The changes relate to targeted tariff relief, simplifying bonded warehouses, and the general preferential tariff regime.
The federal government will eliminate tariffs on children's clothing and sports and athletic equipment (excluding bicycles). According to the budget, this change is intended to make prices more competitive between Canada and the United States. This tariff relief will be effective 1 April 2013 on listed items, ranging from clothing to sporting equipment.
Simplifying bonded warehouses
Other changes in the budget are intended to strengthen the advantage of foreign trade zones (FTZ) programs, which provide duty and tax relief to importers. For example, the annual registration fees for bonded warehouses will be eliminated. Bonded warehouses allow companies to import products into Canada without paying duties and taxes at the time of import. The goods enter the warehouse and duties and taxes are not paid until the goods leave the warehouse and enter the Canadian market.
The government will also simplify the FTZ application process to grow the program. To aid in this growth, the federal government will invest $5 million* over the next five years to raise awareness in the market for Canada's FTZ advantage.
Modernizing the general preferential tariff
The budget announced the federal government's plan to modernize the general preferential tariff (GPT) that applies to selected countries. Importing companies will need to review the tariff treatments for countries from which they import goods and determine how any changes could affect the duties and taxes they pay when goods cross the border.
Read a March 2013 report prepared by the KPMG member firm in Canada: Customs Tax Changes — Review Imports for Duty Reductions
For more information, contact a professional with KPMG’s Trade & Customs practice:
John L. McLoughlin
Todd R. Smith
Luis A. Abad
Or your local KPMG Trade & Customs professional.