classifications.

 

8. Plan the transportation (shipping) of your goods overseas.

At this stage you will need to determine how involved you want to be in the process of getting the goods from source to destination and if you will be using the services of a freight forwarder. A professional freight forwarder is a critical link in the supply chain, and can assist your company in determining all costs included in a sales contract.

Next, you will need to identify the mode of transportation that will be used (highway, marine, rail, air, postal or courier service). This will lead you into selecting the method of shipping and communicating with the transportation company on cross-border requirements.

 

9. Identify your terms of sale.

With the expansion of global trade it has never been easier to find sources for goods worldwide and then sell directly to your clients. That being said, before you embark on this journey, you will need to know the rules of international commerce otherwise known as Incoterms® . It is important to identify your terms of sale as they clarify your shipping responsibilities and iron out your landed costs.

To learn more about Incoterms®, visit the Incoterms® Rules for a short description of the 11 rules from the Incoterms® 2010 edition.

 

10. Evaluate the right payment program for your business.

There are several options for obtaining release of your goods. You may prepare the release and accounting documents yourself or you may hire a licensed customs broker to do so on your behalf. It is important to note that these companies or individuals are not government employees and importers must pay a fee for their services.

 

There are basically three different payment methods available:

 

  1. Direct security – this is where you would have your own bond and security posted with Customs, but this may not be a viable option if you are a new company. When this is in place, you would pay Customs on the last business day of the month for amounts owing on your statement.  If payment is late, penalties would apply and possible suspension of deferred payment privileges.

 

  1. Goods and services tax (GST) direct – Once you are a GST Registrant, you can opt to pay Customs on the last day of the month, but without posting a bond and obtaining your own security.  This does not cover duty, only GST.  The same conditions apply as above for late payment.

 

  1. Use of a customs broker’s bond – Customs brokers already have bonds in place with Canada Customs, but would charge a fee for use of their bond.   You may need to post a deposit or meet other criteria for this to happen.  If you think this is the right option for you, speak to a customs broker to find out their requirements.

 

For more details on this topic visit the following links on the CBSA website:

 

11. Align your trade compliance practices with your business objectives.

 

The key to managing the customs compliance of your business is to be informed. Whether you have a custom broker that handles your compliance or you take care of them yourself, it is good practice to be aware of how customs regulations apply specifically to your business. While an experienced custom broker can review your business activity for best practices, assuming that they will is often an oversight by importers. It is important to designate a person within your organization to monitor Customs activity and deal with your customs broker when needed.

 

It is in an importer’s best interest to regularly review their Customs process, stay up to date with changing regulations and prepare to withstand a Customs audit. Make sure your internal procedures, documents, tariff classification, free trade agreements, valuation and origins are in compliance with Customs requirements. Additionally, understanding the links between your internal operations, accounting and Customs procedures can help address any shortcomings. Part of a winning formula is to ensure that your business plan includes a strategy for monitoring compliance over time.

 

As you prepare to import your product to Canada, we hope this information will help you plan for a successful start to your entrepreneurship journey.

Get sound advice and current training

Pacific Customs Brokers provides advice and trade compliance seminars and webinars to entrepreneurs interested in importing. To schedule a one-to-one trade advisory consultation with our Trade Advisor contact us at consulting@pcb.ca. For a complete list of upcoming sessions visit the Trade Compliance Education and Development section of our website.