Archive for the ‘Canada Customs’ Category


 

4 Trade Incentives That May Delight Your Finance Team

Incentive-Money-600Trade agreements save companies money, but what about the other programs that can reduce importing and carrying costs for importers and manufacturers?

The Government of Canada recognizes the need for Canadian companies to be competitive in the global market. Special circumstances apply to some and every importer has a unique profile based on their business model. Various companies participate in manufacturing activities, while others provide goods for sale in Canada and internationally.

Administration costs and the rapid growth of small businesses can sometimes cause business owners to overlook opportunities for cost savings available through government programs for minimizing duty and tax liability. Canada Border Services Agency (CBSA) and Canada Revenue Agency (CRA) offer several of these programs. They are not suited for every business and certain conditions apply. Depending on the nature of your business, you may find benefit to exploring your options and taking advantage of the tax and duty relief plans offered.

 

Four trade incentive programs that could provide relief from duties:

1. The GST Direct Program

The GST direct program offers GST Registrants the option of paying their Goods and Services Tax (GST) directly to the Receiver General of Canada. A statement called a K84 Monthly Statement is generated on the 25th day of each month. It provides a breakdown summary of the GST owed for any importing activity within the previous month. Shipments imported after the 21st of the month, will appear on the following month’s K84.

Low value shipments valued under $2,499.99 get longer grace time before payment of the GST is required. Low value shipments must be accounted for by hard copy or electronic transmission by the 24th day of the month following the month the goods were release.

The GST direct program allows importers to claim the GST input tax credit on the previous month, while allowing for almost a full extra month to remit the GST payment for shipments released after the 21st of the previous month. For example, a high value shipment released October 21 would not require the GST to be paid until the last business day of the month in November. There is currently no online option for payment when it comes to GST Direct. The GST must be received by way of a cheque to Receiver General no later than 4:30 pm local time on the last business day of the month. Your customs broker can deliver the cheque on your behalf to CBSA, some lead time will be required to ensure it is delivered on time. Late payment of the GST to the Receiver General can result in a penalty from CBSA.

This program requires a small adjustment to your business’s accounting cycle. The benefit of this program for your company is improved cash flow and a reduction in your customs broker’s liability on their customs broker bond. Depending on your import activity and entry complexity, this program can sometimes translate into an opportunity for a discount on your entry fees by reducing the financial exposure your customs broker takes on when clearing your freight. Your customs broker must post security with CBSA through and independent surety company. There is a cost associated with the customs brokers bond, so the higher your company’s disbursements in duty and GST, the higher the cost to maintain a customs brokers bond to service your account.

To sign up for the GST direct program, a letter must be completed on your company letterhead. Your customs broker will need a copy to update your importer profile and activate GST direct on your import account.

 

2. Exporter of Processing Services Program (EOPS)

This program allows companies who further manufacture goods for export, to import goods without payment of the Goods and Services Tax (GST) at the time of import.

To qualify, participants in this program:

  • Must be a GST or HST Registrant
  • Must have no ownership interests in either the imported goods that are coming into Canada for further manufacturing or the processed goods after production
  • Must not be closely related to the supplier outside of Canada for whom you are processing the goods

To get approved for this program, a consultation with the Canada Revenue Agency (CRA) is required. Participants must keep detailed records for goods imported under this program as well as proof of export for the processed goods post manufacture. Goods imported under the EOPS program must be exported within four years from the date of accounting. Once approved for this program, Canada Customs assigns an Order in Council (OIC) number that must be shown on your import entries to allow for the GST exemption on imports entering Canada under this program. Pacific Customs Brokers can assist with the program application.

For more information on the EOPS program, please visit  the Exporters of Processing Services Program section of CBSA’s website.

 

3. Duties Relief Program

This program allows importers to bring in goods duty free if they will eventually be exported. The goods must be exported in the same condition or after using or consuming them in the manufacturing process. This program is best suited to companies who import goods attached to tariffs with high rates of duty. It is a proactive approach because it allows for duty relief at the time of accounting; prior to payment of the customs duties on import. The prescribed timeline for export is a maximum of four years. This program requires detailed record keeping to ensure compliance in case of a customs audit. Your customs broker can assist with the application.

For more information on the Duties Relief Program, please consult the Canada Border Services Agency’s D Memorandum D7-4-1: Duties Relief Program.

 

4. Duty Drawback Program

This program is similar to the Duty Relief Program but pertains to companies who have already paid customs duties on imported goods.  Detailed records are required for compliance purposes, but this program allows for duty recovery for importers, producers, and manufacturers. Goods that have not been further advanced in condition are eligible for duty drawback. For goods being exported to a NAFTA country that have been further processed, additional conditions apply.

For more information on the Duty Drawback Program, please consult the Canada Border Services Agency’s D Memorandum D7-4-2.

