Game Changer -- Part 1 of 3

Some key components of customs compliance is being proactive and keeping oneself current with changes to regulations, policy and law.

As noted in my previous posting... (see: https://customsandcooking.blogspot.com/2023/07/influencer.html)
CBSA has outlined proposed changes to Customs valuation regulations in Canada. This is a game changer to Customs compliance, regulations and administrative policy to extents that we have not seen in a decade.

Again, if the proposed amendments are adopted, this is a game changer for companies importing goods to Canada.

Several key trade associations, multiple law firms, consultants, customs brokers, as well as corporations large and small have been trying to understand and untangle the vague language that is being used to define the changes.

The spirit of these changes were to focus on B2C eCommerce transactions initiated by Non-Resident Importers (NRIs). However, the proposed regulations, as written, can also affect drop shipments where a resident Canadian company acts as the Importer of Record (IOR) as well as affect at least six other scenarios that would change how the value for imported goods are to be declared to the Canada Border Services Agency (CBSA).
For those that are familiar with the "First-Sale" rule in the US, these changes may mean that in Canada the tag line for the main valuation rule would be the "LAST-SALE" rule. (Quite frightening...)


What is pleasantly surprising is that these changes have grabbed the attention of most, if not all, of the entire trading community.
Legal firms are joining forces to present webinars.
Associations representing Customs Brokers and specific industry verticals are providing webinars, extensive information and even assistance and encouragement to submit responses and comments to CBSA about these proposed changes.

The trade world is uniting in Canada!

In that light, comments are being accepted by CBSA until July 26, 2023.
It is strongly encouraged, even imperative, for the trading community to review the proposed amendments and provide feedback to the Government of Canada.

Rumor has it that Members of Parliament are sitting up and paying attention and this is on the eve of a cabinet shuffle. Stay tuned...


Excerpt from the Canada Gazette

There are two main elements to these changes:
1) Redefining "sold for export to Canada"
2) Determining who is the "purchaser in Canada"
(Note: VFD = Value for Duty) 

The objectives of defining this term ("sold for export to Canada") are the following:
  • Ensure that the term “sale” is interpreted in a broad sense to include agreements, arrangements or any other type of understanding that cause goods to be exported to Canada;
  • Ensure that, in a series of sales, the last sale to the buyer in the country of import (Canada), and not an earlier sale between two foreign entities, is to be used as a basis for determining VFD;
  • Uncouple, going forward, the “sale for export” from the “transfer of title to the importer” as determined by the 2001 Supreme Court of Canada decision;
  • Clarify that any form of intent to sell or purchase the goods is a sale for export to Canada, including agreements or any other arrangements to purchase that cause the goods to be imported to Canada; and
  • Specify that if the goods are subject to more than one sale for export to Canada, the applicable transaction for VFD will be the last sale in the supply chain that brought the goods into Canada, irrespective of the chronological order of the sales.
Sales that occur in Canada and do not cause the goods to be exported to Canada will not be used in the determination of the VFD of imported goods.
Purchaser in Canada
In addition, the current definition of “purchaser in Canada” within the Regulations would be amended to remove linkages to the concepts of “resident” and “permanent establishment”. The purchaser would be the person who purchases or will purchase the goods in the relevant sale for export to Canada.
As a result of this change, and in order to align with amendments described above, the terms “permanent establishment” and “resident” would be repealed, as they would no longer be relevant to the objective of the Regulations.
These amendments would ensure that the VFD of imported goods, when determined according to the transaction value method, is based on the sale that causes the goods to be exported to Canada.


Grab your favorite flavor of ice cream as how this plays out and how long it will take, will be very interesting to watch.
Location: Montreal, QC, Canada

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