Do you feel confused when paying import duties from China to Canada?
Do you know how much and when to pay as an import duty from China to Canada?
Well, let’s get the answers. Import duty is a tax imposed by a country’s customs authorities on imports and certain exports.
The value of goods usually determines the import duty from China. Knowing more about import duty and customs clearance can help you in avoiding a lot of importing issues.
As the world’s manufacturing factory, China is the place that most Canadian businessmen want to buy wholesale from. But the problem comes, documentation, custom taxes, and import duties are to be filled in this regard, but they don’t know-how.
In this blog, you will be introduced to what is Canadian import duty, how to calculate it, and so on. Hence, every other question that comes to your mind regarding import duty from China to Canada will be addressed.
Table of Content
Chapter 1 : What you need to Prepare for Import Duty from China to Canada?
Chapter 2 : Important Documents for Paying Import Duty from China to Canada
Chapter 3 : On What factors the Import Duty from China to Canada depends?
Chapter 4 : What are different Methods to Pay Import Duty from China to Canada?
Chapter 5 : Methods to Reduce Import Duties from China to Canada
Chapter 6 : Frequently Asked Questions About Import Duty from China
Chapter 1: What you need to Prepare for Import Duty from China to Canada?
When you are preparing goods for importing them from China to Canada, you must know the import duty respective. Preparing goods are not enough, you have to prepare the documentation required for import duty from China to Canada.
Here is the list of all the documents with the required explanation.
1. Get your company’s business number for importing
For a business or being an individual, if you want to import from China to Canada. Then, you need to get the business number issued by the Canada Revenue Agency, it is very crucial for creating an export-import account. The charges of import-export accounts are zero and it can take few minutes to complete the process. It will provide some extra information like:
- It is the tax ID number that will be used for paying the importing goods.
- It consists of nine identification numbers.
2. Confirm the HS code and HS rules before importing
There is a customized international method to import products. HS is the Harmonized System code and is the global multifunctional nomenclature founded by Worlds Custom Organization. It is used for the identification of the products which you are importing from different countries.
Various countries are using the harmonized tariffs or codes for trading among different countries.
This is the central point whenever you try to import goods from China to Canada. HS code plays a mandatory role in the declaration and classification of goods entering and leaving Canada. It is better to check on the correct HS code and follows the rules of the process.
If you want to check the HS code of the product you need to visit the HTS official website. After entering the questions your answer will appear soon.
- Get six digits recognition code
- Product categories with prices
- Well defined standard rules
3. Preparation of the goods to be imported
Business is something that stands on the profit rates, so it follows the core rule of buying the product from a place and selling in the other market.
If you are importing the products from China to Canada, then you should focus on the type of goods you are importing.
The wise option for you to avoid time and money is that you take information about the merchandise before placing the order. The pre-purchasing tips are listed below;
- Read the description and composition of the product.
- Ask for the samples before importing the main order.
- Order the products which you need the most and are also unique and then check the reselling ratio.
- Also, go for the products which have low cost for bulky orders.
4. Determining the correct tariff classification number for the goods
The products which you are importing from China to Canada on the business level or at the individual level will make you suffer many problems at custom clearance.
The HS code is a secret code for every order you are placing which will clear the goods from China.
Before importing your goods, make sure that you are clear about the HS code of your goods. It is a standardized number given to different types of products, according to this, the customs can easily identify your products.
5. Estimating the applicable tariff treatment and rate of duty
While you view the Canadian custom tariff, there are two fields entitled “Most-Favoured-Nation (MFN) Tariff” and “Applicable Preferential Tariffs”. Before determining the rate of duty, establish an applicable tariff treatment for your goods.
Applicable preferential tariff is applicable on all the products originating from all countries except North Korea. They can use the rate of duty under this column. This is specific to their type. It shows reduced rates on goods as per the agreements.
After determining the tariff classification number, the application of the applicable tariff treatment will determine the duty rate. You see “Most-Favored-Nation Tariff” and “Applicable Preferential Tariff” when checking the Canadian Customs Tariff Schedule.
In Most-Favored-Nation Tariff, all countries except North Korea can use the rate of duty to import the goods. The Applicable Preferential Tariffs column contains the reduced rates of duty based entirely on trade agreements.
