NRI Non-Resident Importer. Based in the U.S.

Transcription

1 NRI Non-Resident Importer Based in the U.S.

2 INTRODUCTION This guide explains how U.S. businesses can import goods to Canada without having a physical presence in Canada. It will help you to understand the concept of a Non Resident Importer (NRI) and contains the various documentation required in order to become an Importer of Record in Canada. It outlines the regulations and procedures involved in the NRI process. As trade between the USA and Canada is the largest in the world and to facilitate this relationship, Kuehne + Nagel has developed this booklet primarily for U.S. organizations, explaining the import process regardless of where the goods originate. For more detailed information specific to your requirements, please contact a Kuehne + Nagel Ltd representative at: A global leader in international forwarding and Supply Chain Solutions, Kuehne + Nagel was founded in 1890, has more than 70,000 employees at 1,300 locations in more than 100 countries. For more information on Kuehne + Nagel, please visit our web site at This toolkit is not intended to provide or replace legal advice. The materials provided herein are for general information and offer basic knowledge. Page: 2

3 TABLE OF CONTENTS What is an NRI? 4 What is the Kuehne + Nagel NRI process? 4 What are the advantages of becoming an NRI? 4 Features of Kuehne + Nagel s NRI process 5 Kuehne + Nagel services available for the NRI process 5 The NRI account setup process 8 Documents and terms 8 Additional information 12 Page: 3

4 What is an NRI? An NRI is a company who is based outside Canada, most often in the USA, who does not have a permanent establishment in Canada but imports goods under its own company name and pays all duties and taxes to CBSA. They are known as Non-resident Importers of Record by the Canada Border Services Agency (CBSA). What is the Kuehne + Nagel NRI process? KN arranges pick-up of your goods, shipping to Canada, customs clearance, insurance and final delivery to your customer, all on the NRI s behalf. Your goods can also be shipped to one of Kuehne + Nagel s warehouses for distribution at your request as orders come in. What are the advantages of becoming an NRI? Control over supply chain. Control over transportation. Full visibility over transportation. No physical presence required in Canada, reducing operating costs. Allows your customers to order goods customs cleared and delivered to their doors just at they would from your Canadian competition. Your Exports Transborder Customs Your Customer Distribution Figure 1.1 Importing process Page: 4

5 Features of Kuehne + Nagel s NRI process Kuehne + Nagel can provide the U.S. exporter with all the details needed to expand operations into the Canadian marketplace. Some of the features include: Documentation preparation Product fulfillment inventory flow and distribution for international and domestic transportation requirements Referrals to industry professionals such as customs attorneys Information bulletins from the Canadian governments Shipment tracking and reporting capabilities Customized invoicing itemizing all services utilized Dedicated in-house customs and trade consultants with expertise in NAFTA, valuation and other compliance issues Customized performance reporting One contact person for all inquiries Kuehne + Nagel services available for the NRI process Discover the benefits of over 50 years experience in Canadian and U.S. ports. KN supports the NRI process with a full line of services. CONTRACT LOGISTICS Over 3.1 million square feet of warehouse space managed across Canada Dedicated and shared facilities Infrastructure, technology, innovation, and supply chain expertise Inbound and Outbound logistics After-sales and Reverse logistics Solutions for every business vertical Page: 5

6 Efficient, custom-designed transportation management Rigorous carrier selection process designed to meet standards for service, pricing, security and compliance Leverage volumes across customers for competitive solutions A full truckload (FTL) carrier mix for maximized availability Dedicated KN Managed Less-than-trailer load (LTL) network Consolidation and de-consolidation services Analytics that identify improvement opportunities OVERLAND TRANSBORDER SERVICES Complete coverage northbound and southbound Door-to-door service Courier, LTL, FTL and specialized equipment, including overweight and oversized shipments Order management Zone skipping and solutions Full EDI capabilities C-TPAT, FAST, CSA and POP certified for heightened security Around-the-clock, automated customs clearance services with access to information 24/7 Pre-arrival processing/e-manifest NAFTA certificate maintenance and/or full qualification analysis Customs consulting Export documentation Duty refunds and drawback claims Post-entry audits and corrections Classification, valuation, and origin opinions/assistance CUSTOMS Page: 6

7 NACORA INSURANCE BROKERS 100% subsidiary of Kuehne + Nagel Over 30 years specializing in transportation insurance Highly competitive rates A rated insurance partners Annual or single shipment insurance Immediate on-line coverage Electronic services Certificates Coverages available for Marine Cargo, Personal, and Commercial insurance AIRFREIGHT Seamless air logistics solutions Time-defined delivery promise Immediate all-in price calculation without additional charges Simplified and standardized invoicing Leader of the air industry s Cargo 2000 initiative Detailed Route Map planning Visibility of actual cargo movements and planned future movements Proactive alerts SEAFREIGHT Full-container load (FCL) Less-than-container load (LCL) Buyer s consolidation Sea Transport Management (STM) Order to Market (O2M) Local handling: customs clearance, door deliveries Intermodal Services Industry-specific solutions for niche markets including Projects, Oil and Gas, Perishables and Forest Products Page: 7

