Importer & Customs Responsibilities
Updated by Neil
The preceding section included product protection, compliance, and labelling problems. But the Customs officials lookout for other things too when you import an item.
US Customs (Customs and Border Protection, or CBP) is accountable for imposing US customs regulation. It also performs in place of more than 20 other agencies. They assemble duties, taxes (like with alcohol or tobacco), and fees.
It is highly commended by Customs that you refer to a US licensed customs dealer or trade advisor early on, for US import guidelines are complicated. This part offers just a very high-level overview of Customs and your supervisory responsibilities.
While in Canada, the CBSA is the federal government department responsible for ensuring compliance with Canada’s tax, trade and border regulations. It is also responsible for making sure that all OGD requirements are met before goods are allowed to enter Canada.
The CBSA reserves the right to inspect shipments at the importer’s expense if the inspection involves loading and unloading cargo, if the examination takes place at a location besides a designated customs facility, and if it takes place after hours. It may also deny entry of the shipment into Canada, seize the contents, or request additional information.
If you are found non-compliant the CBSA may levy financial penalties under the Administrative Monetary Penalty System (AMPS). One way to reduce the frequency of inspections is to have a strong record of compliance, and partner with carriers and brokers who are also committed to compliance.
Responsibilities of an importer of record
The importer of record (your client) is responsible – and thus liable – for the payment of all duties and taxes and accuracy of the information presented to CBSA. Therefore, it is important to ensure that your processes are compliant with all government regulations. Compliance can fall by the wayside due to a lack of time commitment to correct and input precise data and a lack of internal expertise and resources.
Importers are also required to keep a hard or soft copy of records for six years from the end of the calendar year in which the goods were imported.
Customs Classification-The Customs Tariff is based on the World Customs Organization’s (WCO) Harmonized Commodity Description and Coding System (HS).
Obtaining a Business Number
Before importing commercial goods into Canada, as a business or an individual, you will need to obtain a Business Number (BN) issued by the Canada Revenue Agency (CRA) for an import/export account. This import/export account is free of charge and can usually be obtained in a matter of minutes.
You should gather as much information as possible about the goods you intend to import. Obtain descriptive literature, product composition information and, whenever possible, product samples. This information will be crucial when it comes time to determine the tariff classification of the goods you wish to import. The tariff clarification number will be used to determine the rate of duty that will be applied to your goods.
Country of origin
NAFTA Certificate of Origin- Shipments eligible for preferential treatment as outlined by the North American Free Trade Agreement must be accompanied by a Certificate of Origin. This document includes detailed information about the contents of a shipment, including the origination of each component part. The Certificate or Origin is not required for non-NAFTA shipments or for shipments valued at less than US$1,000.
CBSA assists other government departments (OGDs) in administering entry requirements for products that fall within their areas of control. Many goods subject to OGD requirements necessitate special permits, licenses, certificates, or other paperwork. Special examination by customs officers may also be required for certain goods. Following is a list from the CBSA website of some of the most commonly imported products that may require review by an OGD:
Duties and Fees
It is critically important to doing business in Canada to have an understanding of that country’s unique sales tax code. In Canada, sales taxes are collected at the federal and provincial levels of government, and a business must be careful to comply with all applicable levies. Sales taxes are different from import duties. Import duties on goods between the U.S. and Canada were virtually eliminated via NAFTA.
• A federal Goods and Services Tax (GST) of five percent of value is assessed on just about all goods entering the country.
• Provincial sales taxes are levied at the province level and are collected locally.
• The provinces of Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, and Ontario have opted to “harmonize” their provincial sales tax with the general sales tax. This combined rate is called the “harmonized tax,” and represents the sum of the 5 percent federal GST plus the appropriate provincial tax.
Depending on the items being shipped, goods may also be subject to excise taxes and other fees. For example, an “antidumping duty” is assessed on any product entering Canada whose manufacturer, is in any way subsidized by the U.S. government. If fees are owed, the value of the goods being shipped must be converted into Canadian dollars to determine the amount of fees owed.
Your Responsibilities As An Importer Of Record
You will be the Importer of Record (IOR), lest the supplier is making the import declaration. Your importer number will be your Social Security Number (lest you are a company or non-US resident).
