Valuation of goods for Non-Resident Importers (NRIs)
Valuation of goods is a snarly topic at the best of times. It’s challenging territory to navigate and worth reading more about.
And the already complex process of valuation is even more challenging when a non-resident importer (NRI) is involved. (Read more here about the benefits and responsibilities of becoming a non-resident importer.)
Your greatest ally as an NRI
Before we dig into some of the common pitfalls and recent changes impacting valuation for NRIs, please remember that each situation is different. And although we’re trying to simplify this issue for importers, each section below may end up leading to more questions depending on your particular circumstance.
A skilled and experienced trade consultant is your best resource for guidance through your specific circumstance and situation.
Common pitfalls of valuation for NRIs
As a non-resident importer, ask yourself the following questions to determine if you’re heading into troublesome territory for the valuation of your goods:
- Have the goods been sold by the NRI to the person receiving the goods? If not, the NRI may not want to be the importer.
- Have the goods been sold...or are they being sent to Canada “in anticipation of future sale”?
- Is the sold-to party related to the NRI? If yes, does the price reflect an “arms-length” transaction? Is there a transfer price involved?
- Is the price inclusive of duty, freight, and/or customs brokerage? If yes, have these been quantified and is the customs broker aware?
Key things to remember
Keep these things top of mind when considering the valuation of goods as an NRI:
- There is no such thing as a $0 value.
- If goods are supplied at no charge, does a warranty condition exist? If yes, has it been expressed on the shipping documents?
- If there is no charge and no warranty, is the value declared defensible using generally accepted accounting principles?
Recent changes in valuation for nonresident importers
The federal government recently invited comments from industry on their proposed revisions to the Value for Duty Regulations. The thrust of this endeavor is to ensure that duty is calculated on the highest value in the series of events/sales that caused the goods to be imported into Canada.
Read more here.
There are other changes happening in the business-to-consumer (B2C) environment where NRIs engage third parties (“platform operators”) to facilitate sales to consumers in Canada.
These changes will likely push more non-resident importers to become registered for GST/HST. Provincial sales taxes may also be a factor as certain provinces (e.g. BC, SK, MB, Quebec) expand on existing rules to capture revenue in the “digital economy.”
Cole International’s team of experienced trade consultants are ready to help you navigate the complex and changing landscape of valuation of goods as a non-resident importer. Contact our team today to streamline your cross-border operations.