8 The NRI account setup process The following section outlines the documents required for the NRI process and illustrates the support provided by KN to the Non Resident Importer. Click on each to obtain the on-line version of the form. For a detailed description of the required documents, refer to the following. KN account Setup for NRI Credit Application BN Import account application (RM number) BN - GST - HST registration (CRA, RT number) GAA General Agency Agreement Agreement to maintain records outside Canada (CBSA) Surety Bond application form over $100,000 Surety Bond application form under $100,000 Statement of Origin for Commercial Importations of less than $ CAD Documentation Required for Export Shipment Canada Customs Invoice or Commercial Invoice NAFTA Certificate of Origin (if applicable) GST/HST registration number and Business number HS Code information and description Documents and terms KN Credit Application An application for a line of credit and obtaining an account number for billing purpose. The client is required to give consent to check their credit history. General Agency Agreement A form of power of attorney, authorizing Kuehne + Nagel Ltd to act on the behalf of the client in dealings with Canada Border Services Agency (CBSA), filing of entries, payment of duties and receiving refunds on behalf of the client. Importers (RM) Number Application: An application to CBSA for a single business number (SBR) for import purposes. This form must be completed and returned to KN for submission. GST/HST Registration Form This form is used to register for GST/HST with Canada Revenue Agency (CRA) and is filed directly with CRA once approved. Your registration number will be the same 9 digits as your importers number, however, followed by RT. NAFTA Certificate of Origin (North American Free Trade Agreement) The NAFTA Certificate of Origin is completed by the exporter and used in Canada to allow for duty free status. NAFTA certificates can be filed on a blanket basis for up to one year by completing field # 2 on the NAFTA form or can be provided on a shipment by shipment basis. On shipments valued at $ CAD or less a Statement of Origin, in the prescribed format, for commercial importations of less than $ CAD can be completed. Page: 8

9 Documents and terms Registering for the Goods and Service Tax (GST)/Harmonized Sales Tax (HST) Most NRI s are required to register for GST/HST based on your projected sales to Canada and the nature of your product. Please go to CRA website, in English or French, and see Mandatory Registration for details and the CRA office responsible for your state. GST/HST Surety Bond NRI s who are registered for the GST/HST are required to obtain a surety bond with CRA in accordance to subsection 240(6) of the Excise Tax Act. CRA will advise the client directly on the bond limit required. The bond is required by CBSA to ensure the Canadian government that any monies owing to them by the NRI are paid. You cannot obtain a GST number without a surety bond. Nacora Insurance Brokers Ltd, part of Kuehne + Nagel Ltd can provide Surety Bonds for all the KN Non Resident Importer clients. Companies requesting a bond of specific amount must complete a form and application. Canada Customs Invoice (CCI) An invoice in a prescribed form, to be completed by the importer, the exporter, or their agent. All data on the prescribed CCI is required for shipments valued over $2500. According to CBSA, it is not mandatory to prepare a CCI with every export provided that the commercial invoice is complete and contains all the necessary information. Importers may use a CCI, commercial invoice or both. Agreement to maintain record outside Canada It is a letter of undertaking allowing companies to maintain records in the U.S.. NRI s are no longer required to maintain records in Canada. The fully completed forms must be ed or faxed for verification. The originals MUST be mailed to: Records Trade Services Division Canada Border Services Agency 1980 Matheson Boulevard East P.O. Box 7000, Station A Mississauga, Ontario L5A 3A4 Phone: Payment of the duty and GST upon Importation Once the shipment has arrived, KN customs, acting on behalf of the Non-Resident Importer, pays CBSA all necessary duties and taxes. Kuehne + Nagel subsequently bills the NRI client for reimbursement. Please see process flows (figure 1.2 and 1.3) for flow-through concept pertaining to GST. Direct payment of duty and GST Duty and GST can be paid directly to the CBSA on a monthly basis. Click here for instructions and form. Page: 9

10 Goods and Services Tax Process Flow Chart REGISTERED FOR GST Figure 1.2 Goods and Services Tax process flow chart - Registered for GST NRI ARRANGES EXPORT TO CANADA KN PAYS GST* TO CBSA ON BEHALF OF NRI NRI PAYS GST TO KN NRI BILL GST/HST** TO CANADIAN CUSTOMER (on the customer invoice price) NRI FILES INPUT TAX CREDIT TO BALANCE GST/HST PAID AND COLLECTED * GST = GST at importation 5% ** GST/HST = GST/HST rate according to place of supply rules Page: 10