 

Good advice can save you money. When it comes to customs compliance, Pacific Customs Brokers’ Trade Advisory Services can assist in identifying your exposure to risk in your supply chain and help navigate the most complex trade issues. This often translates into a competitive advantage in the marketplace and a positive relationship with customs. Our Trade Advisors can help explore the strategies that fit your organization.

Want to know more about our Trade Advisory services and how they can benefit your organization?  Contact our Trade Advisory team at consulting@pcb.ca or visit the Trade Advisory Services section of our website.

 

Has your business benefited from trade incentives?

Do you have questions about these trade incentive programs? We welcome your comments below or email Ask Your Broker.

 

The Danger in Altering Phytosanitary Certificates

Phytosanitary CertificateIt has come to the attention of the customs brokerage community that there has been an increased occurrence of alterations being made to Phytosanitary Certificates by persons unknown. Specifically, these alterations are in the form of invalid “Shipper’s Original” stamps being affixed to the certificates. As outlined below, modifying documents in this manner is a very serious offense with staggering repercussions.

What is a Phytosanitary Certificate?

A Phytosanitary Certificate is a legal document issued by the National Plant Protection Organization of the exporting country. It certifies that the indicated commodity is free of pests and meets the regulations of the importing country. The Phytosanitary Certificates that are currently being altered are issued by the U.S. Department of Agriculture (USDA) for product entering Canada.

What does ‘Shipper’s Original’ mean?

This is a statement that appears on the bottom of the Phytosanitary Certificate in the form of a pre-printed stamp. There are several variations of the certificate depending on whether it has been pre-printed and filled out by hand or computer generated. Regardless, the words “Shipper’s Original” will appear in either red or black ink on the bottom right-hand corner and may show “Part 1 – Shipper’s Original” versus simply stating “Shipper’s Original”.

Acts that Constitute Alterations

Altering a document includes, but is not limited to:

  • Changing information on the document
  • Attaching a PARS sticker to the document
  • Writing over top of the printing to clarify quantities or other information
  • Cutting out portions of one Phytosanitary and attaching them to another

Suspected Cause for Modified Documents

Due to the unfortunate placement of the “Shipper’s Original” statement, it is relatively easy for the stamp to get cut off on a scan or a fax. The Canadian Food Inspection Agency (CFIA) will reject the certificate if the “Shipper’s Original” is not visible on the documentation that they receive by fax. We believe that this has led to the unauthorized cutting and pasting of this statement from one Phytosanitary Certificate to another.

While it may be viewed as a way to expedite the import process, intentionally modifying a Phytosanitary Certificate in any way is forgery of a legal document. Original copies of each Phytosanitary Certificate are forwarded to the regional CFIA office by which the goods were released. CFIA and USDA can, and do, conduct internal and external audits of the Phytosanitary process and match original copies to the copies faxed to CFIA at the time of importation. In instances where forgery has been discovered, harsh penalties will be assessed against importers, exporters and/or carriers, depending on who is conducting the investigation.

Repercussions for Modifying Phytosanitary Certificates

It cannot be stressed enough that alterations of any kind to legal documents are forbidden and the repercussions for committing these forgeries are severe. The fine print on the Phytosanitary certificate issues the following warning:

Warning: Any alteration, forgery, or unauthorized use of this phytosanitary certificate is subject to civil penalties of up to $250,000 (7 U.S.C. Section 7734(b)) or punishable by a fine of not more than $10,000, or imprisonment of not more than 5 years, or both (18 U.S.C Section 1001).

These penalties will be assessed in addition to Administrative Monetary Penalty System (AMPS) penalties issued by Canada Border Services Agency and the Canadian Food Inspection Agency.

In summary, Phytosanitary Certificates are legal documents that are issued by government agencies and it is a criminal offense punishable by law to alter these documents in any way.

For more information on export certification please visit CFIA’s website: Phytosanitary Certificates

 

Have questions about Phytosanitary Certificates? Leave them in our comments section below or email Ask Your Broker.

eManifest Deployment Schedule Established

ScheduleRecently, there was a meeting of the Border Commercial Consultative Committee (BCCC) Commercial Projects Sub-committee. At that time, CBSA notified the trade community that a new deployment schedule for future eManifest functionalities has been established.

Following is a notice from the Canada Border Services Agency’s Director General of Information, Science and Technology outlining the details of this deployment. Stakeholders will notice that there has been no date announced for mandatory compliance.  Pacific Customs Brokers will continue to provide details regarding this program as they become available.

 “The latest schedule which will deliver new eManifest features and systems to external clients is as follows:

  • the initial implementation of new and enhanced notices which will improve communication between trade chain partners and with the CBSA are expected to be available in Fall 2015, and
  • electronic systems (EDI and eManifest Portal) for importers to transmit advance trade data (ATD) to the CBSA are expected to be available in Fall 2016.”

