If you’ve read our post about the advantages of becoming an NRI to Canada, you know that a lot can be gained from doing business with our northern neighbor, including simpler pricing, control over shipping, extending your market, and tariff-free trade.
As a member of NAFTA, Canada eliminated tariffs on industrial and most agricultural products imported from the US. However, there are still some tariffs and tariff-rate quotas (TRQs) levied on poultry and dairy products, as well as grains and seeds. The sale of alcohol is managed through liquor boards controlled by the provinces.
Here’s a step-by-step guide to help you grow your business by exporting to the True North.
- Get a business number from the Canada Revenue Agency (CRA). Here’s how to do it.
- Identify the type of goods you’d like to export.
- If you want a little extra help, you may use the services of a customs broker.
- State where your goods are from. (If your product has origins from different countries, Canada may need to calculate whether a sufficient amount of the product originates from NAFTA countries for the tariff exemptions to be valid.)
- Some goods may be controlled, prohibited, or otherwise regulated by the Canada Border Services Agency (CBSA). You can check whether it applies to you here.
- Your goods may need a permit from the government. See here whether that applies to you.
Classifying your products
Check out the 10-digit classification number applicable for each of your exported products.
Determine if any tariffs apply to you
- As a NAFTA country exporter, you may be eligible for tariff exemptions. See here if that’s the case.
- Chances are you might not be exempt from the goods and services tax (GST), and its provincial counterparts. Check here the applicable rate.
- Now, you need to determine the value of your goods. Here’s the information you need for that.
- Estimate the taxes and possible tariffs imposed on your goods. Here’s an example of how to do it (with a sample exchange rate of 1.15):
US$100 x 1.15 = CAN$115 (value for duty)
$115.00 (value for duty) x 4% (customs duty rate) = $4.60 (customs duty)
$115.00 (value for duty) + $4.60 (customs duty) = $119.60 (value for tax)
$119.60 x 5% (GST) = $5.98 (GST)
Total of customs duty and GST payable (in Canadian dollars) is $4.60 + $5.98 = $10.58
- Choose a carrier and ship your goods.
- See whether your shipment documents are in order
- Any commercial shipment arriving in Canada needs to be accompanied by an invoice containing all the information featured in a Canada Customs Invoice. (This means that you can use your own invoice, provided it has all the information)
- At the border, you have to submit the customs coding form, or Form B3.
- Your carrier will submit a Cargo Control Document (CCD).
- Pay the applicable taxes to get your goods released. If you’re thinking of importing high volume goods regularly, it might be a good idea to apply for an RMD (Release on Minimum Documentation), which allows your goods to be released from the border before payment.
Growing your business into a new market is an exciting step, and one that can help stabilize the future of your small business. While Canada shares our language, they don’t use our banking system or currency. If you need to make payments to any of your Canadian partners, Veem offer a safer, faster, cheaper alternative to traditional wire transfers. Keep your business running smoothly on both sides of the border.
If you’re looking for more information on Canada, read our comprehensive guide on How to do Business in Canada.
You need 7 tools to master international trade. Find out what they are.