11 Goods and Services Tax Process Flow Chart - NOT REGISTERED FOR GST Figure 1.3 Goods and Services Tax process flow chart - Not registered for GST NRI ARRANGES EXPORT TO CANADA KN PAYS GST TO CBSA ON BEHALF OF NRI NRI PAYS GST TO KN NRI BILLS CANADIAN CUSTOMER GST WITH PROOF OF PAYMENT (Form B3) CANADIAN CUSTOMER MAY CLAIM INPUT TAX CREDIT TRANSFERRED OVER FROM NON-REGISTRANT PROVIDED ALL CONDITIONS ARE MET Page: 11

12 Additional information Business Number The Business Number (BN) is the common identifier used in Canada. It allows businesses to simplify their dealings with each other as well as with all levels of the public sector. It is based on the idea of one business, one number. The major BN accounts registered by the CRA are: Goods and Services Tax/Harmonized Sales Tax (GST/HST); Payroll deductions; Import/export; and Corporate income tax. The BN consists of two parts the registration number and the account identifier. The entire number has 15 characters: Nine (9) digits to identify the business; and Two (2) letters and four (4) digits to identify each account a business may have. For example, your Business Number could look like this: Registration number Account identifier R P The nine digits are your Registration Number and they identify your business. Your registration number is unique and it will stay the same no matter how many or what types of CRA accounts you have. RC - Corporate Income Tax RM - Import/export RP - Payroll deductions RT - GST/HST The last four (4) digits identify the reference number; in this case, a second payroll deductions account. Note: You can register your new business for the four BN accounts at one office at the same time. Taxation Methods Since the NAFTA agreement came in force, there are only 4 forms of taxation in Canada for imported goods. They are as follows: Customs Duty Goods and Services Tax (GST) Excise Duty Special Imports Measures Act (SIMA) The most common forms of taxation are Duties and GST Page: 12

13 Additional information Form B3 B3 form is a detailed accounting report to the CRA of over 70 data elements, specific to each shipment transaction, such as; Importer name and address, Description of the goods, Value for duty, Direct shipment date, Tariff treatment, Country of origin of the goods, Tariff classification, Duty and tax rates, Duties owing. This form is completed by KN customs. Bill of Lading It is a document, issued to a shipper or carrier, that describes the goods to be shipped, acknowledges their receipt and states the terms of the contract for their carriage, to a named place for delivery to the consignee who is usually identified. A through bill of lading involves the use of at least two different modes of transport from road, rail, air, and sea. Canada Border Security Agency (CBSA) CBSA is the government department responsible for ensuring compliance with Canada s tax, trade and border legislation and regulations. They make sure the goods are met with all the other government departments requirements. They have the authority to inspect shipment to verify compliance or take samples to verify reporting and content. Commercial Invoice It is the basic document prepared by the vendor to collect his/her money and to assist in clearing the goods from customs at the destination. The commercial invoice doesn t have to be any prescribed format. Although all the following information must be included on the commercial invoice; Country of origin, exporter name and address, consignee name and address, description of the goods, net and gross weights, unit price, extended price, currency of settlement, terms of delivery, terms of payment, date, reference numbers, import licenses and freight or other charges included/excluded. Duty The duty rate is dictated by the HS code and tariff treatment and is applied to the Value for Duty. The duty rate may be reduced or eliminated if the country of origin and export is granted a preferential tariff treatment or has a free trade agreement with Canada. (such as NAFTA) Please go to the CBSA website publications page for the six methods of valuation in order of precedent. Excise Duty Excise duties are charged on spirits, beer, and tobacco products. When they are imported into Canada, duty is payable by the importer at the time the goods are imported. Goods and Services Tax GST is a tax that applies on most taxable supplies, except the zero rated sales (such as basic groceries, agricultural products, prescription drugs and others). The current GST rate is 5%. Page: 13

14 Additional information Harmonized Sales Tax Many provinces have harmonized their provincial sales tax with GST to create the harmonized sales tax (HST). HST applies to the same base of goods and services as GST. Import Permits The Export and Import Controls Bureau (EICB) is responsible for administering the Export Import Permit Act (EIPA). The EIPA delegates to the Minister of International Trade Canada wide discretionary powers to control the flow of goods contained in specified lists provided for under the Act. Packing List It is a detailed list of contents of the shipment, which includes quantities, items, model numbers, dimensions and net & gross weights. Refunds An importer can receive a refund or drawback on full or partial duties paid on exported or destroyed goods, defective goods, short shipments, etc. Special Imports Measures Act (SIMA) The CBSA is responsible for the administration of the Special Import Measures Act (SIMA), which helps to protect Canadian industry from injury caused by the dumping and subsidizing of imported goods by imposing dumping and countervailing duties. As government website links change and expire from time to time, please for updated links should you encounter this problem. Page: 14