Posts Tagged ‘importing into Canada’


 

What is the Value for Duty on Rescue Puppies: A Customs Valuation Case Study

Customs Valuation on Rescue DogsWhat is the value of a rescue puppy? What a silly question… man’s best friend is invaluable! Those cute bundles of happiness that greet you each day with a wagging tail and eagerness to go outside are a part of our family. However invaluable our four-legged companions may be to us, Customs needs a Customs valuation also known as value for duty (VFD) placed on them when importing into Canada. Therefore in this blog, we will take a closer look at a recent import we completed on some rescue dogs from Idaho.

 

Nothing is free in the eyes of Customs. To determine the value of seemingly free, invaluable or complimentary items, you must use one of the 6 Methods of Determining Customs Valuation.  This blog post explained the methods must be ruled out, one-by-one, beginning with transaction value.

 

What are the 6 Methods of Valuation?

The six methods are:

 

  1. Transaction Value: The value for duty is based on the price paid or payable
  2. Transaction Value of Identical Goods: The value for duty an established value for duty of identical goods
  3. Transaction Value of Similar Goods:The value for duty an established value for duty of similar goods
  4. Deductive Method: The value for duty on the most common selling price (per unit) of the goods sold to Canadian Consumers
  5. Computed Method: The value for duty is the cost of production, profit, and general expenses
  6. Residual Method: Used when none of the above will do

 

How to Value Free Goods

When we received the call from our client who was wanting to import a family of dogs from a U.S. shelter that could no longer keep them, we rose to the challenge. We were under a time limit to determine the value for duty as the shelter in Idaho was running out of space.

 

As previously mentioned, with items like samples, replacements, warranty items, short-shipped goods, importers are required to declare a fair market value, even if in the end payment of duties and taxes may be unnecessary. But was the value for rescue puppies the same?

 

In the case of the puppies, Canada Border Services Agency (CBSA) has a specific D-Memorandum on how to come to a correct value for duty.

 

Transaction Value Method

It states that the Transaction Value method should be used. Now, you may wonder, ‘how can it be used when there is no transaction taking place?’, Well, there is. CBSA states that:

 

“Where goods are sold for export to Canada, to a purchaser in Canada, and the price paid or payable (PPP) of the goods can be determined, the transaction value method is to be used to determine the VFD. The PPP is defined as all of the payments made or to be made by the purchaser to or for the benefit of the vendor.”

 

Some of those payments would be:

 

  • Adoption fee(s)
  • Veterinary charges
  • Foreign permits
  • Any other costs associated with exporting the animal from the U.S.
  • Permits acquired in Canada
  • Veterinary charges paid in Canada

 

Transaction Value of Identical or Similar Goods Method

If any of the above costs were not incurred, CBSA states that :

 

“If no money is paid by the importer to acquire the rescue animal, the VFD must be determined using an alternate valuation method. No VFD shall be determined by arbitrary or fictitious amounts.”

 

In looking at our 6 Methods of valuation, and knowing that they must be ruled out one-by-one, starting with Transaction Value, if Transaction Value cannot be used, the next option must be Transaction Value for Identical then Similar goods.

 

For example, if after this import, our client wanted to import another rescue dog from the same shelter in Idaho, of an identical breed and similar age, but no PPP was in place, the VFD should be the same VFD used in the previous import.

 

Deductive Method

If there is no identical or similar established value for duty,  move down the list to Deductive method.

In this method, you would find an established selling price in Canada for the same breed and similar aged dog. They would then use that figure less the profit earned and costs associated with importing the animal (veterinary costs, permits, etc.) to establish a value for duty.

Questions to Ask Yourself When Determining Value for Duty

The above methodology can be applied to many seemingly ‘free goods’. When looking to import them into Canada, we suggest you ask yourself the following questions. They will help to determine which method you should use:

 

  • Will you be selling the goods to a buyer for a price?
  • If you are not selling the goods, is there a selling price established on an identical or similar item?
  • If you are not selling the goods, and there is no established value for identical or similar goods you’ve previously imported or sold, is there an established selling price within Canada for the same goods?
  • If you are not selling the goods, and there is no established value for identical or similar goods, and established selling price within Canada by another vendor for the same goods, was there a cost to making the item?

 

In this case, the rescue puppies and mom were imported using the Transaction Value Method. The adoption fees, veterinary charges, and permits were added up to establish the value for duty. They have since been adopted and are happy and healthy new additions to Canada.

 

For more information on determining value for duty  or for assistance in Customs valuation, leave us a comment below. We are happy to help.

