NON-RESIDENT CUSTOMS CLEARANCE.
WHAT IS A NON-RESIDENT IMPORTER (NRI)?An NRI is a foreign or U.S.-based business that is able to ship goods to Canada, while enjoying the same advantages as Canadian importers. However, they do not need to invest in Canadian manufacturing facilities, distribution facilities or sales offices. |
YOUR RESPONSIBILITIES AS AN NRI
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ADVANTAGES OF BEING AN NRI
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HOW CAN WE HELP
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HOW TO GET STARTED
To become an NRI, your company must first obtain a Business Number (BN) from the Canada Revenue Agency (CRA), which is a 9-digit number that identifies a company for various revenue-related matters in Canada, including commercial cargo imports. Obtaining a BN and registering for an import/export account with CRA is a free, simple, and generally quick process.
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For more information please check out the Government of Canada Website.
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Like the vast majority of countries around the world (the United States being a notable exception), Canada employs a system of taxation that is assessed and collected on the “value added” at each stage of the supply chain for most goods and services.
With respect to imports, Canada’s federally imposed Goods and Services Tax (GST) is payable on all goods that are not specifically tax exempt, such as prescription drugs, medical devices, basic groceries, etc., to the Canada Border Services Agency (CBSA) prior to customs clearance. These payments, however, can be entirely reclaimed by companies that have registered with the CRA.
As a general rule, NRIs that have worldwide revenues of more than CAD$30,000 and are “conducting business in Canada” must register with the CRA for purposes of collecting and remitting taxes. Registered companies are expected to collect the appropriate amount of GST payable from customers on their sales and then remit this amount to the government, but as noted above, they are also able to fully recover any GST paid at the border on their import transactions.
Depending on the size of your company and the amount of your estimated sales in Canada, as an NRI registering with the CRA for tax purposes, you may be required to post a security deposit with the government, or this requirement could be waived altogether. GHY’s Trade Experts can help you to determine which situation applies to your particular business, in addition to helping guide you through the entire reporting process to ensure that your commercial activities are fully in compliance with all of the applicable tax regulations.
With respect to imports, Canada’s federally imposed Goods and Services Tax (GST) is payable on all goods that are not specifically tax exempt, such as prescription drugs, medical devices, basic groceries, etc., to the Canada Border Services Agency (CBSA) prior to customs clearance. These payments, however, can be entirely reclaimed by companies that have registered with the CRA.
As a general rule, NRIs that have worldwide revenues of more than CAD$30,000 and are “conducting business in Canada” must register with the CRA for purposes of collecting and remitting taxes. Registered companies are expected to collect the appropriate amount of GST payable from customers on their sales and then remit this amount to the government, but as noted above, they are also able to fully recover any GST paid at the border on their import transactions.
Depending on the size of your company and the amount of your estimated sales in Canada, as an NRI registering with the CRA for tax purposes, you may be required to post a security deposit with the government, or this requirement could be waived altogether. GHY’s Trade Experts can help you to determine which situation applies to your particular business, in addition to helping guide you through the entire reporting process to ensure that your commercial activities are fully in compliance with all of the applicable tax regulations.
NRIs are subject to all Canadian customs legislation, such as the Customs Act and Customs Tariff Act and their related regulations, which are administered by the CBSA. Additionally, depending on the type of products involved, NRIs may also be subject to the border requirements of various other government departments (referred to as “Participating Government Agencies” or PGAs). Goods subject to PGA regulations include the following:
GHY’s Trade Experts can help determine whether any of these specific regulatory requirements apply to your shipments and ensure that you are well prepared in advance to deal with them in order to avoid any surprises or delays at the border.
- Food and food-related products
- Apparel goods, textile articles and steel products
- Animals, plants and certain wood products
- Energy consuming products
- Pre-packaged consumer products
- Motor vehicles and tires
- Drugs, medical devices and hazardous products
GHY’s Trade Experts can help determine whether any of these specific regulatory requirements apply to your shipments and ensure that you are well prepared in advance to deal with them in order to avoid any surprises or delays at the border.
