5 Legal Ways to Reduce Your Canadian Import Duties
December 2023 · 9 min read
Introduction
Most Canadian importers are paying more duty than they need to. The Canadian tariff schedule and international trade agreements offer numerous legal mechanisms to reduce — or eliminate — the duties your business pays. Here are five strategies worth exploring.
1. Leverage Free Trade Agreements
Canada has free trade agreements with over 50 countries, including the United States and Mexico (CUSMA/USMCA), the European Union (CETA), and many others. If your goods qualify as originating under one of these agreements, you may be entitled to a zero or reduced duty rate. The key is obtaining the proper documentation — such as a Certificate of Origin — and ensuring your goods meet the rules of origin requirements.
2. Review and Optimize Your Tariff Classification
The same physical product can sometimes be legitimately classified under multiple HS codes carrying different duty rates. A thorough classification review by a licensed broker may identify a legally defensible classification that results in lower duties.
3. Claim Duty Drawback
If you import goods that are later exported, used in manufacturing of exported products, or returned as defective, you may be eligible to recover the duties paid through Canada's duty drawback program. Many importers are unaware of this program or fail to claim refunds they are entitled to.
4. Apply for Tariff Relief
The Canadian government offers duty remission orders and tariff relief programs for certain industries and inputs. If your business regularly imports a specific product that is not manufactured in Canada, you may be able to apply for a remission order to have duties reduced or eliminated.
5. Use a Customs Bonded Warehouse
Goods stored in a CBSA-licensed bonded warehouse are not subject to duties and taxes until they are released into the Canadian market. This can be advantageous for businesses that re-export a portion of their inventory, allowing them to defer or avoid duty payments on goods that never enter Canadian commerce.
Next Steps
Viacan's duty optimization specialists can conduct a free review of your import program to identify savings opportunities specific to your business and commodity mix.