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NAFTA, Canada Temporary Entry of Goods into Canada under NA

Information on temporary entry and travel to Canada. Also includes taxes and standards guides.

NAFTA, Canada Temporary Entry of Goods into Canada under NA

Postby bridgat » Mon Nov 17, 2008 12:21 pm

This document is meant to be a guide on the temporary entry provisions of Canada. Exporters should keep in mind that only the customs regulations of Canada are definitive. For complex issues or where interpretation is required, exporters should seek legal assistance or advice from Canada Customs.

Temporary importation provisions can enhance a company's marketing abilities by increasing the product exposure in the market at lower initial cost to the exporter than regular importation would cost. The North American Free Trade Agreement (NAFTA) requires Canada, Mexico, and the United States to grant duty-free temporary admission to certain classes of goods imported from another NAFTA country. In addition, under the service provisions, NAFTA also provides "tools of the trade" provisions that allow companies to send their service personnel, along with their tools, to Canada and Mexico. NAFTA's temporary entry provisions for after-sales service providers and professionals facilitate expedited clearance through immigration.

Every day in Canada, innumerable commercial items enter the country on a temporary basis. Canadian Customs officers are very familiar with temporary entries, and U.S. exporters, as well as Canadian importers, should be prepared with some basic background knowledge of what to expect when goods are being brought into Canada but will be returned to the United States at a later date. Considerable resources to determine entry status and procedure are available via the Internet, the Canada Customs and Revenue Agency (CCRA), and through private sector customs brokers. U.S. companies bringing goods into Canada on a temporary basis would be well served to utilize these resources in order to expedite entry, avoid any unnecessary procedural delays, and to best serve their clients and interests in the Canadian market.

Under NAFTA's temporary entry provisions, duty-free entry cannot be conditioned on whether directly competitive or substitutable goods are available in the importing country. Furthermore, goods do not have to originate (a product meeting NAFTA's rules of origin is said to originate) in a NAFTA country to qualify under the temporary entry provisions. Finally, it is important to note that since the implementation of NAFTA, many North American goods are now duty-free, thus eliminating the need for temporary entry in many cases. However, Canada's Goods and Services Tax (GST) is still applicable for duty-free goods, while goods entered temporarily may be eligible for relief from GST.

CCRA has produced an excellent publication, Memorandum D8-1-1 available on this subject on the CCRA website. This publication covers the 57 classes of items that qualify for temporary importation in detail and provides numerous reference points and interpretations related to bringing in a temporary import.

WHAT QUALIFIES?

Generally, all goods being imported temporarily, so long as they are not being imported for sale, lease, further manufacturing, or processing, will qualify for duty-free entry under tariff item number 9993.00.00. For the purposes of this tariff item only, the term "further processing" does not include repair. Goods imported temporarily to be restored to their original operating condition do qualify under tariff item number 9993.00.00. While there are no restrictions on the types of goods or the use to which they may be put, at the time of importation the importer must specify how the goods will be used while in Canada. The goods must be imported in a reasonable quantity.

To qualify under tariff item 9993.00.00, the temporarily imported goods must also be classified under the appropriate tariff item in Chapters 1 to 97 of the Harmonized Tariff Schedule. If the goods are duty-free when classified in Chapters 1 to 97, and there is no relief available for the Goods and Services Tax, the importer should consider classifying the goods under their applicable tariff item instead of 9993.00.00 because using 9993.00.00 would require additional paperwork and carry additional restrictions with no additional benefit.

GOODS AND SERVICES TAX (GST)

If the goods qualify under number 9993.00.00, they may or may not be eligible for full or partial relief of Canada's goods and services tax. For information about whether or not your product qualifies for GST relief, contact Canadian customs by visiting the "Contact us" section of Canada Customs and Revenue Agency website (http://www.ccra-adrc.gc.ca) in the Canadian district where the importer of your product is located.

