Tax & Trade Blog
Changes Coming to the Canadian Customs Tariff in 2022!
In our prior blog on World Customs Organization (“WCO”)’s five yearly revisions to the Nomenclature of Harmonized System or HS Codes, we discussed the possible amendments to the Canadian Customs Tariff.
Effective January 1, the Canadian HS Code of tariff classification is being amended! The Canadian Border Service Agency (“CBSA”) has recently published the proposed changes in the 2022 Customs Tariff. These changes prompt importers/customs brokers to re-evaluate their tariff classifications and HS Coding systems to avoid any penalties associated with incorrect reporting and plan in advance by requesting validation of any existing CBSA Ruling!
The 2022 HS amendments impact a wide range of goods. In view of the technological advancements, recognizing new product streams, addressing the global environmental and social issues, and complying with international trade agreements and conventions, the Canadian Customs Tariff is considerably amended - many sections of the existing Customs Tariff are amended, repealed and added including the tariff codes and description of goods.
Importers need to review these changes and determine their impact, if any, on current imports, prior to the January 2022 effective date. If incorrect tariff numbers or rules of origin are used thereafter, AMPS and other penalties could apply. Importers usually have a 90-day period from the date of “reason to believe” to file any corrections to their B3 Returns.
The good news is that to assist with prior planning of the transition, the CBSA has prepared a Table of Concordance (at the 8-digit level prepared by Finance Canada and at the 10-digit level prepared by Statistics Canada for background of HS Coding and level digits see our prior blog here), where the current tariff numbers are known any reconciliation should not be a tough grind.
A review of the Concordance table reflects that around 1194 tariff items at the 8-digit level and 1534 tariff items at the 10-digit level were impacted. This encompasses a wide range of goods.
Some of the heavily impacted chapters include:
- Chapter 29 - Organic Chemicals
- Chapter 30 - Pharmaceutical Products
- Chapter 44 – Wood, Articles of Wood; Charcoal
- Chapter 70 - Glass and Glassware
- Chapter 73 - Articles of Iron or Steel
- Chapter 84 - Nuclear Reactors, Boilers, Machinery, etc
- Chapter 85 - Electrical Machinery and Equipment
- Chapter 87 - Vehicles (non-Railway non-Rolling-Stock)
- Chapter 88 – Aircraft and Spacecraft
- Chapter 90 - Medical or Surgical Instruments and Apparatus
- Chapter 95 - Toys, Games and Sports Requisites
- Chapter 97 - Works of Art, Collectors’ Pieces and Antiques
The 2022 Customs Tariff brings in some major changes to the harmonized system, with a significant number of tariff items being repealed or amended, and with new tariff items being added and described differently, importers also need to determine whether any existing rulings on tariff classification or the origin of goods are impacted rendering the current tariff classification inappropriate.
The onus is on the importer to ensure that they report and account for goods correctly and, not on the CBSA if a ruling becomes redundant! The CBSA has established a process for the validation of existing rulings and has indicated that existing rulings can be revoked where a validation request has not been submitted for goods which are impacted by the 2022 changes. It is in the best interest of importers to make such validation requests timely as the standard processing time is 120 calendar days, however in practice, it could take longer than estimated.
Importers engaged in cross-border trade should determine prior to January 2022, if and how these changes may impact their product classifications and correct their practice to avoid potential penalties. Those in doubt, should seek assistance from a professional to ensure correct tariff classifications and submit validation requests for existing customs rulings. There is no better time than now for Importers to create some budget for a comprehensive Tariff Class Review.
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