IE Canada Submits Comments to CBSA on the Proposed ‘Last Sale Rule’

Trade Update • June 27, 2023

he Canada Border Services Agency (CBSA) announced proposed amendments to the Valuation for Duty (VFD) Regulations in May 2023. Referred to as the ‘Last Sale Rule,’ these changes have been widely criticized by the industry for being unfair and detrimental to Canadian businesses. Consequently, several associations are urging the CBSA’s Border Commercial Consultative Committee to conduct a more in-depth study and review of these changes.

Among the associations expressing concerns is IE Canada (The Canadian Association of Importers and Exporters), which has submitted its comments to the CBSA consultation on the proposed amendments to the valuation for duty regulations.

Excerpt of IE Canada’s Submission

Re: Canada Gazette, Part I, Volume 157, Number 21: Regulations Amending the Valuation for Duty (VFD) Regulations

The Canadian Association of Importers and Exporters (IE Canada) is pleased to provide comments regarding the Canada Border Services Agency (CBSA) consultation on the proposed regulations amending the valuation for duty regulations. IE Canada serves businesses who depend on the movement of goods across Canada’s international borders. We offer an informed perspective with over 85 years of engagement and advocacy in Canada. Our members’ expertise surrounds the ever-important global supply chain, including customs and brokerage, freight forwarding, transportation and supply chain infrastructure, manufacturing, wholesale distributors, retailers, legal, financial and tax.

Executive Summary

IE Canada acknowledges CBSA’s rationale to “protect Canadian importers’ ability to compete on a level playing field with non-resident importers (NRI)”. In the CBSA’s attempt to “provide greater certainty and predictability for the importing community”, we interpret this proposal to create more uncertainty and raise substantial concerns that Canadian resident importers will be irrevocably harmed by the proposed “last sale rule” in several areas.

CBSA’s rationale for change is stated to achieve several benefits including protecting Canadian importers’ ability to compete with non-resident importers (NRIs). We have extensively reviewed the proposed Regulations (RIAS) with our members and colleagues from across Canada and abroad and find that we are generally aligned in our interpretation that the proposed changes are flawed.

Whether the substantial increase in VFD was intended to apply to resident Canadian businesses or not, the outcome will be that the proposed changes will irrevocably harm Canadian supply chains and further increase inflation for Canadian consumers. We also believe that the approach may force international companies with assets in Canada to leave, discourage future investment in Canada and accelerate the decline of Canada’s global trade competitiveness. Therefore, we recommend that the Government of Canada (GOC) not proceed to enact CBSA’s proposed changes.

As presently drafted, IE Canada does not support the current regulatory approach nor the substance of the currently proposed regulations. We are concerned that the regulatory approach does not follow the Cabinet Directive on Regulation and the proposed regulations will put the Canadian economy in jeopardy. We believe that the regulatory text proposed in Definitions for the Purposes of Subsection 45(1) of the Act targets traditional domestic sales transactions and will substantially increase the VFD and taxes for Canadian resident importers.

CBSA appears to be trying to address challenges in determining what they believe to be the correct VFD for a multi-tiered transaction (i.e., there must be three or more parties involved in the sequence of sales leading to the importer). In reviewing all the supporting documents provided in the proposal, and drawing upon our collective experiences globally, we believe this proposal is not aligned with the international trade community. We believe the materials to support the CBSA’s justification were cited out of context. CBSA also seems to be addressing perceived issues with transfer pricing and a series of CITT cases that were appealed, and the importer was successful. Instead of honouring the decisions it would appear these proposed changes are an attempt to change the legislation and regulations.

As a member of The Canadian Chamber of Commerce we have participated in the drafting of comments and support their comments filed under separate cover. We have also reviewed and support the comments submitted by the Commodity Tax, Customs and Trade Section of the Canadian Bar Association (CBA) and the Canadian Produce Marketing Association (CPMA).

We offer specific recommendations for the proposal but also more detailed observations and suggestions in a number of key areas.

We are committed to dialogue and working to a mutual understanding of the issues CBSA believes are impacting trade; however, we need to be sure that we are aligned with current global agreements on valuation and compliance with our existing agreements. As a rules-based country, we can not break these obligations and also put our own Canadian NRI companies at risk of retaliation when exporting around the world.

