The Canada Border Services Agency (CBSA) has released its second trade verification priorities list for 2024. Trade verification is a post-importation audit process implemented by the CBSA to verify the accuracy of importers’ tariff classifications, valuation and origin declarations and their accounting for imported goods after the goods have been imported. These verifications may be random or aligned with CBSA priorities which are currently announced semi-annually.
The CBSA has advised they will be more vigorously verifying any GST exemption codes claimed on import and will require adequate support for claiming a 0% rate of GST. In addition, they will be reviewing Excise matters and more specially excise on vaping products. On June 20th, Bill C‑69 received royal assent and introduced an increase in excise duties for vaping products effective July 1st, 2024. The CBSA has indicated vaping products subject to excise duties and taxes are a compliance priority.
Goods subject to tariff rate quotes and supply management are limited in the amount which can be imported or produced respectively. The verifications on the classification of certain frozen desserts containing diary has been added as a trade priority
Tariff classification refers to whether the importer is classifying the goods correctly under the Canadian Harmonized Tariff Schedule and attendant rules. A new round of tariff classification priorities for gloves as been announced, joining the ongoing round for disposable and protective gloves. The CBSA is also continuing to pursue tariff classification priorities in the areas of spent fowl, bags, LEDs, indicator panels, parts of lamps and bicycles, freezers, washers and dryers as well as “Furniture for Non-domestic Purposes”
Valuation priorities are a consideration of whether importers are providing a correct value of the imported goods on which customs duties and import taxes are levied. The CBSA is continuing another round of valuation reviews for apparel products after they found non-compliance in more than 50% of the cases reviewed in the first three rounds of reviews.
The customs duties levied on an imported good may depend in certain cases on the origin of the goods and also if a tariff preference or beneficial rate is claimed. For example, an origin preference claim under an applicable trade agreement (Canada – US – Mexico Agreement (CUSMA) for example) or a tariff preference is claimed under a preferential tariff regime (Most Favoured Nation). Origin duty preferences may not be available in certain cases for reasons including, but not limited to, when importing an otherwise originating good through a third-party country and/or where the percentage of inputs used or manufacturing process isn’t sufficient to confer a tariff preference.
The CBSA has identified “Bedding and Drapery” as an origin trade verification priority. In particular, it has noticed American manufacturers were marking products as “Made in USA” to qualify for North American Free Trade Agreement (NAFTA) benefits despite using fabrics not produced in territories subject to NAFTA. It should be noted the NAFTA agreement has now been replaced by the Canada-United States-Mexico Agreement (CUSMA).
The CBSA continues to remind importers that Russia and Belarus originating goods no longer qualify for Most-Favoured Nation tariff treatment joining North Korea under the General Tariff regime. The General Tariff duty rate in most cases is 35% with limited exceptions.
In addition, they will be actively verifying import duty preference claims made under the Canada-EU Comprehensive Economic and Trade Agreement and the Canada – UK Trade Continuity Agreement.
The full list of trade verification priorities can be found on the CBSA website.
Those importing goods which appear on the trade verification priorities list should review their records and ensure the accuracy of their trade data reported including tariff classification, origin and customs valuation. Should errors be uncovered, it may be possible to use correction methods under the Customs Act to proactively remedy non-compliance. Correcting and/or disclosing errors in the right format to the CBSA often leads to reduced interest assessments and penalty mitigation.
