Exporters of Processing Services (EOPS)
The CBSA has a number of Remission Programs that are available to importers to negate the need to pay duties and taxes at time of clearance and thus improve cash flow concerns by not having to wait long periods of time to recover these payments.
Today we want to talk about the Exporters of Processing Services Program - more commonly known as EOPS. Exporters of processing services can be described as manufacturing service companies. These companies perform manufacturing services such as assembly, manufacture alteration etc on goods or materials that that they do not own for which they charge a fee. Qualified companies can import goods belonging to non residents without paying the Goods and Services Tax on condition that when the work is done the products are exported.
In order to be considered for the benefits of this program:
- You must be registered for GST/HST purposes;
- You are able to post financial security, if required;
- You never transfer possession of the goods to another Canadian business - except for storage or transportation;
- The goods are owned by non residents who are not closely related to you;
- The goods are never consumed or used in Canada;
- And the goods will be exported within 4years of accounting for them.
To apply for the program you must prepare and application letter requesting authorization to use the EOPS program and send to your local Canada Revenue Agency Tax Services Office. Should the product be subject to Duties you can also apply for duty relief under the Duties Relief or Deferral program. In this case you would forward the K90 Duties Relief Application and GST Application letter to your local CBSA office and not to the CRA. .
Quite recently we have had an increase in calls from clients asking if there are any programs available that would benefit them to defer any duties or taxes. As an example manufacturing service companies who import chassis from US based customers to install truck bodies, sewer cleaners or cranes for example have to pay the 5% GST on the chassis. If you have a contract with a US customer to produce 50 truck bodies and the chassis are sent to you the GST can be quite high. Let's assume the value of a chassis is $100k that would mean $5000 per chassis or having to pay $250,000 in GST and then having to wait until you do your remittance to CRA to get your money back.
The EOPS Program would be a real benefit for people in these types of situations.
For more information on Your Trade Balance contact our Consulting Department | 204-947-6700 ext. 209