Posts Tagged ‘NRI’


 

Why Am I Losing Money When Shipping to Canada?

Frustrations arising from cross-border shipping to Canada are always showing up in  my Google Alerts.  Most are from online auction type sellers who really do not understand the customs clearance process. Some try to save the customer’s money by  placing a false value on the goods which can result in even more costs for false declaration and lengthier delays for the receiver in Canada. Some e-sellers  refuse to ship to Canada altogether as they feel it is too much hassle and have lost money in  the transaction or received bad feedback from buyers.

Have you been faced with this situation?

1. Why do my customers in Canada want me to ship USPS?

This could be because it is cheaper to do so.

2. When I ship via postal service why does my customer in Canada send me a message four weeks later informing me they did not receive the package and I should resend it?

It could be because there is no traceability and it might be lost or stolen.

3. When I ship using a small parcel courier why do they hold my package hostage until the customer pays all the customs charges? Often the customer refuses to pay and the parcel company ships the package back and charges me for it.

Using the small parcel courier now provides you with the ability to track your package, but does your customer in Canada know what to expect to pay in  extra customs charges when the goods are delivered? If they don’t they may feel the charges are too high and it is no longer worth buying the product.

4. When I ship using the “other” small parcel company, why do they bill me all kinds of customs charges but the customer still gets their package?

The small parcel courier is on a customs program called the Low Value Shipment Courier program (LVS), in which the courier is allowed to declare and deliver the package and then that small parcel company sends out a letter stating how much they owe in duty, taxes and brokerage. If the Canadian customer does not respond, the “other” small parcel courier’s service guide directs them to bill the charges back to the shipper for any unpaid customs charges.

“Regardless of any payment instructions to the contrary, the sender is ultimately responsible for payment of duties and taxes if payment is not received.”

5. Why is my business losing so much money when selling to Canadians?

See 2, 3, and 4 above.

Have you explored all your options when shipping and selling to customers in Canada?

Before you ship or sell your products to customers in Canada, do your homework and consider calling a Canadian customs broker who can assist you in:

  • understanding the complexities of the cross-border transaction
  • save you money in fees
  • avoid unnecessary hassles at the border and with angry Canadian customers
  • streamline your shipments for a speedy delivery and a less costly transaction

The Non-Resident Importer option may be one solution. Preparing your Canadian customer on what to expect and having a solution in place may be another. Contact us before you finalize your next sale, and we will work with you and your Canadian customer to help both of you make a smooth cross-border transaction.

Do you have further questions about shipping to Canada? Feel free to ask them in the comment section below.

CBP VS CBSA Valuation History

Shipments to Canada - Non-Resident Importers The direct to market program for Non-Resident Importer’s (NRI) can be key if you have the sales volume. While this is an excellent way to take advantage of lower duty rates for importing directly from an offshore country,valuation for Customs declaration remains a critical component of your customs compliance.

The United States and Canada differ on interpretation of the valuation rules. Lets take a look at the history and review how we arrived with customs valuation rules as they are today.

History:

Governments have collected customs duties since the beginnings of international
trade. It is recorded that Athens applied 20 percent import duties on
corn and other goods, while the Romans, from well before the time of Julius
Caesar, depended upon customs revenues to support the expansion and maintenance
of their empire. And, where a tax must be collected, there will be
disputes over rates and methods….

Today: In 1947, the General Agreement on Tariffs & Trade (GATT) negotiations concluded that the customs value should not be arbitrary or fictitious. Since then, there are agreements on how to determine the value for customs declarations.

Currently the valuation rules on are based on the implementation of the GATT Agreements. In 1994 the World Trade Organization established and implemented (based on those existing GATT agreements) the Customs Valuation Agreement (CVA) that all WTO members must abide by.   Valuation rules are necessary for many reasons and are valuable for use in:

  • Determining and collecting revenue
  • Producing trade statistics
  • Implementing and monitoring trade agreements
  • Monitoring quantitative restrictions (quota)

Still the interpretation of these rules are different for different countries.

The basic method for determining value is the transaction value method: the price paid or payable of goods being imported with certain adjustments when sold for export to the country of importation. This is where the interpretation has been the subject of many reviews and debates.

This is another significant difference between Canada and the USA with respect to a US company acting as a NRI and thinking they can use the ‘first sale rule’ for their direct imports into Canada.

In the US the “first sale rule” allows (under certain conditions) for the importers to use the price payable by the buyer (middleman) for imports into the USA. For example: a buyer (middleman) secures a sale of merchandise bought for $20,000. and then in turn sells the goods to the retailer for $30,000. The goods in the meantime are being exported from China into the USA with the final buyer being the importer. The value used meets the condition for using the valuation under the first sale rule. (lesser value of $20,000.).

Some countries in the World Trade Organization (WTO) have legislated and refined the interpretation of these valuations rules successfully while some have not.