 

 

 

 

Your Designation Maintenance Begins with our Professional Development Courses

Image: Seminar Room

 

A new year means a new start and this includes a reset to the maintenance requirements of your professional designations set forth by the credential’s governing body. Your Professional Development starts with Pacific Customs Brokers.

Taking any of our seminars and webinars may earn you maintenance points, credits, and hours towards a variety of professional designations. Some examples of eligible designations are:

  • Certified Customs Specialist (CCS)
  • Certified Trade Compliance Specialist (CTCS)
  • Certified Export Specialist (CES)
  • Designate with the Law Society of British Columbia (LSBC)
  • Accounting Professional


Registration for Spring is now open!

Review and plan your professional development maintenance for the first half of 2018 by clicking on the course names below:

  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! 3 3
CDN Trade Compliance Part 1 5 5
CDN Trade Compliance Part 2 5 5 3
Exporting from Canada 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 5 5 5
Customs Valuation 5 5
CFIA 5 5
FDA 5 5 3
C-TPAT 2.5 2.5 2 2

 

If you have never attended one of our Professional Development Courses, 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 sessions are a convenient way for trade professionals to stay ahead of new regulations with international trade and gain additional knowledge in key areas. Benefits of attending an online course include:

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

Professional Development Courses – Seminars and Workshops

At our in-person courses you learn the best practices of being a compliant importer and/or exporter which will help you expedite your commercial shipments to and avoiding costly delay triggers. Our experts share their knowledge and stories on international and cross-border shipping regulations to keep you current with customs and partner government agency requirements.  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 hurdles
  • Cost-effectiveness – More affordable than industry standards
  • Range of topics – Choose from a wide variety of topics
  • Certificate of Completion – Receive a certificate for each course you attend
  • Handouts – Take home your own set of course material
  • Industry accreditation – Earn points towards maintenance of your industry designations
  • Networking – Connect with other like-minded professionals

 

Have questions or comments about any of our courses? Call 888.538.1566 or email us today!

CBSA Will Use a New Cargo Inspection System to Pre-screen Northbound US Cargo

Cargo Inspection System - Pacific Crossing 2017

 

CBSA will open the first land border

Gamma Ray Vehicle and Cargo Inspection System to improve processing of US Cargo

at Pacific Highway sometime in the summer of 2017.

Contributed by Jan Brock,

Senior Trade Advisor
Former Chief of Commercial Operations Pacific Highway crossing

Canada Border Services Agency (CBSA) announced in its Report on Plans and Priorities that it intended to invest in detection tools to assist the Border Services Officers with detecting high risk cargo.

Examinations may be performed with the use of specialized tools e.g. gamma ray imaging vehicle and cargo inspection system, ion scanners and detection dogs and may include a full or a partial offload of the goods to detect the presence of prohibited or restricted goods.” CBSA

 

Gamma ray imaging is a non-intrusive tool that cargo inspection services can use quickly and effectively to verify the presence of legitimate goods and to investigate suspicious and unknown materials. This technology assists with reducing border wait times and costs associated with cargo inspections.  

The Gamma Ray Imaging Vehicle and Cargo Inspection System being built at Pacific Highway is a stationary fixed location system contained within a building.

This technology performs the best for  detecting the presence of high density items  such as  steel or low density like narcotics.  It is capable of scanning an entire  semi truck and trailer ,intermodal shipping containers and automobiles for contraband.

This Cargo Inspection system  is a fast screening tool that will aid in facilitation of  cargo inspection at land borders. Large sized targets can be examined without unnecessarily opening or disturbing the contents of the load or incurring the cost of unloading or de stuffing the container.  

An offload will incur a cost to the importer, carrier and to CBSA cargo inspection services as it is very labour intensive.

The gamma ray image this system presents to the Border Services Officer (BSO) after the scan of the cargo and/or vehicle has been completed will assist in the officer’s decision on whether a more intrusive examination is warranted and the load may be redirected back to the warehouse for offload or destuffing by CBSA or the CBSA Contracted Cargo Inspection Service.

The efficiency, reduction in cargo inspection services and avoidance of costs associated with such action will make this new Cargo Inspection System a welcome addition to the Pacific Highway Port of Entry  and to Canadian Freight!

Have more questions on cargo inspection systems or cargo inspections services? Contact us and we are happy to assist.

For more detail please refer to the linked resource below :

Link: CBSA Report on Plans and Priorities

Want to learn more about the fundamentals of cross-border shipping? Attend a Customs Compliance Seminar hosted by Pacific Customs Brokers and learn from the experts.