Canada Border Services Agency Notice:

I am writing to you today to provide an update on the Canada Border Services Agency’s (CBSA) progress in the implementation of the eManifest Project.

Over the past few months, the CBSA conducted a comprehensive review of the development, testing and production timelines associated with the delivery of the remaining project components.

I am pleased to advise that this review has resulted in a new deployment schedule for future eManifest functionalities that takes into consideration clients’ requests for time to make changes to their internal business processes and systems, and for the education of CBSA officers.  In addition, since the new deployment schedule introduces functionality incrementally, it enables new systems to run in parallel with existing production systems allowing for early detection and resolution of issues.

The first deployments are foundational in nature and will provide the background and internal system support for the functionality that will ultimately be delivered to the trade community.  One of these deployments was released earlier this summer and additional deployments are planned to be released over the next several months.

Today, I would like to inform you that the schedule for subsequent deployments which will deliver new eManifest features and systems to our external clients is planned as follows:

  • the initial implementation of new and enhanced notices which will improve communication between trade chain partners and with the CBSA are expected to be available in Fall 2015, and
  • electronic systems (EDI and eManifest Portal) for importers to transmit advance trade data (ATD) to the CBSA are expected to be available in Fall 2016.

 

As system development continues to move forward, the CBSA will be communicating further details about the eManifest deployment schedule, and how it impacts each stakeholder group, through various channels such as Web site content, Webinar presentations and client mail-outs.

Thank you for your continuing support and valuable input to the eManifest Project.

Bruna Rados
Director General
Information, Science and Technology Branch
Canada Border Services Agency

 

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

For the latest updates on eManifest visit the Carrier News section of our website regularly or  sign up for our weekly Border Pro newsletter. Additionally, you’ll find the Your Broker Knows YouTube channel to be an excellent resource.

 

Additional Resources:

  1. ACI eManifest: 4 Problematic Situations and How to Handle Them
  2. Regulatory Update: eManifest Amendment Process Outlined

 

Duty Rates Increase for Imports from Several GPT Countries January 1

General Preferential Tariff Effective January 1, 2015, the Canadian Government intends to withdraw eligibility to the General Preferential Tariff (GPT) from 72 higher-income and trade competitive countries (out of current 175 beneficiaries), including China, South Korea, India and Brazil.  Of the 72 countries affected by this change 20 have preferential tariff with Canada though other trade agreements.

Entitlement to the benefit of the General Preferential Tariff is withdrawn in respect of all goods that originate in the following countries, effective January 1, 2015.

List of Countries Affected:

“Algeria”, “American Samoa”, “Antigua and Barbuda”, “Antilles, Netherlands”, “Argentina”, “Azerbaijan”, “Bahamas”, “Bahrain”, “Barbados”, “Bermuda”, “Bosnia and Herzegovina”, “Botswana”, “Brazil”, “Brunei”, “Cayman Islands”, “Chile”, “China”, “Colombia”, “Costa Rica”, “Croatia”, “Cuba”, “Dominica”, “Dominican Republic”, “Ecuador”, “Equatorial Guinea”, “French Polynesia”, “Gabon”, “Gibraltar”, “Grenada”, “Guam”, “Hong Kong”, “India”, “Indonesia”, “Iran”, “Israel”, “Jamaica”, “Jordan”, “Kazakhstan”, “Kuwait”, “Lebanon”, “Macao”, “Macedonia”, “Malaysia”, “Maldives”, “Mariana Islands”, “Mauritius”, “Mexico”, “Namibia”, “New Caledonia and Dependencies”, “Oman”, “Palau”, “Panama”, “Peru”, “Qatar”, “Russia”, “Saint Kitts and Nevis”, “Saint Lucia”, “Saint Vincent and the Grenadines”, “Seychelles”, “Singapore”, “South Africa”, “South Korea”, “Suriname”, “Thailand”, “Trinidad and Tobago”, “Tunisia”, “Turkey”, “Turks and Caicos Islands”, “United Arab Emirates”, “Uruguay”, “Venezuela” and “Virgin Islands, U.S.A.”

 

Least Developed Country Tariff (LDCT):  

Entitlement to the benefit of the Least Developed Country Tariff is withdrawn effective January 1, 2015 in respect of all goods that originate in Equatorial Guinea and Maldives.

 

Impact on Importers:

If you import goods from any of the countries listed above, the withdrawal of eligibility could increase the amount of duties payable upon import into Canada. Goods that are in transit to Canada prior to January 1, 2015 are exempt from the withdrawal order.

 

Advice for Importers:

Importers will want to use the coming months before this regulation is in effect to their advantage by preparing themselves and leveraging any duty savings that may still be available. It is highly recommended that you consult with your customs broker before placing orders, to understand how duties are impacted by this regulation change in 2015.

 

Need More Information?