The agreements are:
- Columbia tariff (COLT)
- Jordan tariff (JT)
- Panama tariff (PAT)
- Honduras tariff (HNT)
- Korea tariff (KRT)
- Canada-European Union Tariff (CEUT)
- Ukraine Tariff (UAT)
- Comprehensive and Progressive Trans-Pacific Partnership Tariff (CPTPT) etc.
These trade agreements would be benefited from the tariff treatment.
6. Classification of goods based on GST, excise tax, or excise duty
Part IX, Division III of Excise Tax Act says that GST (5%) is payable for many goods. Goods for fishing and agriculture, groceries, prescribed drugs, medical and assistive devices, are non-taxable says Schedule VII and VI of excise act.
There is a list of goods that excise to tax:
- Automobiles and conditioners
Tobacco or alcoholic products are subjected to duty. While importing the products from China to Canada, you should have a look at the restricted, taxable, and durable products.
7. Obtain special import permits, relevant inspection, certificates for the goods if needed
Many goods are subjected to the Government departments for certification. For this, import permits, certification, and some inspections will be required while importing.
There are separate departments for inspection, the CBSA is responsible for the legal inspection of the importing goods.
Regarding the importance of the goods, one or more departments get involved in the process. They offer a list of the products which are subjected to have permits and certificates.
8. Confirm the shipment and reporting of goods with your freight forwarder
The freight forwarder is the person or the company responsible for the safe shipping of the products from one place to another.
A freight forwarder can store the cargo during the time of the creation of the import account, negotiate the charges for the transport, prepare the documents for shipping and organize the type of booking of cargo.
It is very helpful for the person to hire the freight forwarder to import the products from China to Canada. The shipping details, charges and time can also be confirmed by contacting the shipper.
9. Ensuring that items are permitted to be imported from China to Canada
There are some goods that are imported after getting the permits. These goods are especially under the control of the government, so that is the reason for this prohibition.
If you want some prohibited items to be imported to Canada, then you have to ensure this before placing the order. Further, it involves some steps:
- Firstly, you have to inform the authorities about the type of product you need to import.
- Then, these agencies check the product.
- After that, they allow you to apply for the permission letters.
Chapter 2: Important Documents for Paying Import Duty from China to Canada
Certain documents are essential for paying import duty from China to Canada. If you are planning to import products and goods from China to Canada, then having a deep understanding of these documents is essential.
1. Obtaining Business Number (IBN) from CRA
The Business Number is very important before importing the goods from China to Canada. It is issued by the Canada Revenue Agency. At customs clearance, some documents are required:
- Canada Customs invoice
- B3 customs coding form
- Cargo Documents
- Bill of lading
Some goods may also need the permits which should be provided with them.
2. Complete Canada Custom invoice
The shipping from China to Canada involves various stages which are crossed only by the availability of the documents, permits, and invoices. At the customs clearance, the complete invoice is essential to be provided.
This is the sign of agreement between the supplier and the buyer, it can prove that the product is legal and can be imported.
3. Cargo control document
The cargo control document gives information about the broker’s transition number, shipping address, customs clearance locations, and the weight of the shipment.
The cargo control documents will specify four digits’ numbers, these numbers can help to identify the carrier of goods and the actual goods while doing the initial and final clearance.
One copy of the cargo control document is given to CBSA. The other one is given to the buyer confirming the arrival of goods.
4. Filling Bill of Lading
The bill of lading (B/L) includes the important information for importing the products. For example, the basic characters to be filled are the number of units shipped, the name and address of the shipper and the receiver, the date of shipment, and the size of the shipment.
These points are crucial and helpful for the accurate import of the products. The buyers can check all the products after loading them according to B/L document. It could be on a prepaid or collect basis.
5. Making a list of packing preparing commercial invoice
The commercial invoice contains the details of the imports and exports of sales. The customs are very much concerned about it.
Moreover, the content of the packing list supports the customs to check the correctness and the quality of imports or exports.
The packing list may contain information like the number of packages, net weight, types of packages, quantity, etc.
