The Non-Resident Importer (NRI) Program July 17, 2018 The Non-Resident Importer (NRI) Program The Non-Resident Importer (NRI) Program is an initiative of the Canada Border Services Agency (CBSA) that allows United States / international exporters to sell products to Canadian customers directly on a delivered-price basis, without the need for a physical presence in Canada. Registering as an NRI offers many benefits, including better control over your supply chain, an increased ability to compete in the Canadian marketplace, and opportunities to provide better service to Canadian customers. The following provides an overview of the benefits of becoming a Non-Resident Importer, your responsibilities as an NRI, and how to register to the NRI Program. Further details can be found in our guide, The Non-Resident Guide to Importing Goods into Canada. Who is a Non-Resident Importer? A Non-Resident Importer (NRI) is a business based outside of Canada, who does not have a physical presence in Canada, but imports goods into Canada under their own name. By registering as an Non-Resident Importer, your company becomes the Importer of Record into Canada. Becoming the Importer of Record offers many benefits, mainly the ability to include all of the costs of shipping and customs clearance into one price to the customer. The sale resembles a domestic transaction for your Canadian customer, making your product more accessible and easier to purchase. The risk of becoming the Importer of Record is that you are responsible for complying with the many rules and regulations associated with importing goods into Canada under the Customs Act and Customs Tariff Act. Benefits of Becoming an NRI Reduced Costs Non-Resident Importers do not require a physical establishment in Canada to sell to Canadian consumers. This reduces operating and overhead expenses associated with infrastructure, operations staff, warehousing, and distribution. Being an NRI also contributes to savings within your supply chain. As both the exporter in your own country and the importer in Canada you are better able to estimate and control shipping and import-related costs. These costs can be further reduced by consolidating shipments, as goods only have to be cleared once. Supply Chain Control As both the exporter and the importer, you control the shipping process. This allows you to manage the movement of your goods and potential bottlenecks in the supply chain. Becoming an NRI also allows you to establish consistency in your import processes, reducing delays at the border and delivery times to customers. Accessibility for Customers NRIs can offer direct delivery to Canadian customers, removing the administrative burdens and “hidden fees” often associated with buying products internationally. Becoming the Importer of Record in Canada allows you to sell your products to customers on a Delivered Duty Paid (DDP) basis (Incoterms 2010), meaning you pay all the costs associated with delivering the goods door-to-door to your customer. For the customer, the online or invoice price is the final amount paid and shipment tracking is provided directly by the seller. Competitive in the Canadian Marketplace Through reduced costs and easier access for Canadian consumers, the Non-Resident Importer Program allows you to compete more effectively and increase your sales and market share in Canada. Your sales resemble domestic transactions to Canadian customers – similar to purchasing the products from a Canadian company – making your product more accessible. Responsibilities of an NRI The largest risk of becoming a Non-Resident Importer of Record is assuming responsibility for compliance with the many customs laws and regulations related to the import of the goods. This includes, but is not limited to, submitting accurate and complete information to the CBSA, paying the applicable duty and taxes, and maintaining records. Failure to submit the required information and payments may result in fines and penalties under the Administrative Monetary Penalty System (AMPS), confiscation of goods, or prohibition from future importations. Submitting Correct Information Goods imported into Canada require specific information for clearance by CBSA at the border, including: Correct tariff classification for the product being imported; A Canada Customs Invoice (CCI) or commercial invoice detailing the same information as a CCI; Certificate of Origin to apply preferential tariff treatment (e.g. NAFTA, CETA, etc.); Additional information required for the specific product being imported (e.g. import permits). Tariff Classification The Customs Tariff provides tariff classifications and rates of duty for thousands of products based on the Harmonized Commodity Description and Coding System (HS Code) – the universal coding structure used in international trade. As the Importer of Record, you are responsible for ensuring that the tariff classification for the product you are importing is correct on documentation submitted to the CBSA. Canada Customs Invoice All commercial shipments imported into Canada must include a commercial invoice providing specific information including, but not limited to, the buyer and seller, country of origin, price paid or payable, quantity and description of the goods. A Canada Customs Invoice (CCI) is required for shipments with Value for Duty of CAD $2,500 or more. For shipments valued under CAD $2,500, a commercial invoice may be used provided it details the same information as a CCI. NRIs may also submit both a CCI and commercial invoice with their shipment. As an NRI your selling price will include duty, Goods and Services Tax (GST), customs brokerage, and freight/shipping costs. All charges must be stated on your commercial invoice so that duty and GST is calculated on the correct value. The HS Code provides for accurate