Oh Canada. Is Compliance The Same?

Transcription

1 Oh Canada Is Compliance The Same?

2 We Look The Same (Sort Of )

3 We Speak The Same (Or Do We?) We Say Creek Roof Presentation Chesterfield Tea Towel Bunnyhug Pogie Garburator Runners You Say Creek Roof Presentation Couch Hand towel Hoodie Unemployment Garbage Disposal Tennis Shoes

4 We Share A Border But We are a sovereign nation Different laws govern our country Import regulations are similar but can vary vastly CBSA (Canada Border Services Agency)exists to Protect our people Protect the Canadian economy

5 Pre-Entry Compliance Documentation Classification NAFTA

6 CBSA Canada Border Services Agency Makes the importer responsible for: correct declarations of tariff classification, value, origin and tariff treatment providing a complete cradle to grave audit trail of all Customs related documentation

7 Documentation Commercial Invoice Packing List Import Permit/License (if required) NAFTA Certificate or Certificate of Origin Bill of Lading B3 and Recap

8 Information Required on Invoices Name & Address of Supplier Date of Direct Shipment Purchase Order/Sales Order Number Consignee/Importer Name & Address Country of Origin

9 Information Required on Invoices Terms of Sale Currency of Sale Description of Goods Price per unit/extended price Pieces & Weight

10 Other Information If freight is included in sale price, it must be indicated and deducted from the declared value If there are costs for export packing, they are dutiable and need to be known Trade discounts are allowable deductions if taken

11 Other information Warranty Replacement Invoice must state goods are being replaced under warranty GST Zero-Rated No Charge or Free sample Items Invoice must show a value for the goods and indicate value is for customs purposes only Duty and GST are payable on the value shown

12 Compliance Problem Areas Accounting Classification Valuation Tariff Treatment Duty Relief

13 Compliance Problem Areas - Accounting Control and Adjustments Overages or shortages? No charge items? Consignment? Warranty? Ability to retrieve documents via common reference Records maintained for 6 years plus current year

14 Compliance Problem Areas - Classification Canadian Customs Tariff Consists of Sections 99 Chapters Over 11,000 Tariff Items

15 Compliance - Classification Do the Customs invoices properly and completely describe the goods? Have any NCR s been issued? Has tariff been verified with broker? How is tariff determined on new products?

16 Classification (Footwear) International Chapter Heading Subheading Country-Specific Tariff Item Classification Number Consult D for further information explaining the tariff classification of footwear.

17 Why is Classification Important? Effects the amount of duty paid Free trade tariff treatment entitlement Availability of duty relief Anti-dumping/countervailing measure applicability Tariff rate quota applicability

18 Compliance Problem Area - Compliance Problem Area - Valuation Are you related to the buyer? Are any deducted freight charges verifiable? Consignment Goods? Are Assists, Royalty Payments, Subsequent Proceeds applicable but not included in the Value?

19 Compliance Problem Area - Tariff Treatment Do you have Certificates of Origin on file? Do the Certificates of Origin specifically identify the goods imported? Can you or your vendor support the origin declaration?

20 Tariff Preference There are numerous tariff treatments in Canada that reduce the rates of duties payable on imported goods: Most-Favoured Nation (MFN) Tariff North American Free Trade Agreement (NAFTA): United States Tariff (UST), Mexico Tariff (MT), Mexico-United States Tariff (MUST) Chile Tariff (CT) Canada-Israel Agreement Tariff (CIAT) Canada-Costa Rica Tariff (CRT) Canada-European Free Trade Association Free Trade Agreement: Iceland Tariff (IT), Norway Tariff (NT), Switzerland-Liechtenstein Tariff (SLT) Canada-Peru Free Trade Agreement: Peru Tariff (PT) Commonwealth Caribbean Countries Tariff (CCCT) Australia Tariff (AUT) New Zealand Tariff (NZT) Canada-Columbia Free Trade Agreement: Colombia Tariff (COLT) Canada-Panama Free Trade Agreement: Panama Tariff (PAT) General Preferential Tariff (GPT) Least Developed Country Tariff (LDCT) 20

21 Compliance - Relief Programs Do you use end use tariff items? Are system links in place to identify diversions? Do you file amends when goods are diverted? Are drawbacks properly managed?

22 NAFTA North American Free Trade Agreement Applies ONLY to qualifying goods manufactured in Canada, USA or Mexico Allows for duty free entry of qualifying goods In order to qualify, goods must meet specific criteria: Specified percentage of North American content Undergo a tariff shift or Meet both of the above mentioned criteria Good understanding of classification required

23 NAFTA Certificates Can be completed in English, Spanish or French Can be single shipment or a blanket period for up to one (1) calendar year Completed by exporter Required for commercial goods valued over $ CAD Should be signed by an officer of the company All items on the invoice should be easily crossreferenced to the NAFTA Certificate

24 Low Value Statement For shipments valued under $ CAD this statement can appear on the invoice and still qualify for NAFTA: I certify that the goods referenced in this invoice/sales contract originate under the rules of origin specified for these goods in the North American Free Trade Agreement (NAFTA),and that further production or any other operation outside the territories of the Parties has not occurred subsequent to production in the territories. NAME: I.M.Exporter TITLE: Controller COMPANY: WORLD EXPORTER TELEPHONE: (613) FAX: (613) DATE: October 20, 2014 Signature I am the exporter of the goods X or producer of the goods. Country of Origin USA X Canada Mexico USA & Mexico

