It is important to consider the effects of import duties, tariff codes, harmonized codes and other customs fees and considerations when conducting business globally.
All imported shipments are subject to duties and taxes. These charges are assessed by the customs authorities in the destination country and are levied against the value of the shipment. The rate of duty may also be influenced by any or all of following:
In addition to duties, taxes may also be assessed on goods entering a country, as well as on the customs broker’s services for clearing the goods into the country.
Value Added Taxes (VAT), Goods and Services Tax (GST) and General Consumption Tax (GCT) are some of the taxes that may be assessed against a shipment. The tax type and tax rate will vary from one county to another. It is your responsibility to know and understand the taxes in the country you are shipping to.
Some countries will require that duties and taxes are paid prior to the release of the goods. A customs broker may pay these charges to customs and then invoice them to the paying party along with brokerage fees and disbursement fees.
All shipments entering Canada must be reported to the Canada Border Service Agency (CBSA). The carrier is responsible for reporting goods to the CBSA. Information gathered from the commercial invoice is compiled and sent to the CBSA electronically to enable determination of admissibility.
Complete a Master Carrier Authority form and submit it to Purolator to ensure that your designated customs broker is registered in order to prepare your import shipment for clearance.
Customers can choose their own customs broker to clear shipments coming into Canada regardless of mode.
All non-document shipments entering Canada will require a commercial invoice as the primary shipping document. The commercial invoice must provide the following details:
Additional documentation, such as certificates, permits and examinations may be required by other government departments depending on the nature of the shipment.
For more information, please contact your Account Executive or call us at 1 888 SHIP-123. To learn more about importing into Canada, visit the CBSA website.
Accurate calculation of duties and taxes requires a thorough knowledge of the HS Codes and Trade Agreements in order to determine the correct tariff treatment. The following example depicts how duties and taxes may be calculated for an export shipment to an international point valued at USD$932. The goods are subject to a 7% duty and an 18% VAT. In this case, the Cost, Insurance and Freight (CIF) Value is used to calculate duties and taxes. Please note that freight and insurance may be assumed values used by a destination customs authority, and all funds are in USD.
Invoice Value $932
Insurance Paid $16
Freight Paid $52
Total CIF Value is the total Cost (invoice value in this example) + Insurance paid + Freight paid = $1,000
The amount of duty charged is the CIF Value multiplied by the rate of duty (7%) = $70 ($1,000 x 7%)
The value for tax is the total CIF + duty charge = $1,070
The VAT is the total CIF + duty charge multiplied by the VAT rate (18% in this example) = $192 ($1,070 x 18%)
Duties and Taxes payable = Duty charge + VAT Tax charge: $70.00 + 192.60 = $262.60
CIF + Duty + VAT = $1,262.60 = Total Landed Cost for the goods
Accurate calculation of duties and taxes requires a thorough knowledge of the HS Codes and Trade Agreements as it may affect the correct tariff charge and customs clearance of your shipment..
The following example depicts a calculation of duties and taxes applied to goods imported into Canada and valued at USD$200. The goods are subject to a 4.2% duty rate and 6% GST. An exchange rate of 1.038 is used for the purpose of this example.
Value of the shipment = USD$200 (convert to Canadian currency at an exchange rate of 1.038)
The converted amount is the value for duty -- USD$200 x 1.038 = CAD$207.76
The value for duty multiplied by the rate of duty is the customs duty -- $207.76 x 4.2% = CAD$8.72
Value for duty + customs duty = Value for tax -- CAD$216.48
Value for tax multiplied by the tax rate = Tax -- 216.48 x 6% = CAD$12.99
Duty and Tax payable = Tax + Duty -- CAD$12.99 + $8.72 = CAD$21.71