CBSA proposes amendments to strengthen customs regulations for Canadian importers

Canada Border Services
Photo by Praveen Kuma Nandagiri on Unsplash.

The Canada Border Services Agency (CBSA) is taking significant steps to enhance customs processes and promote fair competition for Canadian businesses in the face of the growing e-commerce sector.

The agency has announced its proposal to amend the Valuation for Duty Regulations, aiming to bolster statutory and regulatory frameworks, and rectify lost customs revenue resulting from undervalued goods.

Presently, Canada’s regulations for determining the value for duty of imported goods do not align with the international consensus set by the World Customs Organization.

This discrepancy places Canadian importers at a disadvantage compared to their foreign counterparts, who can declare lower prices during the trade chain, resulting in reduced duty payments.

To address this issue, the CBSA plans to establish a definition for “sold for export to Canada” and modify the definition of “purchaser in Canada.” By doing so, a consistent and reliable method for calculating the value for duty of all imported goods will be introduced.

The draft regulations have been made available in the Canada Gazette, Part I, inviting interested parties, including importers, businesses, and customs brokers, to provide written feedback until June 26, 2023.

This consultation period allows stakeholders to contribute their insights and perspectives, ensuring a comprehensive evaluation of the proposed amendments.

Several key facts underline the urgency and importance of these regulatory changes. In 2022, the CBSA assessed over $39 billion in duties and taxes, reflecting the substantial economic impact of customs duties and related taxes.

Additionally, the e-commerce sector has experienced remarkable growth, with retail e-commerce sales increasing by 67.9% from February 2020 to July 2022. E-commerce now accounts for 6.2% of total retail sales, emphasizing its significance as a platform for business operations.

Recognizing the need for fair and consistent duty and tax collection, the government included changes to the Customs Act in Budget 2021. These changes aim to ensure that goods are valued equitably by all importers.

In furtherance of this objective, the CBSA conducted an informal consultation from June 4 to July 4, 2021, providing stakeholders with an initial opportunity to contribute to the proposed amendments.

The CBSA’s proposal to amend the Valuation for Duty Regulations reflects its commitment to safeguarding the competitiveness of Canadian businesses and optimizing customs processes amidst the surge in e-commerce activity.

By aligning with international standards and promoting fairness in duty assessment, these regulatory changes will create a level playing field for Canadian importers, benefiting both businesses and the Government of Canada.