25 Standard NAFTA Wording to be Put on a Purchase Order between the Buyer and Seller protects the buyer Seller accepts all responsibility for the information provided on the NAFTA Certificate of Origin, letter or affidavits collectively, Documents. By signing these documents, the seller is accepting all responsibility and liability that the information provided is complete and accurate. The seller also accepts any liabilities resulting from inaccurate data or failure to comply with NAFTA requirements. The seller agrees to hold harmless and indemnify the buyer against any and all claims, actions, liabilities, costs and expenses arising from or relating to the sellers breach or failure to comply with any of the foregoing: 1. To provide a NAFTA Certificate of Origin for qualifying goods 2. To cooperate with Canada Border Services Agency (CBSA) if information is requested 3. To cooperate with CBSA in the event of a NAFTA audit 4. To reimburse the importer for any costs associated with a certificate found to be invalid

26 Apologies/Regrets

27 Post Entry Compliance Documentation Review Entry Correction Dispute Resolution

28 Post-Entry Compliance In Canada Program based vs. transactional based Compliance Verifications Classification Valuation NAFTA Intensive verifications (audits) rare GST/HST done separately by CRA

29 Key Areas To Check Every Entry Date of direct shipment Tariff classification on B3 Value declared Currency of sale Trade Agreement used? Country of origin Pieces/weight

30 Full Entry Review Starts with purchase order Does PO match with what was sent? Is PO # or other identifier on all documents? Were all invoices sent to the broker and can all items be accounted for? Date of direct shipment declared vs actual Importer name/address correct Are all items classified correctly?

31 Full Entry Review Country of origin of goods Does the tariff treatment match country of origin? If trade agreement was used, are supporting documents on hand? Is it correct for that particular item? Were deductions taken and are they accurate? Do receiving reports match shipping reports?

32 The B2 Form used to correct errors made on B3 Fields that are changing will be noted country of origin, date of direct shipment, etc Only 1 B2 per issue can be sent in Cannot correct same mistake twice Additional B2 s can be done for same transaction if different corrections are being made Should be linked to original transaction file for compliance purposes

33 The DAS Detailed Adjustment Statement Customs generated form Acknowledges changes made with B2 submission Issued by Customs after verification activity Used for both refunds and amends Customs broker usually handles accounting Should be kept with original file for compliance purposes

34 Tariff Base Management Whose responsibility is it? How often is it reviewed? Is more than one broker involved? Does each broker have its own database? Are databases cross-verified? Is more than one company involved? Is information provided to broker adequate? Really watch parts provisions

35 Correction Obligations Within 90 days Required to correct erroneous declarations of origin, tariff classification, or value for duty Obligation to correct applies if result is payment of duty or revenue neutral Correction to occur within 90 days of date of "reason to believe" that the declaration is incorrect Must correct declarations back to the date of the specific information, up to a maximum of four years 35

36 Reason To Believe Examples of specific information that gives rise to an importer's reason to believe: DAS s and Rulings issued to the importer Trade Tribunal and Court decisions Legislative provisions that are evident and transparent Information received from exporters, suppliers, etc. CBSA written communications such as a CBSA final audit report Importer-initiated compliance review Knowledge of the goods being diverted to an end-use or end-user not contemplated by the end-use tariff classification declared

37 Voluntary Disclosures After 90 days Encourages disclosure of deficiencies in accounting and payment of duties and taxes after 90-day correction period has lapsed Relief from penalties, but all taxes or duties owing, plus interest, are payable Conditions Voluntary - once subject to trade verification of any type, frozen out of program Complete and include all elements of error and all transactions, not representative samples and extrapolation Error(s) must relate to accounting and/or payment of duties/taxes and involve application of penalty 90-day period for corrections has lapsed Must not be pattern of non-compliance 37

38 Voluntary Disclosures No prescribed form for making a voluntary disclosure request Disclose errors and present all pertinent information in letter form If the voluntary disclosure is valid and accepted by the CBSA: VDP Client Agreement Form must be completed and signed Importer must file corrections (dating back four years) Application of penalties if the voluntary disclosure is not accepted by the CBSA Non-acceptance is rare "No-name" or hypothetical disclosure to obtain preliminary opinion 38

39 Refund Claims Importers may seek refund if customs accounting error resulted in overpayment of customs duties/gst No obligation to seek refunds Generally, four year limitation period from date of accounting One-year time frame applies to refund claims relating to preferential tariff treatment for goods exported from a NAFTA or CCFTA country Exposure to trade verifications 39

40 CBSA Verification Process and AMPS Verification Process Initiation letter Questionnaire and requests for customs/commercial documents for sample transactions Supplementary requests for information Verification visit (not usual) Interim report and company response Final verification report AMPS applied for contraventions escalating penalty levels Reason to Believe and Reassessment Period Final Report is "reason to believe No AMPS and required to amend for verification period and going forward Importer had previous "reason to believe" - AMPS and importer required to amend dating back to the date of the specific information, up to a maximum of four years If no customs duties payable, reassessment period is verification period and going forward 40

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