Top 10 cross-border GST and customs issues for Canadian businesses

1. -GST paid on importation should be recoverable and should not become a sunk cost.
2. -In the case of exports, GST should not be applicable, but an exporter should nevertheless pay close attention to whether or not its export meets the necessary requirements to be “zero rated.”
3. -Identifying the best party to act as the importer of record is crucial.
4. -Non-resident companies face particular challenges when planning to import goods into Canada in their own name
5. -Many trade chain structures involving non-resident companies will trigger an application of the Canadian drop shipment rules.
6. -Attention should be paid to standard terms of trade (e.g., INCOTERMS), as they can have significant implications on the payment of GST and duties.
7. -Under a penalty regime known as the Administrative Monetary Penalty System (AMPS), the Canada Border Services Agency (CBSA) will issue monetary penalties for instances of non compliance with customs obligations.
8. -Determining the customs value of imported goods, or their value for duty (VFD), requires the application of a prescribed valuation method.
9. -Importers involved in related-party transactions need to understand that there are additional complications to arrive at the VFD when the seller and the buyer are related.
10. -Although Canada is known as a favourable jurisdiction when it comes to using transfer prices for purposes of determining the VFD on related-party transactions, income tax rules that govern transfer pricing and the customs valuation rules are not the same.

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