Proposed Amendments to Valuation for Duty Regulations to Ensure Fair Trade Practices – Submit Your Comments

Trade Update • March 29, 2023

he Canada Border Services Agency (CBSA) has announced proposed amendments to the Valuation for Duty Regulations. These amendments aim to address an unfair advantage enjoyed by non-resident importers (NRIs) and create a more equitable trade environment. The proposed regulatory changes are open for public consultation until June 26, 2023. We will provide an overview of the amendments and their potential impact on trade practices in Canada.

Addressing the Regulatory Gap

The existing legislative and regulatory framework allows NRIs to declare a lower value for duty (VFD*) on imported goods by utilizing an earlier sale price, which often occurs in the earlier stages of the supply chain. This practice creates an unfair advantage for NRIs, as they can bypass the sale to an actual buyer located in Canada. To rectify this issue, the proposed amendments would clarify the determination of duty calculation by defining the term “sold for export to Canada” and amending the definition of “purchaser in Canada.”

Benefits and Objectives of the Proposed Amendments

The regulatory changes serve a variety of important purposes.

• Firstly, they aim to ensure that Canadian importers competing with NRIs are not disadvantaged under the current framework, which allows NRIs to declare a lower purchase price for VFD calculations. By rectifying this disparity, the proposed amendments promote fair competition and level the playing field for Canadian businesses.
• Secondly, these amendments provide a legal foundation for the government to collect duties based on the sale that brought the goods into Canada. This prevents revenue leakage resulting from NRIs’ ability to declare an earlier sale in the supply chain, ensuring the government receives the appropriate duty revenue.
• Furthermore, the proposed regulatory amendments align Canada’s practices with its international obligations, particularly the World Trade Organization’s Customs Valuation Agreement. Compliance with internationally agreed methods of calculating VFD helps maintain fair trade practices and strengthens Canada’s trading relationships.

Have Your Say – Submit Your Comments

The proposed amendments to the Valuation for Duty Regulations demonstrate the CBSA’s commitment to promoting fair trade practices and leveling the playing field for Canadian importers. By addressing the regulatory gap that benefits NRIs, these changes aim to create a more equitable environment for all businesses operating in Canada.

We encourage stakeholders and industry representatives to actively participate in the consultation process during the 30-day period until June 26, 2023. Your feedback and insights are valuable in shaping the final regulations and ensuring they reflect the interests and needs of the trading community as a whole.

How to Submit Your Comments

Comments can be provided within chosen sections of the Canada Gazette, Part I, Volume 157, Number 21: Regulations Amending the Valuation for Duty Regulations.

Questions about the these proposed amendments, and/or assistance with submitting comments? We are always here to help, contact us.