If have questions about the GPT or LDCT  tariff treatment and need more information,  Pacific Customs Brokers offers trade compliance consulting. Our Trade Compliance Specialists will work with you to assess how these changes may affect your imports.

If you are a current client and are unsure of how these regulation updates affect your business, please contact us and we’d be happy to discuss this with you.

 

Background:

In the early 1970s, the United Nations recommended that developed countries grant non-reciprocal tariff preferences to imports from developing countries under a Generalized System of Preferences in an effort to promote the industrialization of developing countries.  Most major developed countries offer such regimes.  Canada’s regime, the General Preferential Tariff (GPT), was established in 1974 and offers tariff rates that are lower than Most-Favoured-Nation (MFN) tariff rates for imports from developing countries, with the aim of promoting economic growth and export diversification in developing countries.

Canada’s  Economic Action Plan 2013 announced that the Government would modernize Canada’s GPT regime by removing benefits from 72 higher-income and trade-competitive countries, effective January 1, 2015.

 

Additional Reading:

 

Have questions about GPT or LDCT  tariff treatment? Leave them in our comments section below or email Ask Your Broker.

Importing Cheese Into Canada — It’s Not That Simple

Dairy Products: CheeseJust because you can buy it, does not mean you can import it. Many Canadians like to take advantage of the low-cost dairy products available in the United States, whether that be for personal or commercial use.  But did you know that dairy products such as cheese are a regulated commodity? While yes, you may import into Canada, it comes with restrictions.

Personal import limits on dairy products:

For personal use the limits on dairy products e.g. cheese, milk, yogurt and butter are as follows:

  • Up to 20 kilograms per person with a maximum value of CAD$20

Note: Cheese packed in whey must meet further requirements before importation.

 

Requirements for importing cheese into Canada for commercial use:

If you are planning on driving south of the border to pick up cheese for your business, stop! There are certain requirements that must be met in order to be able to import cheese for commercial use.

1.  CFIA Cheese Import Licence

To start, a commercial importer must hold a valid CFIA cheese import licence issued by the Canadian Food Inspection Agency.  Here is an application form that must be completed » Application for a Cheese Import Licence (CFIA/ACIA 5562)

For more info regarding applying for a cheese import license, contact the CFIA’s Centre of Administration.

2. General Import Permit

Cheese is on the import control list and the Export and Import Permits Act (EIPA) . The Department of Foreign Affairs, Trade and Development requires an import permit for all types of cheese imports including fresh, grated, powdered and processed. This is in addition to obtaining a cheese import license.

Failure to obtain a General Import Permit:

If a General Import Permit is not obtained, cheese may still be imported by obtaining a Single Import Permit, but your imports would be subject to a tariff rate of over 200%.

Further information on permits prior to importing can be reviewed at the link below:

Additional Requirements:

  1. Cheese products can only be accepted if they are produced in a country that does not pose animal health concerns to Canada.
  2. Minimum grade or standard
  3. Correct labelling – Consumer-sized products (pre-packaged) must be labelled with the information required to be shown under the Consumer Packaging and Labelling Regulations and Dairy Products Regulations.
  4. An Import Declaration form in duplicate, is completed by the importer or his representative, must accompany the load. This form must contain the following information: name of the exporter; name of the consignee; in the case of cheese, the importer’s cheese import licence number, a description of the dairy product and any identification marks; the number, kind, and net weight of containers; and a statement that the dairy product was manufactured from sound raw materials, was prepared under sanitary conditions, and was, at the time of shipment, sound and fit for human consumption. The statement must also accurately identify the manufacturer or authorized agent.
  5. Health and safety requirements prescribed in the Food and Drugs Act and Regulations and the Dairy Products Regulations.

 

Consequences for not meeting import requirements:

Arriving at the destined port of crossing and failing to meet the above requirements, may result in the seizure, or destruction of the goods, or CBSA may order the goods back to the United States until the proper requirements have been met.

Additionally, at any time, the Canadian Food Inspection Agency may randomly inspect any food product to ensure that minimum requirements (composition, labelling, standard containers and health standards) are met. Non-compliant product will be detained until it meets regulatory requirements, or, if imported, it may be ordered out of the country or destroyed.  Failure to declare restricted items such as cheese may result in penalties, permanent seizure of goods and in some case criminal prosecution.

 

How Pacific Customs Brokers can help?

Pacific Customs Brokers’ over 50 years of experience with dairy imports coupled with our 24/7 customs brokerage service at all commercial ports of entry will serve your company well when importing dairy items. We can not only assist in the release your shipment but also help you determine the duty rates and import permit requirements as well as apply for the required permits, should you need one. For more information on how we can help you commercially import dairy products into Canada, please contact us.

What has been your experience at the border with cross-border shopping? Have questions about importing cheese into Canada? Leave them in our comments section below or email Ask Your Broker.