Archive for the ‘Canada Customs’ Category


 

10 Easy to Follow Steps to Importing Into Canada for Entrepreneurs

Image: 10-Easy-to-Follow-Steps-to-Importing-into-Canada-for-EntrepreneursThere are so many things to think about when you are running a business. And if you are a U.S. business looking to sell into Canada, or you are a business importing into Canada, the task list gets even longer. But many entrepreneurs do not know the first step to importing. That is why we have created The 10 Easy to Follow Steps to Importing Into Canada for Entrepreneurs.

As a prospective entrepreneur or new business owner, use these steps and links to external resources to navigate through the complexities of importing into Canada.

Determine if the Goods can be Imported into Canada

We often help first-time importers get out of a Customs jam as a result of not first checking eligibility of the imported goods. because of this, we recommend knowing what can and cannot be imported into Canada as step number one.

To start, you need to

  •         Obtain an accurate description of the goods you plan to import or export.
  •         Identify the country of origin, manufacturer, and export of the goods.
  •         Canada has a range of goods over which it imposes import controls. The Import Control List (ICL) of the Export and Import Permits Act lists these goods.

Next, you will need to determine whether the goods are controlled, regulated or prohibited by any Other Government Department (OGDs). OGDs regulate groups of commodities relating to their agency (Health Canada, Environment Canada, and the Canadian Food Inspection Agency are a few).

There are over 10 OGDs that are involved in the importation, in-transit movement, and exportation of various commodities. 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.

To understand OGDs in more detail, read our post on how OGDs regulate the flow of your goods.

Determine the Tariff Classification, Rate of Duties and Taxes, Value for Duty

Once you have ensured you can import your goods into Canada, you must determine the:

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

The fact that every commodity that clears through Customs must have an accurate and correct Harmonized System Classification (tariff classification) applied to it is especially important. This classification comes in the form of code which identifies the item and rate of duty to CBSA.

While correctly classifying your commodities is key to avoiding under or over payment of duties and possible, it also reduces the possibility of Administrative Monetary Penalty System (AMPS) penalties, or seizure of your goods.

Visit the Canada Border Services Agency website to determine how to calculate duties and taxes.

Determine if you can Take Advantage of a Free Trade Agreement

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

Canada has free trade agreements with several nations. 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.

Understand Your Import Responsibilities and Opportunities

We highly recommend that you gain a good understanding of customs regulations and requirements. Enrolling in trade compliance education will teach you:

  •         What documents need to be created (and how to spot an error if created by a vendor)
  •         Key trade topics such valuation, tariff classification, free trade agreements, emanifest, etc.
  •         How to manage trade compliance

The substantial knowledge you receive help you in understanding logistics and getting a feel for how transactions move through the regulatory process.

Register Your Business for Import or Export

Before you can import into Canada, you must obtain an import/export account (commonly referred to as an import/export license).  To do that you must complete several 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.

Determine How You Will Submit Your Entry Declaration to Customs

Businesses have many options to communicate import declarations to CBSA. Some are:

  •         Using a courier broker of freight forwarder who both ships your goods and submits the customs declaration on your behalf.
  •         Creating an in-house team that submits it directly from your business to Customs via Electronic Data Interchange (EDI).
  •         Doing it yourself; arriving at the port of entry to meet your goods and make the declaration.
  •         Hiring a customs broker. A customs broker can help you:
    •         Obtain shipment and contract documentation
    •         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 and await clearance, prepare a formal declaration, pay the charges due and then anticipate delivery of their product. Even more expensive is an in-house team.

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.

Determine How You Will Pay Duties and Taxes

Just like there are many options for submitting your entry declaration, there are a couple of options for paying duties and taxes. You may:

  •         Prepare the release and accounting documents yourself, or
  •         Hire a licensed customs broker to do so on your behalf  and therefore, services fees would apply

There are three different payment methods available:

  1. Direct security – this is where you would have your 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 will pay Customs on the last business day of the month for amounts owing on your statement.  If payment is late, penalties will apply and possible suspension of deferred payment privileges.
  2. Goods and services tax (GST) direct – Once you are a GST Direct Registrant, you can opt to pay Customs on the last day of the month, but without posting a bond and obtaining your security.  This does not cover duty, only GST.  The same conditions apply as above for late payment.
  3. Use of a customs broker’s bond – Customs brokers already have bonds in place with Canada Customs, but would charge a fee for the 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.