Have questions or comments regarding importing to Canada? Leave them in our comments section below or email Ask Your Broker.

Trade Talk | Exploring Customs Brokers and the Supply Chain

Trade Talk | Exploring Customs Brokerage and the Supply Chain

Back in 2013 it was reported by Canadian National (CN) that Six million goods and raw materials cross international borders every single day. Now imagine what is involved in clearing these goods through customs in different countries.

This is where Customs Brokers come into the Supply Chain. Customs Brokers are your translators. We communicate with customs and participating government agencies, vendors, carriers and all other participating parties.  throughout the shipping process, ensuring that all of the proper procedures have been followed.

From televisions and home appliances to custom machinery for large construction projects, we clear thousands of shipments every day. Seven days per week, 24 hours per day, 365 days a year, regardless of the port of entry or mode of transport. It is the Customs Brokers duty to ensure that your shipments in and out of the U.S., Canada, Mexico or any other country are being cleared and managed efficiently.

Trade between the United States and Canada is huge and growing. In 2013, our two-way trade was $606 billion. To put that into context, that’s $1.7 billion a day — or $1.2 million every single minute.

What we know for sure:

 According to WX1130 a popular radio news channel, it is expected that aside from the bi-lateral negotiations with the US on NAFTA, Canadian parties will likely address some of the points in debate at the State level rather than the Federal level. This means that those who are representing impacted interests are getting focus by those who have the ability to ensure minimal negative impact and/or even improved experiences across the Supply Chain.

There are 9 million U.S. based jobs that exist because of NAFTA being in place. If Monday’s meetings between Canada and the U.S. indicate anything, it is that there is willingness and there are channels open to ensuring that those 9 million jobs across the Supply Chain remain unaffected and that more jobs can be created with the incoming infrastructure goals of both these countries.

What we are talking about:

Customs Brokers in Supply Chain

Where does your Broker fit in the supply chain? Well the supply chain in truth can actually starts with either the buyer or the seller – it will also ultimately end with either the buyer or the seller. What is determined at either position will impact the activity and costs within the supply chain.

What most people have traditionally considered “supply chain” actually happens in between these two points, your broker is your asset at each end of the supply chain. So do we extend supply chain to incorporate Customs Brokerage?

When we look at past clients cases our experience would suggest YES to this.

Something as seemingly simple, can create extremely complex issues and unnecessary expense, because at the outset it seems so very simple. Take HS Tariffs or even Incoterms, reclassification or reassignment of one of these codes has saved over 50M for just one of our clients on a mere 5 international shipments.

Incoterms if they are new to you were issued updated in 2010. You can see them here

What are Incoterms®:

What are IncotermsModern-day Incoterms, date back to the creation of the first FOB term in 1812.

Here is a basic explanation of what Incoterms are below and if you want to see the updates made in 2010 you can view those HERE

“A series of three-letter trade terms related to common contractual sales practices, the Incoterms® rules are intended primarily to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods. Incoterms inform sales contract defining respective obligations, costs, and risks involved in the delivery of goods from the seller to the buyer. However, it does not constitute contract or govern law. Also it does not define where titles transfer and does not address the price payable, currency or credit items.

The Incoterms® rules are accepted by governments, legal authorities, and practitioners worldwide for the interpretation of most commonly used terms in international trade. They are intended to reduce or remove altogether uncertainties arising from different interpretation of the rules in different countries. As such they are regularly incorporated into sales contracts worldwide.” ~ 

As you can see here, supply chain is much more than freight forwarding and logistics – because these actions take place in between the buyer buying and the seller selling. For many years now we have been working to expand our client’s understanding of where to best access our value as customs brokers – the customs brokers value is best seen on either end of the supply chain for the buyer or the seller before activating the supply chain in the delivery process.

What we think:

Customs Brokers on Supply Chain

We are thinking about ensuring our readers and customers understand IncoTerms and HS Tariff Codes. Earlier this month we shared an article on HS Tariffs you can review it here, and next week we will sharing a powerful article on Incoterms.

 

What we advise:

Advice on Customs Brokerage and Supply Chain

Engage your customs broker early in the sales process, or early in the buying process to ensure that all parties experience the best trade compliance results both top line and bottom line.

 

Getting this right is money in your pocket – getting it wrong, well that is a loss we don’t want you to experience! 

 

What we are reading:

Reading - Customs Brokers and Supply Chain

Forbes: As an analyst who covers supply chain management (SCM) and procurement practice across industry, I tend to keep my keyboard focused on the disruptive themes that continue to re-define it. That said, if you’re expecting me go on about the unprecedented growth of the SCM solution markets, the accelerated pace of innovation, tech adoption, social change, etc., don’t hold your breath. I can’t, as the data argue otherwise. Too many of us conflate diversification with acceleration. There’s a difference.

