Trade Compliance Verification

Transcription

1 Trade Compliance Verification Presentation at the IDEAlliance Conference Clearwater Florida March 30, 2009 Christina Broccolo, Senior Program Advisor Compliance Management Division

2 Why is trade compliance verification important? Ensures that targeted industries are protected Ensures the proper collection of duties and taxes and the proper application of preferential treatments Supports political decision-making with quality trade data Facilitates low-risk trade at the border by verifying compliance after the goods are released 2

3 National Priorities In , four national priorities were selected based on the need to correct non-compliance related to tariff classification: 1. Furniture parts 2. Sawn lumber 3. Gloves 4. Soap 3

4 National Priorities an evergreen process For : 12* national priorities for verification Tariff Classification verification 1. Juice products Origin verification 2. Large household appliances 3. Sport/recreational fishing equipment 4. Swimming Pools 5. Air-conditioner industry 6. Articles of bedding and similar furnishings Valuation verification 7. Ski apparel industry 8. Video (DVD) recording apparatus 9. Large household appliances 10. Parts of gas turbines 11. Bulk shipments of ore 12. Light-duty automotive goods * Additional priorities may be added 4

5 Trade Verification Manual Purpose of the Manual This Manual is designed primarily to assist the Senior Officer Trade Compliance (SOTCs) and managers in carrying out compliance verifications. National standards ensure a common approach to clients and quality verification processes. The manual is used by all regional officers performing post-release verifications, to ensure national consistency in the application of the verification process. 5

6 Multi-Program Verifications Multi-program verifications focus on specific commodity or issues that involve more than one trade program. These can be either national or regional priorities. Sample of 25 B3 transaction lines are verified A supplemental sample of ten (10) transactions will be selected from the client's records to verify that goods are being accounted for to the CBSA. 6

7 Single Program Verifications Single program verifications focus on a specific commodity or issue, and assess the level of compliance with trade data and a specific CBSA program Individual programs verified: sample of B3 transaction lines Target the non-compliance of the importer or vendor under review, along with all competitors who are associated with the commodity or issue Ensure we provide a consistent operating environment to all traders thereby leveling the playing field. 7

8 Measurement Verifications The measurement stage is conducted to report on the level of overall compliance with trade data and CBSA programs Companies and B3transaction lines to be verified are selected by Headquarters Sample of 1-50 B3 transaction lines per company 8

9 Verification Process Steps 1. Companies and a sample of 1-50? B3 transaction lines are randomly selected Additional transaction lines may or will be requested depending on the program 2. Notification letter sent requesting specific documentation Sample support documentation (e.g., purchase order, Canada Customs Invoice or Commercial Invoice, etc.) Samples must be traceable; link back to a CBSA B3 transaction number Completion of specific questionnaires; e.g., systems, release, reporting, etc. 9

10 Steps cont d 3. Depending on the program, on-site visit(s) may be scheduled or other means of communication may be used, to collect information regarding: Internal systems (systems review and walk-through) Financial records (transfer pricings, buying and selling agreements, list of accounts, etc.) Product reference materials (product literature, specification sheet, samples, etc.) Certificates of origin 4. Verification conducted 5. Results reported to client 10

11 Common Operational Challenges faced by Importers Systems and internal controls Lack of proper controls that link accounting records to CBSA declarations resulting in the failure to correct within required time frames resulting in assessment and penalty when subject to a CBSA verification Understanding CBSA program requirements Common, repetitive errors demonstrate a lack of understanding of CBSA obligations and processes 11

12 Common Errors: Tariff Classification Inadequate (vague) description of goods resulting in incorrect classification Part number instead of narrative description Explains high error rates at chapter level Goods routinely classified as other when they are more properly classified under their own named heading Using outdated HS numbers and old tariff codes Clerical errors (transposing classification numbers) Canadian goods returned failure to maintain sufficient export documentation 12

13 Common Errors: Tariff Treatment Incomplete certificates of origin (CO) or none at all TT10 claimed on US imports with no CO at time of importation Failure to claim a preferential tariff treatment at time of entry when certificates could be obtained or are available leaves importers vulnerable to reassessment when goods are reclassified to a dutiable tariff item only one year to correct origin Incorrect origin criterion on the CO indicating ( A ) goods wholly obtained or produced entirely in the territory when ( B ) should have been used as the goods have non-originating content 13

14 Common Errors: Valuation Incorrect currency code or exchange rates used Incorrect VFD is declared, as additions or deductions to the price paid or payable were not taken into consideration (discounts, assists, freight) Freight charges use of estimates when actual cost of freight is known and importer fails to correct 14

15 What is a self-adjustment? A required amendment to an accounting declaration under 32.2 of the Act A valid refund request under 74(1) of the Act may be included Importers can only file one correction for refund for each declaration 15

16 Time Limits 90 days: to correct origin, valuation and tariff classification declarations from the time they have reason to believe that declarations are incorrect (section 32.2 Customs Act) 4 years (from date of accounting): obligation to file corrections under 32.2 of the Act 4 years: request refund of duty (section 74 of the Customs Act) 16

17 Effects of Adjustments CBSA may re-determine origin or tariff classification, or reappraise value for duty under 59(1) within four years of accounting Re-determination period may be extended by one year if self-adjusted in the final year of the four-year time period 17

18 Reassessment Policy What is the Reassessment Policy? Reassessment Policy provides information on the time period for corrections to be made to incorrect declarations of origin, tariff classification, value for duty and end-use of goods Under the Customs Act, sections 32.2 and 59 provide that corrections to incorrect accounting documents are required going back four years In many cases the time period for reassessment is reduced, depending on the circumstances The correction is to be made if it results in money owing to the CBSA or is revenue-neutral 18

19 Reassessment Policy: Reason to Believe Reason to Believe: Importers have specific information regarding the origin, tariff classification, value for duty or end-use of goods, which gives them reason to believe that a declaration is incorrect Specific information includes CBSA rulings, CBSA final verification reports, etc. Importers are responsible for: making a correction to a declaration within 90 days after having reason to believe that a declaration is incorrect 19

20 Appendix I General Information- 1. Canada Border Services Agency Website 2. Border Information Services (BIS) CBSA call centre The Trade Verification Manual Available on CD by request to: Christina.Broccolo@cbsa-asfc.gc.ca 20

21 Appendix II Verification- Legislation Section 42 and 42.01of the Customs Act Requirement to maintain and provide records- Legislation Subsection 40.(1) of the Customs Act Valuation- Legislation Section 48 to 53 of the Customs Act Importer s Valuation Guide CBSA Form # BSF5000(E) 21

22 Appendix III Reassessment Policy Legislation Section 32.2 of the Customs Act The legislation specifies that the importer s obligation to make a correction ends four years after the goods have been accounted for (subsection 32.2 (4) of the Customs Act) D Interpretation of Reason to Believe is found in D11-6-6, Self-Adjustments to Declarations of Origin, Tariff Classification, Value for Duty and Diversion of Goods D Reassessment Policy 22