Canada country guide

• Canada has a diverse workforce and a sophisticated, growing economy.
• Canada has a strong trading relationship with the U.S.
• Canada's strong homegrown technology sector promotes a technologically oriented market.
• Canada's prime location provides easy access to the U.S., Europe, and the rest of the world.
• Canada exercises federal laws, regulations, and taxes but also province-specific laws, regulations, and taxes.

• Canada has relatively low GST and duty rates, which is favorable for landed cost.
• Canada has a low de minimis, which is unfavorable for landed cost.

• Canada has a robust and transparent legal system.
• Canada's import regulations are reasonable and pose no limitations for trade.

• All major couriers ship to Canada.

• Canada uses various digital payment methods, including credit cards, debit cards, payment gateways, and PayPal.

Duty will only be charged on imports into Canada where the total FOB value of the import exceeds Canada's duty threshold (de minimis), which is 20 CAD, and tax will only be charged when the total value of the product plus duty exceeds the tax de minimis, which is also 20 CAD. Anything under the tax de minimis value will be considered a tax-free import, and anything under the duty de minimis value will be considered a duty-free import. For imports from the U.S. and Mexico if the product value plus duty is under 40 CAD, it will be duty and tax-free. If the FOB value of the order is under 150 CAD, it will only be a duty-free import. Postal shipments from the U.S. and Mexico operate under the 20 CAD de minimis.

Duty and tax de minimis

Standard:

• Tax de minimis: 20 CAD

  • Applied to the product value plus duty

• Duty de minimis: 20 CAD

  • Applied to the FOB value of the goods

Shipments from the U.S. and Mexico:

Courier shipments:

• Tax de minimis: 40 CAD

  • Applied to the product value plus duty

• Duty de minimis: 150 CAD

  • Applied to the FOB value of the goods

Postal service shipments:

• Tax de minimis: 20 CAD

  • Applied to the product value plus duty

• Duty de minimis: 20 CAD

  • Applied to the FOB value of the goods

Goods and services tax (GST):

Canada's GST is a 5% federal tax and is applied to the product value plus duty.

• Standard rate: 5%

• Applied to the product value plus duty

• Provinicial tax: Varies by province, see table below

• Applied to the product value plus duty

Provincial tax:

There are several types of provincial tax in Canada:

• Provincial sales tax (PST) is a tax some Canadian provinces have added to the GST.
• Harmonized sales tax (HST) is used in some provinces, which is their PST and the GST combined for a single simplified rate.
• Quebec’s sales tax (QST) is their unique provincial tax rate.

The table below outlines which of the taxes are applicable in each province. Taxes are applied to both the value of the goods and the value of the duty assessed on the item.

*Although the HST values are listed as 10%, they are actually 15%. This table separates the HST and GST values to give a more detailed breakdown even though HST itself includes GST.

The duty rate for good imported into Canada varies based on the type of product that is being imported. Two of the most common ecommerce product categories imported into Canada are fashion and electronics. Many products, such as some electronics, are not subject to duty. Other categories, such as clothing, have high duty rates.

Average import duty:

• Varies
• Applied to the FOB value of the goods

Commonly imported items and their duty rates:

• The average duty for clothing is 16.5% but can be as high as 18%
• Furniture, bedding, and prefabricated buildings are 2.1%
• Iron or Steel is 2.2%
• Pharmaceuticals are 3.5%
• Vehicles are 13.9%
• Laptops and other electronic products are duty-free

Complete list of Canada’s duty rates based on the harmonized tariff schedule

Canada has at least 15 trade agreements that offer a zero or highly discounted duty rate for goods manufactured in participating countries. The most prominent of these trade agreements is the CUSMA/USMCA.

Canada-United States-Mexico Agreement (CUSMA)

The CUSMA agreement provides special duty rate treatment on shipments between Canada, the U.S., and Mexico.

On July 1, 2020, CUSMA replaced NAFTA (North American Free Trade Agreement), which was one of the oldest and most well-known trade agreements.

The CUSMA allows for minimal formal entry procedures and saves consumers money, encouraging global trade as a result.

CUSMA offers substantial savings for merchants importing goods made in the U.S., Canada, or Mexico, that meet the rules of origin requirements.

Each country that is part of CUSMA calls the agreement by their own name:

In the United States: United States-Mexico-Canada Agreement (USMCA)

In Mexico: Tratado entre México, Estados Unidos y Canadá (T-MEC)

In Canada: Canada-United States-Mexico Agreement (CUSMA)

What this legislation means for Canada:

• Increased tax de minimis from 20 CAD to 40 CAD for courier shipments from the U.S. and Mexico
• Increased duty de minimis from 20 CAD to 150 CAD for courier shipments from the U.S. and Mexico
• Preferential treatment for the import of goods made in the U.S., Canada, or Mexico

Shipments under the new de minimis thresholds allow for minimal formal entry procedures and save consumers money, encouraging global trade as a result.

CUSMA offers substantial savings for merchants importing goods made in the U.S., Canada, or Mexico, that meet the rules of origin requirements. A CUSMA certificate of origin is required when the import value is greater than 3,300 CAD.

For imports less than 3,300 CAD, online retailers can include a statement on the commercial invoice to ensure their shipment get preferential tariff treatment. This statement could be as follows:

"I hereby certify that the goods covered by this shipment qualify as an originating good for the purposes of preferential tariff treatment under USMCA/T-MEC/CUSMA."

Canada is a member of the World Trade Organization

As a member of the World Trade Organization (WTO), Canada must abide by the most-favored-nation (MFN) clause, which requires a country to provide any concessions, privileges, or immunities granted to one nation in a trade agreement to all other WTO member countries. For example, if one country reduces duties by 10% for a particular WTO country, the MFN clause states that all WTO members will receive the same 10% reduction.

• DHL Express
• FedEx
• UPS
• USPS
• Purolator
• Canpar Express
• Canada Post

Depending on the courier, additional shipping fees may include:

• Tracking

• Insurance

• Fuel surcharge

• Remote delivery charge

• Signature fee

• Overweight or oversized fee

• Special handling fee

• Dangerous goods fee

• etc.

Always needed:

• Bill of lading or air waybill
• Canada Customs Invoice or a commercial invoice
• Canada Customs Coding Form B3

Sometimes needed:

• Proof of origin (needed if the online retailer is seeking to benefit from a trade agreement)
• Packing list

Postal services are generally operated by a national government authority and are able to deliver to a country’s P.O. box network. The quality of service provided by a postal service varies by country. Courier services are private or public companies that may specialize in a type or range of services, e.g., various transit time options. Courier services do not have access to P.O. boxes owned by postal carriers and generally cost more than a postal service.