Canada’s proposed Digital Services Tax could initiate US trade war
While the Organization for Economic Cooperation and Development (OECD), consisting of 130 member countries, tries to establish a multinational approach to the Digital Services Tax (DST), Canada has said that it intends to implement the 3% DST beginning January 1, 2024, if work by the OECD fails to adopt an approach by that date.
The tax – a three per cent levy aimed at foreign companies, many of them based in the U.S., that derive revenue from Canadian subscribers and contributors – is scheduled to take effect in January, retroactive to 2022, and would almost certainly provoke the U.S. to impose retaliatory trade sanctions, causing significant economic pain in Canada.
The new rules may result in a filing obligation and tax liability for any entity – Canadian or otherwise – that as a corporate group has global consolidated revenues of €750 million or more and earns Canadian digital services revenue from providing online marketplace services, online advertising, social media services or the monetizing of user data in excess of CA$20 million.
Unlike corporate income taxes, digital services taxes are levied on revenues rather than profits, not taking into account profitability. Seemingly low tax rates of such turnover taxes can translate into high effective tax burdens.
U.S. Trade Representative Katherine Tai met with Canadian Trade Minister Mary Ng on October 28th, to discuss Canada’s proposed Digital Services Tax. Ottawa has said it plans to impose this tax beginning January 1, 2024, a move the U.S. has strongly opposed, and the United States Senate Committee on Finance recently advised they are prepared to respond immediately.
For more information, contact Brian Rowe, Director – Customs Compliance & Regulatory Affairs.
Imported Food SFCR Licence verification effective February 12, 2024
In order to import food into Canada most food importers are required to hold a valid Safe Food for Canadians Licence Regulations (SFCR licence), issued by the Canadian Food Inspection Agency (CFIA).
On February 12, 2024, the CFIA will activate the automatic verification of SFCR licences for imports of manufactured foods for human consumption. Food import transactions will be automatically rejected unless a valid SFCR licence is declared.
A valid SFCR licence to import is:
- Active (not expired, surrendered, suspended or cancelled)
- Issued for the activity “Importing Food”
- Issued for the commodities that are being imported
If a transaction is rejected, the importer’s shipment will be denied entry into Canada until their licensing error(s) are corrected and their import declaration is re-submitted with a valid SFCR licence.
A licence is required to import food, except for the following:
- Food additives
- Alcoholic beverages
- Food listed in Schedule 1 of the SFCR if they:
- Are not processed and will be manufactured, processed, or treated for use as grain, oil, pulse, sugar or beverage;
- Have a label applied, attached to, or accompanying them that states “For Further Preparation Only”;
- Are not a consumer prepackaged food
Click here to determine if you require an SFCR Licence.
For more information, contact Brian Rowe, Director – Customs Compliance & Regulatory Affairs.
Initiation of US Antidumping & Countervailing Duty investigations: Aluminum Extrusions
The U.S. Department of Commerce was seeking comments, by 5:00 pm EST November 13, 2023, on Antidumping Duty petitions received concerning aluminum extrusions from the People’s Republic of China, Colombia, the Dominican Republic, Ecuador, India, Indonesia, Italy, the Republic of Korea, Malaysia, Mexico, Taiwan, Thailand, the Republic of Turkey, the United Arab Emirates, and the Socialist Republic of Vietnam.
The merchandise subject to these investigations are aluminum extrusions, regardless of form, finishing, or fabrication, whether assembled with other parts or unassembled, whether coated, painted, anodized, or thermally improved.
- Aluminum extrusions are produced and imported in a wide variety of shapes and forms, including, but not limited to, hollow profiles, other solid profiles, pipes, tubes, bars, and rods. Aluminum extrusions that are drawn subsequent to extrusion (drawn aluminum) are also included in the scope.
- The types of products that meet the definition of subject merchandise include but are not limited to, vehicle roof rails and sun/moon roof framing, solar panel racking rails and framing, tradeshow display fixtures and framing, parts for tents or clear span structures, fence posts, drapery rails or rods, electrical conduits, door thresholds, flooring trim, electric vehicle battery trays, heat sinks, signage or advertising poles, picture frames, telescoping poles, heat sinks or cleaning system components.