International Obligations

We believe that this proposal would make Canada a further outlier on how we value goods that cross our borders. Today, Canada has an additional requirement no other country does that adds additional requirements for transaction value to include to a purchaser in Canada with a permanent establishment in Canada.

Although this proposal is suggesting to clarify which sale is to be used to calculate the duty on imported goods it appears to be targeting a specific party, the NRI, which is not the basis in determining the last sale for export into a country. We are not aware of any country in the world that would include this for consideration of the value to be used. We agree that a related party in the transaction could impact the value of the goods but that is a separate issue. CBSA also seems to be dismissing actual sales and wants to expand to include purchase orders as a foundation to establishing a sale. This provides further evidence that they seem to be trying to move to domestic transactions and not the transaction that moved the goods across the border. It also appears there will be an amendment to the purchaser in Canada and remove the permanent establishment requirements. This would help Canada’s current standing as an outlier with this requirement but would still be an issue by keeping the purchaser in Canada requirement. It is a point of interest that this is being removed when CBSA states that the NRI is the problem.

We do not agree with the statement that the object to “ensure that Canada meets its obligations under the World Trade Organization’s Customs Valuation Agreement and to Canada’s trading partners regarding methods for calculating VFD” would be met. In fact, we believe the opposite is true, adopting the proposed changes would cause Canada to violate this agreement and others and put us at odds with our closest trading partners.

We interpret that the proposed regulations are not consistent with Canada’s obligations under Article 1 of the Agreement on the implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (WTO Customs Valuation Agreement. The comments filed by The Commodity Tax, Customs and Trade Section of the Canadian Bar Association (CBA) go into more detail and we support their comments filed under separate cover.

In addition, we are concerned that Canada is not compliant with the rule nor the spirit of notifying partners of changes until Gazette 2. This proposal is such a fundamental change unique to the rest of the world and also a direct aside to NRI’s of our partners, we believe that they should be both notified now and also given the opportunity to consult with the Government of Canada.

We believe there is concern with how CBSA will enforce these provisions. If the Gazette 1 proposals are adopted as stated we do not feel that importers will be able to comply and therefore do not see how CBSA will be able to enforce the provisions.


  1. Do not proceed with the proposed regulatory changes as stated in Gazette 1.
  1. Stand up an interagency committee (i.e. Finance, GAC, ISED, etc.) to include private sector members to fully review the proposal and potential impacts to Canada whether or not implemented. IE Canada and the Canadian International Freight Forwarders (CIFFA) proposed such a framework in October of 2019 with our paper entitled A Path to a Smart and Secure Border1 (See Appendix).
  1. Conduct an internal review of the proposal including supporting documentation in its entirety to ensure it substantiates the proposal and include the impact to domestic importers that was omitted.


IE Canada looks forward to assisting the GOC and CBSA in getting this proposal that was included in Bill C-30, Budget Implementation Act, 2021, No. 1 that would add a definition of “sold for export to Canada” back on track. To do so however, we require the GOC to trust our informed perspective and that of our other colleagues that as drafted the proposal should not proceed. We look forward to assisting the GOC in drafting more informed policy in the future that achieves the intended outcome and supports Canadian business.


IE Canada

IE Canada’s full letter of submission can be viewed here.

GHY’s Support

GHY is a member of many of the associations actively lobbying on this matter and, in particular, IE Canada. We continue to support IE Canada in their efforts to advocate for a fair and equitable approach to the proposed amendments to the Valuation for Duty Regulations. GHY shares the belief that the ‘Last Sale Rule’ could have significant negative consequences for Canadian businesses and international trade. As such, we stand alongside IE Canada in urging the CBSA’s Border Commercial Consultative Committee to conduct a thorough and comprehensive review of the potential impacts before implementing any changes. Through collective engagement and collaboration, we hope to ensure that the final regulations strike a balanced and sensible approach, benefiting both businesses and the Canadian economy.

Businesses may comment direct or share your desire to support supporting IE Canada’s submission by responding to


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