The CBSA is proposing amendments to the Valuation for Duty Regulations. These proposed regulatory amendments were published in the Canada Gazette on May 27, 2023 with a 30 day consultation period until June 26, 2023.
If you recall, a preliminary consultation was launched in July 2021, providing all stakeholders, including industry stakeholders, the opportunity to ask questions or provide comments on the proposed amendments. (CBSA Consultation Notice -Potential regulatory amendments to the Valuation for Duty Regulations.)The feedback received was analyzed and taken into consideration in the development of these proposed amendments.
The existing legislative and regulatory framework governing the methods of determining the value for duty (VFD) of imported goods creates an unfair advantage for non-resident importers (NRIs). This advantage exists due to NRIs’ ability to declare a lower VFD on goods they import to Canada by using an earlier sale price and not the sale to an actual buyer located in Canada that brought the goods into Canada. The earlier sale price that is used in these instances occurs in the earlier stages of the supply chain, including a sale transaction between a foreign-based manufacturer and an NRI.
The proposed regulatory amendments would clarify which sale is to be used to calculate the duty on imported goods in order to address a regulatory gap that unduly benefits businesses located outside of Canada (NRIs) that ship goods to customers in Canada by (i) defining the term “sold for export to Canada”; and (ii) amending the definition of the term “purchaser in Canada”.
The proposed regulatory amendments would also:
- ensure that Canadian importers that compete with NRIs are not at a disadvantage as a result of the current regulatory framework, which allows the latter to declare a lower purchase price when calculating VFD;
- provide a legal basis to ensure the government collects duties on the sale that brought the goods to Canada, thereby preventing revenue leakage stemming from NRIs ability to declare an earlier sale in the supply chain;
- ensure that Canada meets its obligations under the World Trade Organization’s Customs Valuation Agreement and to Canada’s trading partners regarding the methods of calculating VFD; and
- ensure that Canada fosters a fair and predictable environment for the trading community that is consistent with the objectives of free and liberalized trade and in compliance with the internationally agreed methods of calculating VFD.
Comments can be provided in the Canada Gazette, Part I, Volume 157, Number 21: Regulations Amending the Valuation for Duty Regulations.