Canada Announces Process for Requesting Surtax Remission on Goods from China

Future surtaxes may also be imposed on critical manufacturing sector products, for which the remission process would apply.

The Government of Canada has outlined a comprehensive framework for businesses to request surtax remission (relief) from the recently imposed surtaxes on certain goods imported from China.

This process specifically addresses imports of electric vehicles (EVs) effective October 1, 2024, and steel and aluminum products effective October 22, 2024. Businesses facing difficulties due to these surtaxes can apply for relief under certain conditions.

The China Surtax Order list is not final, and surtaxes may apply to other critical manufacturing products in the future.

The goal of the surtax remission is to offer relief only on a transitional basis as Canadian supply chains adjust. Although remission may be granted retroactively to the date of the surtax implementation, it is the government that will determine the appropriate duration for remission.

Here is what you need to know about surtax remissions and the process for requesting them.

What are the conditions for surtax remission requests?

Businesses can apply for a surtax remission under the following circumstances:

1. Sourcing limitations: The goods or substitutes cannot be sourced domestically or reasonably from non-Chinese sources.
   
   
2. Contractual requirements: Contracts entered into before August 26, 2024, require the business to purchase Chinese inputs for a specific period of time.
   
   
3. Exceptional circumstances: Other special situations that could have a significant adverse impact on the Canadian economy, which will be assessed on a case-by-case basis.

It is important to note that goods imported for resale in the same condition to the United States are not eligible for remission.

Steps for submitting a surtax remission request

Businesses that wish to apply for a surtax remission must provide the following information:

1. Prepare detailed company information: Outline the company’s operations, including corporate structure, location, and number of employees.

2. Product description: Provide a detailed description of the goods for which remission is sought, including the 8-digit tariff item or 10-digit statistical level. 

3. Volume and value: Include the volume and value of the imported goods (exclusive of surtaxes) annually or for the requested period. Provide customs documentation if already imported. 

4. Evidence of sourcing limitations: Provide evidence showing an inability to source the product or substitutes from Canada or other non-Chinese suppliers. Include any Requests for Proposal and responses from potential suppliers.

5. Contractual obligations: Submit copies of contracts or agreements that necessitate purchasing Chinese goods, if applicable.

6. Temporary or transitional sourcing issues: Indicate if the sourcing issue is temporary or transitional and specify the expected duration.

7. Manufacturing cost breakdown (if applicable): For goods used in manufacturing, provide a unit cost breakdown including imported goods, Canadian materials, labour, overhead, and administrative and selling expenses.

8. Impact on selling price: Detail how remission of surtaxes would impact the selling price of the final product. 

9. Employment and production impact: Provide information on how remission would affect employment, production volumes, investment, or other operational aspects.

10. Canadian competitors: Include the names and locations of Canadian competitors and how remission could affect those companies. 

11. Rationale for request: Clearly explain the exceptional circumstances that justify the surtax remission request, referring to the supporting evidence.

12. Consent for information sharing: Grant consent for non-confidential information to be shared with domestic producers for validation, as required.

13. Supporting documentation: Provide any letters of support, independent studies, or market data that may substantiate the request.

14. Additional information: Include any other relevant information that could illustrate the necessity of remission.

Evaluation and approval of surtax remissions

The Department of Finance will assess requests in consultation with other federal departments. Recommendations will be made to the Minister of Finance, who may then submit the remission request to the Governor in Council for approval.

Businesses are encouraged to thoroughly review their supply chain and consult with trade professionals before submitting requests to ensure all criteria are met and the application is well-supported.

Requests for remission must be submitted to remissions-remises@fin.gc.ca, and submissions made before November 8, 2024, will be processed on a priority basis.

For further assistance with the remission request process, please reach out to one of our trade professionals.