Canadian Manufacturing

Maximize your customs duty savings



Canadian manufacturers ought to know by now that customs duty has been eliminated on a long list of manufacturing inputs imported into Canada.

The 2010 Budget presented on March 4, 2010 by Finance Minister Jim Flaherty contained a long list of tariff codes where duty has been eliminated, either completely or gradually over the next five years.

Obviously, if your company imports these raw materials and components from abroad, the duty savings will be realized the next time you file a customs declaration to the Canada Border Services Agency (CBSA).

There should be no duty paid on those items, only GST, which is a recoverable expense and not an import cost in the true sense.

However, if your company does not import these manufacturing inputs, there are still important savings to be made.

The local suppliers you deal with may import those inputs themselves, and are saving duty starting now.

In that case, manufacturers are well advised to renegotiate purchase prices on manufacturing inputs covered by the budget.

The true savings are not only on the customs duty you used to pay to the CBSA, but also on the duty you pay indirectly to the importing intermediary as a built-in component of their selling price.

The time to revisit your purchase terms with your suppliers is now. Otherwise each day that goes by is a day of unrealized duty savings and postponed increase in competitiveness.

Jean-Marc Clement heads the Customs and International Trade consulting practice of PwC in Montreal, where he advises corporate management on international trade matters, particularly in the areas of customs and logistics. Contact him at jeanmarc.clement@ca.pwc.com.

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