Customer acts as importer of record

The most common type of sale for export to Canada involves delivery of goods in the country of export or international waters, where the Canadian customer acts as importer of record, arranging customs release and paying any duties and taxes owing. If the goods originate in a country that does not have a free trade agreement with Canada, the non-resident exporter generally has no responsibilities under Canadian law.

Most of Canada’s trade is with countries which are partners in free trade agreements. These countries include the United States, Mexico, the United Kingdom, Japan, South Korea, Israel, Singapore, Australia, New Zealand, the 27 countries of the European Union and a number of others. Where goods being exported from those countries are dutiable under Canada’s general MFN tariff schedule, the exporter’s principal contribution is to ascertain whether the goods meet the Rules of Origin under the free trade agreement. If they do, the goods may usually be imported duty free or, in certain cases, at a reduced rate. The rules for determining whether goods exported to Canada from the United States and Mexico meet the Rules of Origin under the USMCA are discussed in this article.

The producer of goods within a free trade area has most of the knowledge required to support the certification of origin that allows the importer to claim preferential tariff treatment. The producer, or the exporter if that is someone other than the producer, may generally prepare and sign this certification. However, the exporter will often have to rely on information or certification provided by the producer. In some agreements, notably the USMCA, the importer may also sign the certification. However, the importer may do this only with full knowledge, much of which must come from the producer. The USMCA certification rules are discussed in this article.

Non-resident acts as importer of record

Whare a non-resident sells goods for export to Canada, and delivers the goods outside Canada, the sale itself is not subject to GST. However, if the non-resident acts as importer of record, the non-resident is responsible for paying any duties and taxes owing. Most (but not all) commercial goods imported into Canada are subject to the 5% federal goods and services tax (GST), the Canadian VAT. In most (but not all) cases, this GST is recoverable in one of two ways. A non-resident who is registered for GST may, if entitled, recover the tax by claiming it as a deduction in filing its regular GST return. A non-resident who is not registered may only recover the tax by passing the right to the input tax credit on to its Canadian customer [1]. This transfer is simple in theory but often difficult to achieve in practice.