Plan for the Shipping of Your Goods

Another important aspect is arranging transportation of the goods. 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. Here again, you have many options including using the services of:

  •         A freight forwarder who will manage the entire transportation process including multiple carriers and modes.
  •         Carriers directly. If your shipment is only using one mode of transport, this can be an easy option to manage.

Additionally, you will need to identify the mode of transportation that will be used. Various modes area available including highway, marine, rail, air, postal or courier service. Choosing a mode  will lead you into selecting the best method of shipping and therefore communicating with the transportation company on cross-border requirements.

Identify Your Terms of Sale

It has never been easier to find sources for goods worldwide and then sell directly to your clients. However, 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.

Build a Customs Compliance Program

Especially relevant is the need to build a customs compliance program that works best for you. The key to maintaining customs compliance of your business is to be informed.  It is good practice to know how customs regulations apply to your business. While customs brokers can review your business activity, assuming that do so often is an oversight by importers. Therefore, it is important to designate a company representative to monitor Customs activity and work with your customs broker directly. This person would monitor Customs process, stay up to date with changing regulations and prepare to withstand a Customs audit.

In addition, make sure your internal procedures, documents, tariff classification, free trade agreements, valuation, and origins are in compliance with Customs requirements. Also, 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.

In conclusion, as you prepare to import into Canada, know that there are many resources available to help you. We hope this information will help you plan for a successful start to your entrepreneurship journey.

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Enjoy Duty-Free Imports With A Free Trade Agreement

Duty Free Free Trade

 

With relative ease, you can benefit from free trade. Free Trade Agreements allow you to import certain goods duty-free or at a reduced customs duty rate with participating countries.  To determine if you can benefit from one, let’s first take a look at the definition of a Free Trade Agreement (FTA).

What is a Free Trade Agreement?

Free Trade Agreements are agreements made between countries who want to reduce trade barriers on goods manufactured in their respective countries. Canada has entered into agreements with several countries including Colombia, Peru, Panama, Chile and most recently the European Union to name a few.

Free Trade Examples

Now that we understand the definition, let’s take a look at some examples.  A popular agreement is the North American Free Trade Agreement (NAFTA) which includes Canada, the United States, and Mexico. A more recent example is the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union.

4 Considerations When Evaluating Free Trade Benefits

 Now that we understand what a trade agreement is and examples of how they are used, lets take a closer look at the responsibilities you would be assuming.

In the case of NAFTA, eligible goods must be:

  • Manufactured in one of the respective countries (Canada, the U.S. or Mexico)
  • Qualify under the Rules of Origin
  • Shipped directly from the foreign country to the importing country (Canada, the U.S. or Mexico)

The following 4 areas require additional consideration:

1. Ensuring the items are shipped directly from a foreign country

In some instances, it is necessary to move the goods through a third country. A transportation scenario like this can still fall within the Free Trade Agreement rules by meeting certain conditions. In these instances, if the importer wishes to claim reduced or duty-free benefits, they will need to have proof that the goods were moved “in bond” through another foreign country and were never entered into the commerce of that country.

2. Accurate application of the tariff classification

Also of note is the common assumption that all Free Trade Agreements imported goods are all duty-free. This unfortunately, is incorrect.

Although some goods are entirely duty free, others are not.  Establishing the rate of duty for an imported good depends in part on determining the proper H.S. Tariff Classification. This classification must be accurate.  Furthermore, Tariff classification can be very complex and speaks to the essential character of the imported article including the following:

  • Description
  • Composition
  • End use

Additional questions about the product will need to be answered once the essential character has been determined.