The scope of the investigation excludes merchandise containing non-extruded aluminum components beyond fasteners that is not a part or subassembly of a larger product or system that enters unassembled as a packaged combination of parts to be assembled as is for its intended use, without undergoing after importation any processing, fabrication, or finishing or the addition of parts or material, regardless of whether the additional parts or material are interchangeable. To be excluded under this paragraph, the merchandise must be sold and enter as a discrete kit on one Customs entry form. Examples of such excluded assembled and unassembled merchandise include windows with glass, door units with door panel and glass, motor vehicles, trailers, furniture, and appliances.
The country of origin of aluminum extrusions is determined by where the metal is extruded (i.e., pressed through a die).
HS Tariff Classification of the subject merchandise, including subject merchandise entered as parts of other products, may be found in the Appendix to the notice.
For more information, contact Brian Rowe, Director – Customs Compliance & Regulatory Affairs.
VGM container weight misdeclarations widespread at most ports
The Safety of Life at Sea (SOLAS) Verified Gross Mass (VGM) rule was implemented in 2016 to combat the problem of overweight containers, which cause vessel stability issues and subject the ship, seafarers and shore-side workers to peril. Under SOLAS, the exporter must declare the accurate gross mass of a packed container by two possible methods:
- Weighing the packed container
OR - Weighing all packages, pallets, dunnage and other material loaded into the container and adding the tare mass of the container to this total.
If the carrier does not receive a VGM certification for the container, they can refuse to load it. Carrier CGM has advised that during weighing of containers at transshipment points, they have frequently discovered that the weight indicated on the VGM and ocean bill of lading does not align with the actual container weights. When this happens, there can be serious repercussions for the exporter as, not only is this a safety hazard, but it could cause substantial delays, which could result in demurrage/detention and also potential Customs penalties.
Carriers are also finding that there are situations such as “last-minute” cargo moves, where manual declarations are accepted without effectively weighing cargo and submitting the VGM data through the appropriate platform. Carriers are pushing for swift stakeholder intervention to combat this industry-wide hazard.
For more information, contact Debbie McGuire, Director – Freight Solutions.
Time to renew blanket CUSMA/USMCA Origin Declarations
Don’t forget to get your Blanket CUSMA/USMCA Origin Declarations renewed for 2024. Or simplify your life by taking advantage of our CUSMA/USMCA Management Service, the fast, easy way to ensure your CUSMA/USMCA Origin Declarations are fully compliant.
This is important because significant AMPS (Administrative Monetary Penalty System) transactional penalties could apply if you make a claim for preferential treatment without a valid CUSMA/USMCA Origin Declaration.
Get started now by forwarding your 2024 Blanket CUSMA/USMCA Origin Declarations to fta@universallogistics.ca or contact Ivy Woo, Manager – Customs Consulting Services, for more information.
Global Spotlight Quiz
Name the city that is home to one of the world’s oldest universities
- The city’s well-known university is the oldest in the country – founded in 1386.
- One in every four residents is a student.
- The first bicycle was invented by a graduate of the city’s university.
- It is the warmest city in the country.
- Home to the world’s largest wine barrel, which has a holding capacity of 219,000 litres.
- Great writers such as Goethe, Mark Twain and Heinrich Heine found inspiration in this city and mentioned it in their works.
Answer: Heidelberg, Germany
For more information about shipping freight to or from this city, contact Debbie McGuire, Director – Freight Solutions.
Quick Tip
Ensure your shipping/receiving warehouse staff is available to receive delivery of your shipments quickly
Once advised your shipment is available for local delivery, take delivery at the earliest opportunity. The longer your cargo sits on a pier, at a terminal or warehouse, the more likely it is to be pilfered, lost, stolen or damaged. Help to minimize your risk of problem shipments.
At Your Service:
Dani Heo
Canadian Customs Operations (Head Office)
Dani Heo joined Universal Logistics in April 2022, as a member of the Canadian Customs Operations team at our Head Office.
Dani currently works with our Ocean & Air Clearances team and has previous experience with our Border Clearances team, handling truck and courier clearances. Dani’s organizational skills, attention to detail and knowledge of our overall customs operation has proven to be a valuable resource for our clients.
Dani successfully completed the CBSA Customs Brokers Professional Examination, in addition to holding both her Certified Customs Specialist (CCS) designation and CIFFA Certificate in International Freight Forwarding.
Dani can be reached by phone (905) 882-4880, ext. 1216 or by email.
Dani Heo
Canadian Customs Operations
(Head Office)
SMART Logistics
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