Great Suppliers Make Great Supply Chains

Wall Street Journal: Leave it to California growers to find a new way to eliminate the shipping from farm to warehouse. A startup operation near the San Francisco International Airport is trying to turn the warehouse itself into a farm, the WSJ’s Jacob Bunge and Eliot Brown report, eliminating the timing, transportation and preservation strategies that are critical to modern agriculture distribution. Backed by a group of tech entrepreneurs and investors, Plenty United Inc. hopes to begin selling produce soon that they say is bred for local tables rather than for shipping durability. The operation is part of the expanding field of indoor farming made possible by new lighting and other growing technology. Several startups are trying to marry that technology to the consumer push for local goods, and make it economically palatable by slashing logistics costs. Warehouse space isn’t cheap, however, particularly close to urban consumers, and Plenty United will have to nurture more funding to meet its goal of running 60 farms outside major U.S. cities.

Today’s Top Supply Chain and Logistics News From WSJ – WSJ

 
Have our team put a quote together for your projects below:

 

When topics as broad as free trade re-negotiations, tariff amendments, any type of international border barriers to business are being discussed many of us want to be the fly on the wall that hears the discussion. We try to be that fly on the wall for you, our valued readers.

We know that you also want to know how to have your voices heard in that discussion, especially when you are directly affected.

One way to share your voice is to publish your concerns, insights, ideas or expertise online. Each week we publish and share industry news, our insights and reports that impact you as our readers. Do you have something that you would like us to share? Ask? Research for you? Let us know and we will add your requests to our weekly research and publishing goals.

Trade Talk – HELP! “I’ve been chosen for a (CBSA) Trade Compliance Verification Audit!”

Canada Border Services Agency (CBSA) Verification list 2017 is out – Are you an importer of these items?

As an Importer of goods into Canada, you may one day be faced with a terrifying reality of being chosen for a Canada Border Services Agency (CBSA) Trade Compliance Audit. You may wonder what your next step should be.

Step 1: Breathe, it may not be as bad as you think. Contact your customs broker and discuss the situation. They will guide you through this process. You are not alone.

Step 2: Understand how an audit works.

The CBSA uses Post Release Verification Audits as a tool to measure trade compliance with the various CBSA programs.  Typically a trade compliance audit will focus on one of three major programs, Tariff, Origin or Valuation.  In all cases, there are two processes by which your company may be chosen for an audit.  

  1. Random Verifications – These verifications are typically focused on the type of goods being imported, the country of origin of the goods, the relationship between the purchaser and the seller, etc.   
  2. Targeted Verification Priorities – Targeted verifications are determined through a risk-based assessment.  A list of verification targets is typically issued by CBSA in January and July of each calendar year.  Each list will carry new items to be verified for compliance with tariff, origin and valuation, and, there will be some items that carry over from previous calendar years.

The January 2017 Trade Compliance Verification Priorities can be found at the following link:

http://www.cbsa-asfc.gc.ca/import/verification/menu-eng.html

 

CBSA Verification Audit

 

 

Step 3: Educate your team.

Trade Compliance Education:

Pacific Customs Brokers aims to keep importers and exporters informed on changing customs regulations while educating them on the consequences of non-compliance. Whether you are new to importing, exporting or are seeking training on the movement of international goods, our trade compliance program will aim to match your needs.

Related blog post: 7 Excellent Reasons to Invest in Trade Compliance Education

 Trade Advisory Services:

If your company is chosen for a Trade Compliance Audit or Verification Audit, Pacific Customs Brokers is here to help.  Please contact our office as soon as you are notified of your audit, and one of our Certified Trade Compliance Specialists will work with you to guide your business through the audit process.  It is very important that we be brought in right at the beginning to ensure that we can represent your best interests with CBSA to mitigate the impact of any additional duty, penalties or interest that may otherwise be payable.

Our trade advisory services include but are not limited to:

  • Thorough HS database review with ongoing updates
  • Current industry training and education to review transactions completed by customs brokers thereby minimizing errors
  • Experienced counsel on valuation and origins
  • Strategic advice on withstanding a customs audit
  • Firm support through the challenges of the audit process

For more information about our trade compliance audit services, contact us today or learn more at Canada Customs Trade Compliance.

 

Do you have questions about CBSA’s   trade compliance verification priorities? Use the comments section below to leave us your thoughts or email Ask Your Broker .