To learn more about The Harmonized Commodity Description and Coding System sign up for our next H.S. Tariff Classification Workshop.

3. Comply with rules of origin

Another vital aspect of compliance are the Rules of Origin.  For example, if the product you are importing has any foreign content you must ensure it complies with NAFTA’s Rules of Origin to be eligible. Some goods containing foreign materials may qualify depending on the rules for those tariffs or the Regional Value Content (RVC). 

4. The party completing the documentation has sufficient knowledge

A further area of consideration relates to the party responsible for completing the shipment documentation. It is imperative that your foreign supplier has sufficient knowledge of the goods to support the completion of the Free Trade Agreement you will be using. Using the example of NAFTA, the person completing and signing the NAFTA Certificate of Origin is declaring that all statements are true and accurate. In other words, this person is attesting to due process and confirms that the goods listed qualify. 

Additionally, while the foreign supplier is responsible for supplying the respective FTA Certificate of Origin, the importer of record is ultimately responsible for the payment of duties, taxes and penalties if at a later date the goods are discovered not to qualify.

If you have reservations regarding the validity of a free trade certificate, you may better choose to pay the regular rate of duty.

In conclusion, not all Free Trade Agreements are the same. They provide importers and exporters  advantages such as duty-free or reduced customs duties. The best way to maximize the financial benefits of using an FTA is to ensure you understand your responsibilities.

Looking to learn more about how your company can benefit from free trade? Sign up below to be notified of our complimentary NAFTA for Beginners webinar.

 

The Cost of Customs Compliance Part 3 | The Benefits of Being Proactive

You have read about the perceived cost of compliance and the ramifications of not being compliant for the last two weeks in our Your Broker Knows blog. This week it is time for some happy news! What are the returns of investing in compliant trading activities?

To answer this questions, we are interviewing some of our team members who have many stories to tell!

Q: Do you have an example of a company who endured a Customs audit without receiving penalties as a result of their trading activities?

A: A few years back we worked on behalf of a client who was importing a large capital project into Canada. We cleared the project as one unit under a provisional entry. This is permitted when each part of the import would not work without the other.

The components were arriving from multiple suppliers located in various countries, at multiple ports of entry by boat, airplane, and truck, over the course of three years.

For theses types of entries, Customs requires the importer, to keep exceptionally detailed and accurate entry records for each shipment in the entry. As we were the customs broker, we kept these records for the client. Once entirely imported, the shipment records were submitted to Customs for audit. This value of this project was over $265,000,000.00 CDN. You can imagine how many pieces this import was made up of! The client passed the audit with flying colors! There were no delays, penalty payments, or entry corrections necessary. It was a complete success.

Q: What compliant activities did this company conduct which resulted in such a successful result?

A: Accurate and detailed records and procedures! It’s surprising how many importers can overlook this aspect of compliance, yet it’s one of the biggest problem areas. In this example, it was the entry records. But non-existent operating procedure can lead to compliance issues.

One of our clients received a sizable penalty when the person normally in charge of filling out the customs documentation for each shipment went on vacation. The vacation relief was not trained in this area and had no procedure to follow. The only guide they had to follow was past entry documentation. They copied the information for a past entries invoice, replacing the piece count and value, for the shipment they were scheduled to import. It later turned out that the shipment they copied was for a different commodity. They had inadvertently used the wrong commodity description and tariff classification. This resulted in an inaccurate duty payment. The fine assessed to them was steep. So…records are super important! And pro tip….file them by transaction number as that is how Customs will ask for them.

Q: Customs motto of ‘know before you go’ are words we repeat to our clients often. What does it mean to you?

 A: Oh sheesh, yes we do say that a lot! Know before you go is the equivalent of looking before you leap (in my college’s words). Who takes the jump before looking at where they will land?!?

 We give a lot of credit to new importers who check import eligibility through preliminary research before they make a purchase. Their research is not just online; they reach out to other importers to understand the reality of importing. They call a customs broker or freight forwarder to get a checklist of what they should do before attempting to import. They try to understand all parts of their supply chain – who is responsible for what. There is also value in working with vendors who have experience. Far too many times we clear urgent shipments from new importers who are denied entry for not having done this research.  

