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NRINon-Resident ImporterBased Outside Canada
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This guide explains how foreign 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.
Kuehne + Nagel has developed this booklet primarily for organizations outside Canada, 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: [email protected]
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 www.kuehne-nagel.com
INTRODUCTION
This “ too lk i t ” i s not in t ended to p rov ide o r r ep lace l ega l adv i ce . The mate r ia l s p rov ided he re in are f o r gene ra l in fo rmat ion and of f e r bas i c knowledge .
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TABLE OF CONTENTSWhat 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 11
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An NRI is a company who is based outside Canada 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 an NRI?
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 is the Kuehne + Nagel NRI process?
• 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.
• Allows you to deal with larger retailers who insist on DDP/DAP terms.
What are the advantages of becoming an NRI?
Your Exports
Your Customer
Transborder Customs
Distribution
Figure 1.1 Importing process
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Kuehne + Nagel can provide the exporter with all the details needed to expand operations into the Canadian marketplace. Some of the features include:
Features of Kuehne + Nagel’s NRI process
• 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
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.
Kuehne + Nagel services available for the NRI process
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
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CUSTOMS• Around-the-clock, automated customs clearance services
with access to information 24/7
• Pre-arrival processing
• Customs consulting
• Export documentation
• Duty refunds and drawback claims
• Post-entry audits and corrections
• Classification, valuation, and origin opinions/assistance
OVERLAND• 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
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
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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
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
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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.
The NRI account setup process
KN account Setup for NRI
• 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
Documentation Required for Export Shipment
• Canada Customs Invoice or Commercial Invoice
• HS Code information and description
Documents and terms
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”.
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 of French, and see “Mandatory Registration” for the CRA office responsible for your country. Should you not be required to register, please contact [email protected] for more information on the process.
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Documents and terms
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 outside of Canada. The fully completed forms must be emailed or faxed for verification.
The originals MUST be mailed to:
Records—Trade Services DivisionCanada Border Services Agency1980 Matheson Boulevard EastP.O. Box 7000, Station AMississauga, Ontario L5A 3A4Phone: 905-803-5344
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. The local Kuehne + Nagel office subsequently bills the NRI client for reimbursement. Please see process flow (figure 1.2) for “flow-through” concept.
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.
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Goods and Services Tax Process Flow Chart – REGISTERED FOR GST
NRI ARRANGES EXPORT TO CANADA
KN CANADA PAYS GST* TO CBSA ON BEHALF OF NRI
NRI PAYS GST TO LOCAL KN OFFICE
NRI BILL GST/HST** TO CANADIAN CUSTOMER
(on the customer invoice price)
NRI FILES INPUT TAX CREDIT TO BALANCE
GST/HST PAID AND COLLECTED
Figure 1.2 Goods and Services Tax process f low chart - Registered for GST
* GST = GST at importation 5%
** GST/HST = GST/HST rate according to place of supply rules
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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
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 TaxRM - Import/exportRP - Payroll deductionsRT - GST/HST
The last four (4) digits identify the reference number; in this case, a second payroll deductions account.
1 2 3 4 5 6 7 8 9 R P 0 0 0 2
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
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Additional information
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.
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.
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.
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.
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%.
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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.
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.
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.
As government website links change and expire from time to time, please email: [email protected] for updated links should you encounter this problem.