THE TEMPORARY ADMISSION PERMIT (FORM E29B)

A Temporary Admission Permit, Form E29B is required to process goods entering Canada on a temporary basis when they are not accompanied by an ATA Carnet (For more information on the ATA Carnet, see the entry under Canada entitled ATA Carnet). A Canada Customs Coding Form (B3) is required under certain circumstances. There is no fee for the E29B form. Canada Customs does require a security deposit that is fully refundable upon re-exportation of the goods.

Each Form E29B is assigned a permit number by Canada Customs. This permit must be cancelled in order to document and prove that the goods actually left Canada.

Information to Provide

o The importer/owner should be prepared to provide an invoice providing a detailed description of the goods entering (including any serial numbers or other markings) and an accurate value for duty and tariff classification purposes. Information relating to the intended use of the goods in Canada will be required as well as a reference on the permit to the specific Canadian Customs memorandum identified as the authority for the temporary importation, e.g. Memorandum D8-1-1, Temporary Importation Regulations, or Memorandum D8-1-7, Use of ATA Carnets for the Temporary Admission of Goods.

o The importer must be identified on the permit by his/her full name, address, and telephone number. When a customs broker is involved in the transaction, his/her name and address must also appear on the permit.

Security Deposit Requirements

When goods are imported for a temporary period of time on form E29B, the Customs office of importation may require a refundable security deposit. This security may be in the form of cash, travellers checks, a certified check, or a bond acceptable to Customs. It does not matter whether it is the resident importer or the non-resident exporter who pays the security deposit, so long as it is paid.

The amount of security shall not exceed the duties that would be payable if the goods imported for a temporary period were accounted for under the provisions of Section 32 of the Customs Act (i.e., the duty to be paid for a permanent importation).

In cases where goods are imported for temporary purposes throughout the year, importers or brokers may wish to deposit standing security with Customs in lieu of posting individual security for each importation.

Once all the goods have been exported from Canada, or otherwise accounted for within the time limits specified on the permit, the security deposit will be refunded in full.

NOTE: Refunds of deposits will not be made in instances where goods which have been temporarily imported for commercial purposes have been lost or stolen in Canada. Where the security deposit is less than the duties payable on the goods, the difference will be collected by Customs. However, a refund claim may be accepted after a security deposit has been taken into account, provided the importer or broker can supply satisfactory proof that the goods have been exported, duty paid, destroyed, or abandoned in accordance with Customs regulations and within the authorized time limits. Canadian Custom Form B2 must be used for claiming refunds in these instances.

While the vast majority of exporters to Canada use the E29B form, it is not the only method available besides the ATA Carnet. There is a method called the 1/60th method that is sometimes used with items that are otherwise unavailable in Canada. Customs duties will be payable only on 1/60th of the value for duty of the goods multiplied by the number of months that the goods remain in Canada.

For both the E29B and the 1\60th method (as well as the ATA Carnet), the exporter can opt to use a broker and have him or her pay any necessary deposits or pay them him or herself.

NOTE: For both of these methods, exporters must also register their goods with U.S. Customs by filling out U.S. Customs Form 4455 prior to the exportation of their goods. Exporters can register ahead of time or at the time of departure.


REVENUE CANADA

For those seeking further assistance or clarification, Revenue Canada can be reached from the U.S. by calling (204) 983-3500 or by fax at (613) 952-0022. The toll free number from within Canada is (800) 461-9999. Or visit the website at http://www.ccra-adrc.gc.ca

USING A BROKER

This is a business decision of the company responsible for the import; however, most firms importing a product on a temporary basis should seriously consider the advantages of using a broker to look after the details. For the amount charged by the broker, the saving in company staff time and resources can often be immeasurable if the process doesn't work out exactly as expected. Most brokers are quite familiar with this process and will bring their resources to bear in order to expedite the import.

In the case of items transported for use in a trade show, the event organizer should be contacted in advance in the event that there is a broker of record that is handling the temporary import process for the show.

Special note: A broker can be especially useful in that arrangements must be made for the formal cancellation of the Temporary Admission Permit. This is essential to document the goods actually leaving Canada. If this is not completed, the importer of record may have to forfeit security deposits or other funds paid which would otherwise be refundable.
bridgat
 
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