In today’s marketplace, performing a trade compliance review of your company’s current processes, procedures, and risk mitigation strategies has never been more important. Importers can’t leave compliance to luck and need to be more rigorous in their application of laws and regulations in order to optimize profits and mitigate their risk exposure. The best strategy is to integrate regulatory compliance into the basic fabric of your company.
When it comes to shipping and receiving goods across borders, nothing helps streamline the process like taking a proactive approach. This can take many forms, such as ensuring that you are aware of your responsibilities as an importer, or preparing your staff for a Customs audit. Your company’s financials also play an important role when aiming for complete compliance.
It goes without saying that compliance with tax regulations is one of the most important components of successfully operating any business. Failure to comply can result in reassessments from the Canada Border Services Agency and Canada Revenue Agency resulting in payment of additional duties, taxes, interest payments and penalties. Compliance can also have many financial benefits for your company, such as providing opportunities to have some duties refunded to you.
GST/HST for Canadian Importation
Provided you meet the requirements, every importer registered with the CRA (Canada Revenue Agency) must pay GST unless imported goods are exempt. The importer must charge their Canadian customer GST/HST, based on the ‘place of supply rules’ and subsequently file input tax credits to account for the difference.
Duty Saving Opportunities
Duty deferral and relief programs implemented by the CBSA are designed to help businesses lower costs and improve cash flow. If you qualify, you may be able to do the following:
- Bring goods into Canada and the U.S. and store them tax- and duty-free until delivery
- Receive duty refunds for imported goods that have been sub -sequentially exported.
Determining the correct origin and classification has a direct correlation to your duty rates and determining whether your goods qualify under an FTA.
Compliance Best Practices
Implementing best practices and industry benchmarks within your trade compliance department is vital for success. Compliance risk elements can affect overall operating costs and affect the way your company makes global sourcing and supply chain decisions. Investing in the proper resources to support trade compliance can help reduce border delays and inspections, rejection or seizure of goods or the implementation of fines and penalties. As an importer, the best practices below are vital to ensuring compliance:
1. Knowledge, Education, and Training
Trade compliance legislation can be complex and daunting. The better educated and trained your customs professionals are, the better prepared they will be to deal with the intricacies of the rules and regulations.
2. Senior Management Buy-In
Ensuring buy-in and support from senior management is key to implementing a global trade compliance program within any organization.
3. Internal Controls
Documented processes and procedures within a trade compliance department can mitigate errors in the supply chain. They ensure enhanced communication internally, as well as communication and cooperation between customs service providers and suppliers. Putting the proper procedures and controls in place will save your company money in the end.
4. Audit Check
Internal and external audit checks should be completed periodically to ensure compliance practices satisfy all applicable rules and regulations.
Choosing a Compliant Customs Broker
Is your Customs compliance provider the right partner for you? Do they use best practices in global customs compliance to benchmark your processes against industry standards? These are important questions to consider in your quest for compliance. You must strive to work with a broker partner that understands every angle of the security process and can recommend appropriate programs to help reduce the risk of costly delays.
The right broker partner can help:
- Expedite shipment clearance
- Automate accounting procedures
- Reduce border delays
- Develop, implement and enforce global regulatory compliance and supply chain programs
Customs compliance is not something you can leave to luck. It takes careful consideration, planning, and implementation to prevent hefty penalties and ensure your goods compliantly cross borders.