calculation of duty, based on the tariff classification and country of origin. Certificate of Origin In order to take advantage of reduced or eliminated duty rates under a Free Trade Agreement, such as NAFTA or CETA, a Certificate of Origin or Origin Declaration must be provided at the time of customs clearance. NRIs benefit from the NAFTA Agreement in that a “blanket” NAFTA Certificate of Origin is only required once per year, covering all imported shipments into Canada for a one-year period. Import Permits Certain goods entering Canada are controlled and/or restricted and require an Import Permit for importation. Examples of products listed on Canada’s Import Control List include certain steel, dairy, textile products, as well as military goods and firearms. OGD Requirements Depending on the nature of the product, your imports may be subject to Other Government Department (OGD) requirements. Examples of products affected by OGD regulations include food, pharmaceuticals, plants, and animals. CBSA provides a list of some of the most commonly imported commodities that may require permits and/or certificates from other federal government departments and agencies. Paying Duties & Taxes Valuation In accordance with the Customs Act, a “Value for Duty” must be declared for all goods imported to Canada. The primary method of valuation in Canada is the Transaction Value Method. Under this method, the value for duty is based on the price paid or payable for imported goods with consideration to certain adjustments. Non-Resident Importers face challenges when applying valuation methods to their products. As both the exporter and importer it is more difficult to demonstrate an arm’s length transaction and reliable invoice price. We advise NRIs or importers without substantial operations in Canada to seek further assistance from a Customs Broker when considering valuation and CBSA’s approach to NRI valuation methods. Duty The Customs Tariff provides tariff classifications and rates of duty for imported commodities based on the HS Code. As the Importer of Record, you are responsible for payment of duties owed on imported goods. Taxes Goods and services imported and sold in Canada are subject to a federal Goods and Services Tax (GST). NRIs carrying out business in Canada must register for the GST and may be required to post a GST security bond. GST is applied at a rate of 5% of the duty paid value of the goods upon import. An NRI registered for GST can recover the GST paid the CBSA by claiming an input tax credit (ITC). An NRI who simply sells goods to Canadian customers on a landed, duty-paid basis is not considered to be carrying on business in Canada and is not required to register for the GST. In this scenario, the non-registered NRI is not eligible to claim the GST paid to CBSA, and therefore incorporate the GST into the selling price and transfer (or assign) the input tax credit to the Canadian customer. In addition to the GST, each Canadian province has its own provincial sales tax to which an NRI carrying on business in Canada must register. Taxes vary, with some provinces having a Provincial Sales Tax (PST), and other harmonizing their taxes into a Harmonized Sales Tax (HST). The rate of tax varies between provinces. Maintaining Records All companies or individuals importing or exporting to/from Canada must maintain accurate records of their activity for a period of six (6) years plus the current year. Under authorization from the CBSA, a Non-Resident Importer may designate their Customs Broker to prepare, submit, and maintain all shipment-related documentation and records. The NRI must submit a request in writing to the CBSA for approval. Alternatively, NRIs may submit a letter of undertaking to CBSA for authorization to maintain records at their place of business outside of Canada. How to Become an NRI in Canada Apply for a Canadian Business Number (BN) To become a Non-Resident Importer you must first obtain a Business Number (BN) from the Canada Revenue Agency (CRA) prior to importing into Canada. The Business Number is a unique 15-digit number assigned to companies in Canada to transact with governmental agencies. As an Importer, you will require an Import/Export account. Import/Export accounts are identified by the two-letter business account ‘RM’ (e.g. 123456789RM0001). Import/export account numbers must be entered on documents submitted to CBSA for customs clearance and are only used when importing or exporting. To register for a Business Number, or add an import/export account to an existing Business Number, contact the CRA’s Business Window at 1-800-959-5525, or register online using the Business Registration Online (BRO) service. You may also complete Form RC1, Request for Business Number (BN) and mail or fax it to your nearest tax service office. Register with the CBSA Non-Resident Importers must register with the CBSA, advising of the location in which records will be kept (or submitting a letter of undertaking to request approval from CBSA to maintain records outside of Canada). PF Collins Can Help The simplest way to register for the Non-Resident Importer Program is through a Customs Broker, like PF Collins. By completing a General Agency Agreement (or Power of Attorney), we can assist with the NRI registration and guide you through all aspects of importing to Canada. We can also arrange transportation services for your imports from the U.S. or international shipping point to final destination in Canada. If you need assistance in registering as a Non-Resident Importer or would like more information regarding your import and/or export requirements, please contact our Customs Consulting Department or your local PF Collins office. We offer a full range of international trade and logistics services to assist with all your importing and exporting needs.