Take the USA, Japan and the European Union, while they have had much discussion and even congressional reviews and debates, these countries still allow (with certain conditions met ) the “first sale rule”. Canada and Australia have already abolished the “first sale rule” through legislation 10 years ago.

Canada deems under the transaction value method that the value for customs be: the price paid or payable (with adjustments) by the first purchaser IN   Canada. In other words the value should be the last sales value before import and not the first sale. How does this change the example given above ?

In order to declare the lesser value ($20,000.) the importer must be the middleman and must reside in Canada.   If the middleman happens to be a USA company acting as a NRI for their sales to Canada and has their goods shipped directly from the offshore country they buy from, the value used for customs must be the price paid or payable by the first Canadian purchaser, not the price paid by the middleman under the “first sale rule”

This is critical to the NRI and compliance under valuations rules for doing business in Canada. Many USA companies do not realize this difference and declare the sales price they paid, leaving them at risk in the event of an audit by CBSA.

If you are a NRI selling to Canada, review your procedures and ensure you are using the correct valuation for Canada. When in doubt contact Pacific Customs Brokers for a complete review of the valuation methods and regulations for your imports into Canada.

 

 

 

 

 

 

NRI Program – Shipping to Canada Directly

Hockey PlayerPreviously, we introduced you (U.S. company) to the Non-Resident Importer (NRI) Program for exports to the Canadian market. In this segment, we’ll provide excellent reasons as to why shipping your overseas goods directly to Canada is the way to go.

One of Canada’s passions is hockey, therefore, this is great market to sell hockey sticks. If you are a U.S. company wanting to sell hockey sticks into Canada, this is not a problem. But it is a problem if the hockey sticks are initially imported into the USA from China first and then exported to Canada. The reason being, the hockey sticks will then attract duty. Considering your duty and freight cost to re-export to Canada, the price is no longer competitive as a Canadian firm can import the same hockey stick duty free direct from China. This is where the option of being an NRI is a cost benefit to your company. You can utilize the NRI option for a direct to market cost savings to import the hockey sticks duty free into Canada direct from China.

Many U.S. companies do not export from their locations in the USA. They have enough sales volume to bring the goods into Canada directly from the offshore country without ever landing in the USA and can then take advantage of Canada”s trade agreements with other countries. Just one of the benefits of being a Non-Resident Importer!

Let”s look at another example of how you can use the NRI option to your benefit — perhaps you export (not as an NRI) high end walking sticks made in Italy to Canada. These walking sticks are so desirable, you have no trouble selling them to the Canadian market, despite the Canadian consumer has to pay tax and 7% duty to import them.

With the product, you offer a lifetime warranty of a free replacement, should any of the walking sticks break or crack but the customer will still be responsible for the duty & taxes on the free replacement. The customer is not so happy. If you shipped as the a Non-Resident Importer, the customer would not endure anymore costs. Your customer in Canada is extremely pleased with your hassle free replacement warranty and spreads the word.

You decide to use the NRI option for all your sales to Canada and find you can actually reduce the cost by acting as the NRI due to your weekly volume of shipments to Canada.  Your phone starts ringing, and your website traffic increases with even more orders for the beautiful lifetime guaranteed Italian walking stick!  A true success story!

For more information on NRI option and how it can benefit your sales in Canada, contact us at shipmentstocanada@pcb.ca and get a jump on other exporters to Canada who are not taking advantage of the Non-Resident Importer option.

NRI- Be Prepared Before You Ship

Antique Books and Glasses“Risk comes from not knowing what you’re doing.”
Warren Buffett

 

Would you go cliff diving without knowing how deep the water is? Of course not!

Exporting to Canada can be an easy process or difficult depending upon your knowledge and resources. Many US Companies have been setting up as Non-Resident Importers without knowing all the facts and or not enough preparation before they start using the NRI option for their sales advantage to Canada.

I always remember and refer to the Boy Scouts motto “Be Prepared” for reviewing the NRI process before you export your goods to Canada.

B – Begin the information gathering, find out what is needed to import your   product into Canada, are there any     special permits or licenses needed?

EExplore different ways you can price your product to make it attractive to the buyer. Should you build in import costs in the price you show, or detail   them on your invoice?

 P – Plan how you are going to ship and distribute your products in Canada.     Consolidate or Ship direct?

RRequest the services of our consulting team to rate your catalog of products   to discover the duty rates that may affect your delivered price.

EEstablish your final delivered price, making sure all import costs are   included to maximize profits.

PProceed with the document set up with Pacific Customs Brokers to make   sure your import account is set up and ready to avoid border delays.

A – Audit your procedures and how your paper trail will look to ensure you are in     compliance with all customs   regulations.

RReview the GST tax considerations, do you need to, or should you register   for a GST tax account.

EEducate your sales staff on how to quote a landed cost.

DDelight your customers in Canada with your no border hassle sales solution   and Sell, sell, sell!