6. Getting arrival notice
The cargo can be sent from any of the traditional shipment methods like air freight, sea freight, or Express service. All of these shipment methods provide the customers with the details related to delivery like the day of arrival, number or kind of packages, etc.
After the delivery is reached the destination the receiver will get the arrival notice to collect the cargo delivered from China.
7. Looking for surety and custom bonds
The Customs bond is the contract between the importer, the sheet, and the Customs and bond protection. If the importer does not pay the amount, then the surety will pay the amount owed to the government on behalf of the importer.
With the customs bond, you can claim for the surety in importing the products to Canada.
Chapter 3: On What factors the Import Duty from China to Canada depends?
For having a complete understanding of import duty from China to Canada you should know the pinpointed factors on which the import duty depends. Here is the complete list:
1. Import duty varying from product to product
To look for the correct category of duty on import products you need to search the authorized option to solve this challenging task.
Every country has its own customs duty which is arranged according to codes and depending on the country. These codes are HS codes, HTS codes, TARIC codes, etc.
When you import items to Canada from China wholesale, it holds products of different categories. Each of the categories is different and owns a different treatment.
For example, some of the products need the duty to be imposed, some of them are taxable. Therefore, the import duty is different from product to product.
2. Price commodity affects import duty from China to Canada
The tax collected by the customs authority from importers and exporters is also subjected to import duty.
Sometimes the import duty is called the customs duty. And Canada apply import duty rates to either the customs or price commodity of goods. The duty rates depend on the total price of products.
Firstly, check the commodity code of your products, and search for the exact duty rate of this product, then you will have the right answer of the import duty rates.
3.The origin of the product affects import duty from China to Canada
The origin of goods must be filled in the original production countries, and tariffs can vary widely depending on the distances between two countries.
It is important to check whether there are special trade agreements between the country of origin and the country of destination that affect tax rates.
4.The product type affects import duty from China to Canada
The products which are imported from China are different from one another in their shape, sizes, texture, dimension, weight so also the import duty applied to each of them will be different.
For example, the products which are kitchens or tools are almost free of import charges. The clothing materials and the building materials have high import duties.
5.HS code affects import duty from China to Canada
The HS code is specified for every country, most of the Canadian provinces such as Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, and Ontario have their taxes, which harmonize the taxes with the Canadian sales tax.
This combines with the 5 percent federal GST along with the appropriate provincial tax.
Therefore, check the HS code of your products from HTS official website, you can get the product description and calculate the right answer of the import duty for importing the products from China to Canada.
Chapter 4: What are different Methods to Pay Import Duty from China to Canada?
There are certainly different methods provided to the buyers to pay import duties from China to Canada. These include both online and mailing methods. Importers can use any of the methods that suits their requirements.
1. Paying import duty for the product bought online
You can pay your import duty online by following some steps:
As soon as you receive the tracking number go and put that number in the tracking tool mobile app after downloading it.
- Request email notification or use a mobile application
Whether you are signed in to the mobile app still you will need to put the email address and fill the form to submit. You can put the notifications on to know about the updates.
- Pay with a credit card, Google pay, or Apple pay
There are some other options to pay online using credit cards such as Google pays or Apple pay.
You can select any of these options according to your device (google pay for android and Apple pay for IOS) after finding the packaged eligible. The email address will be required to get the receipt and accepts the terms and conditions.
Once your transaction is complete you will rescue the confirmation email and the bar code which may be helpful at the customs clearance.
2. How to get the refund of the duty?
Sometimes, when you paid twice for one package, you will receive a message about that, and your refund will be sent automatically.
But when you didn’t receive your product, you need to ask for refund through internet. Here is the step by step guide:
- When you found that your package is not in its way, go to the Delivery status page.
- Then you can click the Request refund link on that page.
- Wait for 21 days and get the refund link.
- If it is confirmed, the import duties and taxes will be returned to your payment account.
Chapter 5: Methods to Reduce Import Duties from China to Canada
You might face a situation where you opted for the product for its low cost but have to pay heavy import duty on it. For avoiding such a scenario, you must know the methods to reduce import duties.
1. Reducing product value on commercial invoices
The customs duty has a core factor for its base that is the presence of a certain amount.
