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Changes to customs valuation laws

July 7, 2021 | Daniel Kiselbach, MBA, Satinder Bains, Noah Robinson-Dunning

On June 4, 2021, the Canada Border Services Agency (CBSA) issued a consultation notice in which certain regulatory amendments to customs valuation laws that were being considered. The consultation period opened on June 4, 2021 and closed on July 4, 2021.

The elements being considered by the CBSA for future amendments that were noted on the consultation notice are summarized below.

  1. The term “sold for export to Canada” being redefined to expand the definition of “sale” in the broadest terms as well as to establish the relevant sale that caused the goods to be exported to Canada.

Under current customs regulation the sale for export is the relevant sale that caused the goods to be exported to Canada (i.e. all sales in a series are considered for assessing the relevant sale for export).

This proposal undertakes to make the last transaction in the commercial chain, irrespective of the chronological order or series of sales to be regarded the relevant “sale for export” that will serve as the basis for appraising the value for duty. The proposal further undertakes to determine the term “sale” be interpreted in a broad sense. The updated definition of a “sale” would include any type of arrangements that cause the goods to be exported to Canada.

  1. Define the terms “purchaser in Canada,” “resident,” and “permanent establishment,” and make certain that the relevant sale for export to a Purchaser in Canada (i.e. “permanent establishment”) will serve as the basis for appraising the transaction value of the goods.

It is proposed that, following the amendments, a person will qualify as having a “permanent establishment” if, (i) they are the purchaser of the goods imported to Canada; (ii) they have a fixed place of business in Canada through which goods are purchased; and (iii) the person has the authority to enter into the sale (or arrangement). Under the proposal, the permanent establishment cannot serve as a conduit in the sale.

A non-resident importer without a permanent establishment would only qualify as a purchaser in Canada if the goods were imported (i) for their own use; or (ii) on speculation of future sales.

The official Customs consultation notice from the CBSA can be found here.

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