customs duties

Many businesses import goods.

Some have importing as their sole or primary business activity.

Some are foreign businesses importing goods into Canada.

Whether you are an individual or a corporate importer, you will want to maximize your profits, minimize your costs and exposure to risk and avoid running afoul of the law.

Thus, you must know the laws and regulations of the country into which you are importing goods.

Your business should attain the appropriate legal advice when importing goods into Canada. Indeed, this is especially so since Canada’s legal and regulatory regime governing importing can be complex, technical and bewildering.

With HLF as your trusted legal advisors, you have the right legal team to help you tap into the potentially lucrative Canadian market and grow your business.

What taxes must you pay?

If you are importing goods into Canada, you might have to pay taxes, including customs duties and the federal Goods and Services Tax (GST) (the current rate is 5%). The GST is imposed on the value for duty of imported goods, plus any applicable duties.

Special excise taxes and duties may also be levied on certain goods. A foreign company importing goods into Canada must to pay customs duties, as well as comply with several federal laws that regulate customs procedures, quotas, product standards and labelling requirements within Canada.

How much is the duty?

The rate of duty depends on the classification of a product under Schedule to the Customs Tariff. That rate is applied to the value for duty to calculate the duty payable. Canada’s system of customs valuation is based on the World Trade Organization’s (WTO’s) Customs Valuation Code. It has been implemented into Canada’s Customs Act.

The List of Tariff Provisions in the Schedule to the Customs Tariff (the “Tariff Schedule”) is divided into 99 chapters and contains a comprehensive list of goods intended to cover the range of all possible products that could be imported into Canada.

The correct classification of goods is an important first step in determining the amount of customs duties you must pay to import a product. As legal experts, we can help you understand how the Tariff Schedule applies to your particular situation.

The Canadian system for determining the value of goods for duty purposes is based on the international Customs Valuation Code pursuant to the General Agreement on Tariffs and Trade (GATT).The primary valuation method for imported goods is transaction values.

It is the price actually paid or payable for the goods sold for export to a purchaser in Canada, subject to certain adjustments.

Canada applies different duty rates (preferential and non-preferential) to the same goods on the basis of their origin. The origin of goods is usually based on where they are manufactured, grown or extracted. The rules of origin help to determine whether a product “originates” so as to benefit from a trade agreement.

These rules may involve calculations and analysis of both the tariff classification and value of the components that make up an imported product. Preferential and non-preferential duty rates are set out for each tariff item in Tariff Schedule.

Call us. We can help with these often complicated calculations and analysis of the often complex law.

For goods originating from most countries, the Most Favoured Nation (“MFN”) rate of duty will apply. For goods that qualify as originating from a country with which Canada has a trade agreement, such as the North American Free Trade Agreement (NAFTA), the rules and rates arising from that specific agreement will apply.

As a member of NAFTA, Canada accords preferential tariff treatment to goods of U.S. and Mexican origin; in most cases, these goods may be imported duty-free.

What are the import restrictions?

There are restrictions on quantity in the form of tariff rate quotas.

The federal Export and Import Permits Act has the Import Control List (ICL). Items on the list include:

• clothing
• footwear
• textiles
• fabrics
• yarns
• steel products
• weapons and munitions
• agricultural and food products such as turkey, beef and veal products
• wheat and barley products
• dairy products and eggs.You must get a permit to import these listed products unless they are exempted (e.g. goods from certain countries of origin).

Importers wishing to import goods that have been placed on the ICL must apply to the Department of Foreign Affairs and International Trade for a permit to import these goods.

Also, various legislative controls restrict the importation of:

• agricultural products
• specific food products
• grain
• alcoholic beverages
• radiation emitting devices
• offensive weapons
• oil and gas

Special import measures will apply where imports adversely affect the development and expansion of Canadian industry.

These “anti-dumping” measures aim to protect Canadian producers from competition from foreign goods that are being sold in Canada for artificially low prices.

For example, an anti-dumping duty is imposed where the Canadian International Trade Tribunal has determined that the dumping of goods has caused or is threatening to cause material injury to a domestic industry.

Certain goods are prohibited from being imported into Canada.

These include:

• materials deemed to be obscene under Canada’s Criminal Code
• materials that constitute hate propaganda
• certain prohibited weapons and firearms
• base or counterfeit coins
• certain used or second-hand aircrafts
• goods produced by prison labour
• used mattresses
• any goods in association with which there is used any description that is false in a material respect as to their geographical origin
• certain used motor vehicles
• certain hazardous products
• certain animals and birds
• certain parts of wild birds
• white phosphorous matches

How is the law enforced?

Persons bringing goods into Canada must report to Canadian customs officials, make due entry of the goods and pay any duties and tax owing upon importation.

Canadian customs officials have a broad range of enforcement options, including criminal sanctions and civil penalties that may involve seizing and forfeiting goods and imposing fines.

Customs officials also have considerable audit powers to ensure compliance with import controls, and importers are required to keep extensive books and records.

The Administrative Monetary Penalty System (AMPS) is a civil penalty regime designed to secure compliance with Canada’s import and export obligations.

AMPS is designed to encourage compliance with the law (e.g. Customs Act, Customs Tariff, Special Import Measures Act and associated regulations) by using a wide array of graduated monetary penalties.

They take into consideration both the type of infraction and the compliance history of any particular entity.

HLF can represent you

Let us represent you. If you want to appeal tariff classification, valuation and origin issues, we can help you.

We can represent you in your appeal to the first level internally, the Canada Border Services Agency (CBSA), and then to an independent tribunal, the Canadian International Trade Tribunal (CITT).

We can also help you fight criminal sanctions and civil penalties.