The value of the goods shall be declared to the customs for the purpose of calculating import duties and other duties. Thus, the decrease in the declared value can lead to low import tax rates.
The suppliers may provide the goods with cheaper rates to the importer to help the customer reduce the customs duty.
If the customs, see the products are cheaper than the real value a penalty tax will be applied or products may be lost or may be returned to the loading port.
2. Work with a reliable customs broker
There are direct and indirect costs associated with choosing an experienced and reliable customs broker. The agency fee, as a direct cost, is likely to be the first and most important criterion for choosing a customs broker.
The importance of brokerage fees is undeniable, but the indirect impact of brokers on total costs is far more important than their direct fees.
A good customs broker can help you reduce cost while shipping, so make the agency fee more valuable, and the final cost will be reduced.
3. Manage time well and reduce the cost of the time
A excellent customs brokers can help importers reduce costs through time management. For example, some global borders close at certain times of the day or night. And a truck is carrying fruit from China to Canada.
Suppose the transit time is 20 hours, while 16 hours in the seller’s country, 1 hour at the border customs formalities, the product can be delivered to the buyer’s warehouse after 3 hours.
The truckers must be arrived the customs before 9 p.m. or after 6 a.m. If not, the product may be perishable, and the goods will not arrive for distribution at the correct time in the retail store.
4. Apply for tax rebates for importers
In some cases, tax rebates and duties may apply to your goods. For example, if the product is temporarily imported, the importer can refund the amount paid to customs.
You and your customs broker should be aware of all applicable refund opportunities and be sure to conduct due diligence when you receive a refund.
Chapter 6: Frequently Asked Questions About Import Duty from China
1. What is the lowest cost for import duty on products in Canada?
While importing the products from China to Canada, customers should have know the payment of duties and taxes on the products, and which types of products are coming under these titles.
Import duty is paid when the goods are imported from one country to another and the tax paid by that country is the import duty. And it varies from product to product. The loss of the lowest import duty on the products are listed below:
- Clothing 16-18%
- Cookware 0-8%
- Computers and related equipment 0% and duty-free
- Coffeemakers 0-8%
- Furniture 0-9.5%
- Textile articles (bedding, linen, towels, curtains) 16-18%
- Auto parts 0-8%
2. How can I calculate import duty on China goods?
After the determination of the duty paid value, the import duty can be found. Like the consumption tax, customs duties are also evaluated on:
- Ad valorem basis
- Quantity basis
- Compound formula
The formulas are:
Ad valorem basis: Duty payable = DPV x Tariff rate
Quantity-based: Duty payable = Quantity of imported goods x Amount of duty per unit
Compound formula: Duty payable = DPV x Tariff rate + Quantity of imported goods x Amount of Duty per unit
The calculations of import taxes and the duty payable are done by the exchange rates offered by the Chinese government.
3. What is the impact of high tariffs in Canada on imports from China?
The import duties from China to Canada vary from product to product. Some products have high tariff rates and some have low.
The tariff rates of various products are discussed earlier. The wrist watches have 5% import rates likewise the synthetic fibers, fibers, riding boots have 18%, 18%, 20% respectively.
These are the reasonable tariff rates. If the rates are higher, then there is the need to lower down the rates to increase the trade.
4. What penalties will I face if I don’t declare all of my purchases?
You have to inform about all the products which you imported from China, including the gifts or any other smaller item that you bought for yourself. This may also include the duty-free items and the merchandise which you imported for sale.
In case you provide the wrong declaration of purchase, then the consequences will be faced by you only. You will make to pay 25-80% of the value for duty, whichever is the greater amount.
Or your products will be seized and will not return any more. In the case of vehicles, you can get the seized vehicle by paging some money.
In short, this article is talking about the wide aspects of import duty of the goods. It is a difficult lesson because most importers don’t have enough experience in finalizing the customs clearance.
After going through the blog, you must understand why it is important to know about import duties.
For the reason that the process of paying import duties is complicated, we recommend you to find a experienced and reliable agency like EJET Sourcing, who can help you finalize the process and even save some money.
Now, visit ejet.com for gaining full sourcing services from ordering to delivery from China.