On March 16, 2020, the Canada Border Services Agency (“CBSA”) issued Customs Notice 20-08 “Imported Goods for Emergency Use in Response to COVID-19”, which discusses the circumstances where customs duty and goods and services tax (“GST”) /harmonized sales tax (“HST”) and excise tax relief will be granted for goods imported into Canada that will

At midnight, the United States increased tariff rates on many goods from China from 10% to 25% (referred to as the “U.S. Trump Tariffs”).  The U.S. Trump Tariffs are a form of customs duty that is payable by the importer and is passed on to U.S. consumers.

As a result of the new higher U.S.

Canada

On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (the “Trump Tax Act”).  The Trump Tax Act materially changes U.S. corporate tax laws and incentivizes U.S. companies with overseas operations to either return home to the United States and/or repatriate money home to the United States.

As companies are attempting

There is some concern that U.S. President Trump will cancel NAFTA (because he has said he would terminate NAFTA if he does not get what he wants from Canada and Mexico during the NAFTA renegotiation meetings).  One of the concerns raised in the media is that Canada will impose customs duties on U.S.-origin manufacturing inputs,

With the ever-increasing scrutiny being brought to compliance and the payment of duties on imported goods by Customs and Border Protection (CBP), it is worth commenting that any duties which are due when an entry liquidates may, in fact, end up having to be paid even if the related protest remains pending due to the

Canada

Olympic MedalsCanadian Olympians returning home from the Rio Olympics (or any athletic competition for that matter) do not have to pay customs duties and goods and services tax (“GST”) on their medals.  No customs duties are payable under Harmonized System (H.S.) Code 98.17, which covers “medals, trophies and other articles (not including usual merchantable products

globe and calculatorOn July 4, 2016, Canada’s Trade Minister Freeland announced that Canada implemented the World Trade Organization (WTO) expanded Information Technology Agreement (ITA). Pursuant to the expanded ITA, signatories agreed to eliminate tariffs on 201 information and communication technology (ICT) and related products.

As of July 1, 2016, Canada permanently eliminated customs tariffs on many of

Globe with financial papersOn April 22, 2016, the Federal Government of Canada (in particular, the Department of Finance) launched public consultations on the elimination of unrecoverable customs duties (MFN rate) payable on imported manufacturing ingredients by manufacturers in the agri-food sector.  The consultation were first announced in the 2016 Federal Budget. The submissions are due on or before June 21, 2016.

What this means is that Canadian manufacturers (including foreign companies with a manufacturing operation in Canada) may make written submissions to the Department of Finance to request the elimination of customs duties (MFN rate) on imported food manufacturing inputs. Customs duties are an unrecoverable cost of the manufacturer. The elimination of the duties will reduce the cost of production and cause the manufacturer to be more competitive in Canada and in international markets.  In addition, food costs for Canadian consumers of processed food products will be reduced as the manufacturer can charge less for the processed foods (if made with some imported food ingredients).

The Government of Canada proposed to reduce to “Free” the MFN rates of customs duty of tariff items listed in Table 1 (which also appears after the page break in this blog post). Some of the food inputs listed in Table 1 include certain edible vegetables, roots and tubulars; certain edible fruits and nuts; certain spices; certain cereals and grains; certain products used in the milling industry; certain flours, malts, starches and wheat gluten; certain flours milled from seeds; certain animal or vegetable fats and oils; etc.

However, the Department of Finance would like input from the food processors who import these goods before they will make the decision to eliminate the duties.

In addition, the Department of Finance will also accept views on other tariff items that could be considered in the context of possible further tariff elimination initiatives designed to assist Canadian industry. For example, corn is not listed in Table 1 and is imported into Canada for further manufacturing in the agri-food sector (e.g., into corn syrup).

The submissions must include, at a minimum, the following information:

  1. Canadian company/industry association name, address, telephone number, and contact person.
  2. Relevant eight-digit tariff item(s) and description of the goods of particular interest.
  3. Reasons for the expressed support for, or concern with, the proposed tariff elimination, including detailed information substantiating any expected beneficial or adverse impact.
  4. If concern is expressed with respect to the proposed tariff elimination for one or more eight-digit tariff item(s), please provide views on ways to alleviate such concerns (e.g. limiting tariff elimination to certain end uses, gradual tariff elimination over a longer time period).
  5. Please identify if information provided in the submissions is commercially sensitive.

If submissions are prepared for an item not listed in Table 1, the submissions should demonstrate the benefit to Canada for the elimination. Any company that will increase Canadian jobs by hiring more workers or building another plant should consider make those benefits known in the submissions.

If the submissions are accepted and the tariffs are eliminated on the food processing inputs, the Canada Border Services Agency will no longer collect unrecoverable customs duties in respect of the goods. Any applicable goods and services tax (“GST”) would still be payable, but would be recoverable if the manufactured goods are taxable or zero-rated.

We would be pleased to assist Canadian manufacturers or foreign manufacturers with Canadian food processing operations 9existing or proposed) to prepare their submissions.  This is an opportunity that has a small window and long term benefits.

Continue Reading Canadian Manufacturers in the Agri-Food Sector Have an Opportunity to Eliminate Customs Duties