Engaging in International trade can be challenging to most importers. Many importers struggle to understand and comply with the vast number of international rules and regulations which are applicable to commercial imports just like yours. If you wish to learn more you can always check out the PCB Learning Center for In-Class Seminars and On-Demand Videos. For now, here is a small checklist, which can assist you with reducing your costs or make sure you are not overpaying on your imports.
Harmonized System Tariff Classification
As an Importer you must have the accurate Harmonized System (HS) Tariff Classification code for your product. The first six digits of your HS code are universally recognized in most countries. The final 4 digits, in Canada, are based on sub-headings, more clearly define the components of the product, as well as its end use. You should review each of the subheadings to see if your product is eligible for a lower duty rate.
Free Trade Agreements
As an Importer you should always try and take advantage of Canada’s Free Trade Agreements (FTA). The goal of Free Trade Agreements is to eliminate tariffs on goods made in one country and sold in another. In 2019, Canada currently has 13 Free Trade Agreements with various countries, which offer a preferential or free duty rate. Some of these agreements include the North American Free Trade Agreement (NAFTA); the Canada-European Union Comprehensive Economic and Trade Agreement (CETA); the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP).
Country Of Origin
Free Trade Agreements are worth considering when determining which country you will import from and your source country. For Customs purposes, the “country of origin” is the country from which the goods are grown, manufactured or produced. In the case of manufactured goods, the country of origin is where the item was substantially transformed into its present form. The “country of origin” of your goods determines the trade agreement under which they qualify, as well as the tariff treatment they will receive. Import duties can range from 0% to 35%, which can impact the profitability of your imported product.
If you import from a country with a state-controlled economy and the transaction value has been subsidized in some way, you may incur countervailing import duties to offset the subsidy.
If the price you pay for your goods is determined to be less than the normal price charged by Canadian suppliers, you may incur anti-dumping import duties. Check the SIMA Self-Assessment Guide to see if your goods are subject to countervailing duties.
Remission orders are worth considering. They are available for certain products, such as machinery, to produce a finished product. The basis of remission orders is to allow Canadian manufacturers to produce finished products for export and domestic use, which increases employment opportunities, and generates revenue for Canadian manufacturers. If there is no remission order which currently exists then you can apply for one with CBSA.
Temporary importation of some products allows importers to defer duty for the period of time the goods remain in Canada. For example, you may need a form or mold to make a part for a machine, but the mold or form is only needed for a year before it is exported. The duty payable is prorated for the length of time the mold or form is used.
Importers may have duty drawbacks available to them where they import raw materials and parts for further manufacture and ultimate export of the finished item.
CBSA GST Direct Payment Program
Importers should consider the CBSA GST Direct Payment Program. This Program allows the Importer to make a direct payment to CBSA for their GST credit. It operates on a month end cycle, which allows the importer to manage cash flow and payables; GST is paid on a single monthly remittance. The Program reduces accounting paperwork and simplifies the process of a GST audit.
International trade can be a complicated process. Pacific Customs Brokers can assist you with all of your trade questions, help you reduce your costs, and improve your bottom line. PCB is your one-stop-shop for experienced Customs Brokerage and Freight Management. If you want to apply for the GST Direct Program you can save a lot of time and stress by using the experienced professionals at PCB.