 A client of my colleagues was importing produce from overseas and did not do this research. It turned out that the shipment required a phytosanitary certificate, which they did not have and could not get. Customs destroyed the 6 palettes of produce. It’s costly! That client lost money on the purchase and shipping of that produce. A little research and a lot of conversation can avoid this.

Q: In all your years in this industry, what is the best story you’ve heard with regards to a client being compliant? 

A: There is one back when I first started in this industry that I will always remember. I was getting trained in a seminar when this example came up. I had just learned that Canada Border Services Agency would accept voluntary disclosure of an incorrect entry, provided that they do not find the inaccuracy first.

If a new client had provided us a product database which had even one incorrect tariff, it could result in years of incorrect imports. Customs can look back 7 years, which could result in a lot of incorrect entries.

Now, there is not too much an importer can do as far as lost revenues because, in this example, they would have sold the imported product under the assumption that the import costs were far lower than what they should have been if the correct tariff was assigned and used for declaration. However, there would be an opportunity to disclose this error and make the corrections to Customs.

Clients who find errors should always report and correct them to avoid a penalty that could be a detriment to their business.

Q: If you could give an importer one compliance tip, what would it be any why?

A: Oh my…seriously…just one?! I’m going to give a few.

Do your research, educate your staff, choose vendors wisely, complete paperwork accurately, audit your broker, and maintain your records.

 

Did you like this Q & A format? Let us know if we should do more of these interviews in the comment section below!

 

2017 Designation Maintenance Begins in our Professional Development Courses!

T if for Trade Compliance Education

A new year means a new start for most everything and this includes a reset to the maintenance requirements of your professional designations set forth by the credential’s governing body. We are well into the year now and our Professional Development Courses for fall 2017 are about to launch.

Whether you are a Canadian or U.S. Certified Customs Specialist (CCS), a Certified Trade Compliance Specialist (CTCS), a Certified Export Specialist (CES), a designate with the Law Society of British Columbia (LSBC) or accounting professional, taking any of Pacific Customs Brokers’ seminars and webinars will earn you maintenance points, credits and hours towards a variety professional designations.

Review and plan your maintenance for the second half of 2017 by clicking on the course’s name below:

(Fall registration opens at midnight on July 15, 2017)

  CSCB NEI LSBC
Webinar CCS CTCS CCS CES  
CDN Importing for Beginners Part 1
CDN Importing for Beginners Part 2
US Importing for Beginners Part 1 1
US Importing for Beginners Part 2 1
FDA Regulated Goods 2 2 1
CFIA Regulated Goods 2 2
NAFTA for Beginners Part 1 1 1
NAFTA for Beginners Part 2 1
 
Seminar
Shipping Perishables – NEW! 5 5 3 3
CDN Trade Compliance Part 1 5 5
CDN Trade Compliance Part 2 5 5 3
Exporting from Canada 5 5 3 3
US Trade Compliance Part 1 5 5 3
US Trade Compliance Part 2 5 5 3 3
HS Tariff Classification 5 6 4
Free Trade Agreements and Rules of Origin 5 5 5
Customs Valuation 5 3.5
CFIA 5 5
FDA 5 5 3
CTPAT 3 3 2 2

 

If you have never attended one of our Professional Development Courses before, the following information might help you decide on attending the next one.