As the IOR (Importer of record), it’s your responsibility to be correctly up-to-date and take “reasonable care” to deliver the precise information that Customs requires to do their job (without imposing examinations). It’s expected for the IOR to permit a customs agent to file on their behalf, but there are some relations in the Additional Reading unit if you still think that you might choose to go it unaccompanied.
You must have a bond to include any shipment priced above $2,500, another IOR responsibility. Customs bonds are included in more specifications in the Customs Process part.
Your Liabilities With Shipments
ClassificationIf you are importing goods into the US, it should be your concern to precisely categorize the product. This is done by a ten-digit code Harmonized Tariff Schedule (HTS), which expands the six-digit international HS code system. Your product’s HS code aids in finding how much, if any, customs duties apply and are utilized to impose other import regulations.
The Customs Duty section includes product classification in more specified detail.
As an importer, it is your responsibility to precisely announce the shipment price. Generally, it’s the price mentioned on your commercial bill, but an estimate can get complicated. For instance, Customs may need to sell commissions, non-US strategy or product work costs, and royalty or licensing fees and be involved in the invoice value. You may remove post-import transport, construction, gathering or preservation charges, and buying commissions on the backside.
Country Of Origin
Knowing your product’s country of origin correct is significant because it determines:
- If your shipment is excused from duty because of a free trade contract.
- If your shipment is held back because of quota guidelines.
- If your product is subjected to anti-dumping or countervailing obligations.
- Ensure that the country of origin is evidently listed on your commercial bill and that you track any marking and labeling necessities.
Intellectual Property (IP)
IP includes inventions, fictional and creative works, and symbols, names, pictures, and strategies used in trade. If your product trespasses IP rights, Customs can grab your shipment.
If you are importing goods or packaging including trademarks, ensure the marks are sincere and not forged, and that you have written consent from the trademark holder to import goods including the copyright holder or the trademark, if the copyright has been recorded with the US Copyright Office.
So how can you know if a trademark or copyright applies?
• If the product, label, even language, is similar to a name brand, check that company’s site for IP particulars.
• If you are concerned that a product may be forged, check with the supplier that they have authorization from the trademark holder to produce or sell products with that logo.
• If you’re unsure about anything to do regarding IP, involve a regulatory advisor or get legal information.
Customs has numerous regulatory responsibilities that impact you as an importer, including the subsequent.
Goods imported into the US are subject to a duty percentage (even though some are 0%). These duty charges are commodity-specific but are put on across every country (excluding North Korea, Iran, and Sudan), lest that commodity and country are covered in a US free trade contract.
This tariff is imposed to penalize a country for unfair trade practices (or, at times, for national security) by striking further tariffs on specific goods. These tariffs can also dominate free trade contracts.
The projected 25% retaliatory tariff retort on a range of imports from China illustrates a punitive tariff. The US contemplates that US companies applying to do business there frequently to have to offer details that end up in Chinese authorities gaining access to private technologies and other information.
Anti-Dumping & Countervailing Duties
Anti-dumping and countervailing (AD/CVD) duties are functional when the imported products are taken to have been unfairly promoted or be priced below fair market value. These tariffs are put on to specific groupings of HTS code and particular countries of origin.
Other usual imports from China, like color pencils, notebooks, and wire hangers, have these extra duties. The volume of commitment can also make it unprofitable to import. Refer to a customs broker, or do your research. Ongoing AD/CVD inquiries and orders are recorded on the ITC website.
Unauthorized Entry Of Restricted Imports
Outside Customs regulations, your product may be controlled by either one of the twenty Partner Government Agencies (“PGAs”), like the FDA, CPSC, Fish & Wildlife Service, and the APHIS. The Customs site has relations to every PGA’s import regulations guide.
These agencies are in search of specific commodities, and they can show up in unexpected places. For example, the FDA controls an extensive range of products, including food, cosmetics, drugs, medical devices, and whatever might be in contact with food or medicines. They have a comprehensive description of what creates a medical device, together with everyday products similar to toothbrushes, dental floss, non-prescription sunglasses. Similarly, lip balm, sunscreen, and hand sanitizers are controlled as drugs.
If you are preparing to import a limited product, check with the producer that their products are recorded with the FDA, and inquire for evidence.
As the importer, it is your sole responsibility to precisely announcing your products to Customs. Refer a professional to make sure you get it correct.
You should know everything about your product to find out what regulations it is subjected to.
Ensure that you have all commercial, licensing, and other papers in an arranged manner.