Under Canadian customs laws, the importer of record (NRI, in this case) is responsible to the CBSA for payment of any applicable duties at the border. The rate of duty varies depending on the type of goods you are importing and the country where they were grown or manufactured, with rates ranging from zero to a high of 35% for some products, although the overall average is one of the lowest in the world at just 1.52%.
Additionally, goods imported from countries that Canada has a free trade agreement (FTA) with may also qualify for reduced or duty-free treatment if they meet the origin requirements of the trade deal and are accompanied by proper certification to that effect. Canada currently has more than 10 FTAs in place with various countries around the world, including NAFTA (USMCA) with the U.S. and Mexico, and comprehensive trade deals with the European Union and almost a dozen Pacific Rim nations.
Additionally, goods imported from countries that Canada has a free trade agreement (FTA) with may also qualify for reduced or duty-free treatment if they meet the origin requirements of the trade deal and are accompanied by proper certification to that effect. Canada currently has more than 10 FTAs in place with various countries around the world, including NAFTA (USMCA) with the U.S. and Mexico, and comprehensive trade deals with the European Union and almost a dozen Pacific Rim nations.
- U.S. producers will have duty-free access to an additional 3.6% of Canada’s annual dairy market
- Restrictions on the import of U.S. ultra-filtered milk into Canada have been removed
- Canada will eliminate Classes 6 and 7 protein substances from the milk pricing structure under Canada’s dairy supply management system, and limit exports of Canadian milk protein concentrates, skim milk powder and infant formula
- Canada’s price for skim milk solids used to produce non-fat dry milk, milk protein concentrates, and infant formula will be set no lower than a level based on the U.S. price for non-fat dry milk
- Canada’s dairy supply management system, which places limits on foreign imports is maintained
- Canada has agreed to treat wheat imports the same as domestic wheat for grading and pricing
- Mexico and the U.S. agreed that all grading standards for agricultural products will be non-discriminatory
The value of your goods for duty and tax assessment purposes is generally made on the “price paid or payable,” otherwise called the “transaction value,” which is usually the selling price to your Canadian customer, with certain adjustments. Normally, the transaction value in the case of NRIs will be comprised of the selling price in your home market (domestic costs plus profit) in addition to other expenses involved in getting goods delivered to your customer’s door, such as transportation and all costs related to customs clearance.
Because NRIs act as both the exporter and importer of record, determining the proper valuation of your goods for customs/tax purposes is not without a certain degree of complexity, but GHY can help guide you through every step of the process to arrive at invoice pricing that is fully in compliance with the CBSA’s expectations in this regard.
Because NRIs act as both the exporter and importer of record, determining the proper valuation of your goods for customs/tax purposes is not without a certain degree of complexity, but GHY can help guide you through every step of the process to arrive at invoice pricing that is fully in compliance with the CBSA’s expectations in this regard.
Every product imported into Canada must be assigned a 10-digit code in accordance with the globally used Harmonized System (HS) of classification. This HS tariff classification number determines which rate of duty applies to the merchandise and identifies whether any PGA requirements are applicable.
The classification of goods is generally a straightforward matter, but in the event that uncertainty exists (e.g., should the product not be specifically covered by an HS code or if it could arguably be covered by differing classification numbers), our Trade Experts can eliminate the guesswork and help minimize your risk by obtaining a definitive ruling from CBSA prior to importation.
The classification of goods is generally a straightforward matter, but in the event that uncertainty exists (e.g., should the product not be specifically covered by an HS code or if it could arguably be covered by differing classification numbers), our Trade Experts can eliminate the guesswork and help minimize your risk by obtaining a definitive ruling from CBSA prior to importation.
Rather than a standard commercial invoice, owing to certain valuation issues and NRIs being both vendor/exporter and importer of record, a specialized Canada Customs Invoice will generally be the primary document used to provide various data about your shipments needed for customs clearance purposes. Additional documentation such as permits, certificates, licenses, bills of lading, etc., may also be required depending on the type of goods and any relevant import requirements.
All NRIs are required to maintain books and records relating to all of their Canadian sales activities for a period of six years from the original date of the import. These records can be kept outside of Canada by signing a letter of undertaking with the Canadian government promising to pay for travel and accommodation expenses incurred by a CRA officer in the event of an onsite audit.
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For more information check out the Government of Canada Website.
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