Professional Development Courses – Webinars

Our webinars are designed to meet the demands of the global trade community. These live webinars are a convenient way for trade professionals to stay ahead of new regulations with international trade and gain additional knowledge in key areas. The benefits of attending an online course include:

  • Cost-effectiveness – More affordable than industry standards and some even offered complimentary
  • Global accessibility – Travel is removed from the equation for companies with multiple locations or branches
  • Convenience – Attend from the comfort of your desk
  • Concise training – In a fast-paced industry, efficiency becomes just as important as staying compliant
  • Industry recognized sessions – Earn points towards maintenance of your industry designations

Professional Development Courses – Seminars and Workshops

At these in-person sessions, you will learn the best practices on being compliant as an importer and/or exporter helping you expedite your commercial shipments rather than triggering costly delays. Our experts share their knowledge on international and cross-border shipping to keep you current with customs and participating government agency regulations.  The benefits of attending an in-person seminar or workshop include:

  • All day access – Get our experts to answer your questions one-on-one
  • Case studies and real-life examples – Examine other attendees’ trade compliance issues
  • Cost-effectiveness – More affordable than industry standards
  • Range of topics – Choose from a wide variety of seminar topics
  • Certificate of Completion – Receive a certificate for each course you attend
  • Handouts – Take home your own set of course material
  • Industry recognized sessions – Earn points towards maintenance of your industry designations
  • Networking – Connect with other like-minded professionals

For future reference, download your own 2017 Fall Trade Compliance Program today!

4 Reasons a Personal Import Should Not Clear Customs Under Your Company Name

4 Reasons a Personal Import Should Not Clear Customs Under Your Company Name

Sometimes, an employee or owner of a company will ask their customs broker to clear a personal import using their company’s commercial import account. It is seemingly easier to clear goods under an established account rather than the alternative, BUT this has clear pitfalls that we want to bring to your attention.

We do not recommend clearing a personal import as commercial goods for these 4 important reasons:

  1. Provincial Sales Tax (PST) needs to be assessed. If a commercial import is cleared in the name of a business, the business will have to self-assess the PST, which is often forgotten or unknown. If the shipment is cleared correctly as a personal import, PST is assessed at the time of importation with the exception of goods that require registration, such as vehicles.
  2. The import is filed against the company’s business import number. This means the company is responsible for all audits, Administrative Monetary Penalty System (AMPS) or other queries from government agencies for the next 6 years!
  3. A personal import is exempt from some requirements that commercial importations are required to meet. An example of this is the requirement for North American Free Trade Agreement (NAFTA) certificates. Personal use goods importations can apply NAFTA tariff treatments without a completed NAFTA Certificate or Statement (to reduce the duty payable).
  4. The company has no financial interest in the shipment. In most cases, in order to act as the Importer of Record (IOR) for a shipment, a company or individual is required to be the buyer or seller of the items.

 

Importers of personal use goods have 2 options for clearance:

  1. If items are being shipped to the buyer, for example in online shopping, they can self clear at the customs office closest to them once the shipment has arrived at the bonded warehouse in Canada. Unfortunately, this option can incur additional fees from the transportation company for bonding the load and can delay the delivery of the shipment. The importer will have to obtain a copy of the in-bond documents and then clear the shipment in person at their local Canada Border Services Agency (CBSA) office. Once cleared they will have to return a copy of the customs release to the carrier’s warehouse before the goods can be delivered. Depending on the carrier, the importer maybe able to meet them at the border and clear at the time of arrival. If you are transporting your personal import yourself, you are required to declare your imports at the border when you arrive. At that time customs will assess any duties and taxes payable.
  2. They can hire a customs broker to complete the customs declaration on their behalf. The use of a customs broker will incur additional brokerage fees. However the use of a customs broker will allow the shipment, in most cases, to clear customs electronically at the first point of entry and be be delivered soon after crossing the border. Using a customs broker will also ensure that all import requirements are met and help avoid delays.

    A broker can easily and swiftly assist the individual with a personal import as the CBSA has provisions for a customs broker to use their own business number (specific to personal importations) to clear personal shipments. We can even bill the charges to the commercial account so long as we have the correct authorization from the client.

The difference between personal use goods and personal effects importing:

There is a difference between personal use goods and personal effects imports. To understand the difference please visit our blog post on How To Import Personal Belongs vs Personal Use Goods.

Clearing the shipment correctly as a personal import is the desired and proper way to handle these clearances in order to ensure the import is entered into Canada in compliance with all requirements.

Need help with your personal use goods import? We can help. Call us anytime and tell us your import story toll-free!