News and Insights

Tax Alert | CBSA Proposes Major Customs Valuation Changes

Tax Development Jul 05, 2023

The Canada Border Services Agency (CBSA) is proposing significant changes to the calculation of value for duty for customs purposes. Proposed amendments have been introduced that, if adopted, will increase the declared value of certain imported goods and, ultimately, impact the amount of Customs Duty and Goods and Services Tax (GST) payable.

The proposed changes are intended to address a legislative gap that creates a competitive advantage for non-resident importers (NRIs), including e-commerce sellers, over Canadian importers in respect of commercial goods brought into Canada. Under the current rules, NRIs can declare a lower value for duty on imports by using a previous sale price (such as the purchase price paid to another entity earlier on in the supply chain) instead of the selling price to the buyer located in Canada. This results in NRIs paying less Customs Duty than their Canadian counterparts on the same or similar imports, putting Canadian businesses at a disadvantage and lowering duty revenue for the Government of Canada.

The proposed regulations are designed to level the playing field by clarifying which sale is to be used in determining the value for duty. As a result, an importer may be required to use the selling price (i.e., “last sale” price) rather than a prior purchase price to establish the value for duty. However, while these new rules target NRIs, Canadian resident importers could also be affected. Consequently, all businesses that import goods into Canada, and particularly those that import goods for resale to other customers in Canada, should review the proposed amendments to assess the potential impact on their supply chain and dutiable values.

To date, the timeline for implementation of the proposed amendments has not been identified, but the government has indicated that the coming into force date will be coordinated with other upcoming amendments to the Customs Act (as included in the Budget Implementation Act, 2021, No. 1, S.C. 2021, c. 23).

Interested stakeholders are encouraged to provide submissions before July 26, 2023, as part of the CBSA’s consultation process. Further information on the proposed amendments and a submission form can be found at Canada Gazette, Regulations Amending the Valuation for Duty Regulations.

If you have any questions or concerns about the proposed customs valuation changes or how these measures might impact your business, please contact Ryan’s Customs Duty team.

Maureen Gilfoy
Director, Customs Duty

Sebastian Drozdziewicz, CCS
Senior Manager, Customs Duty