General Preferential Tariff (GPT) treatment ends for 72 countries duties:

Tax Insights
from Indirect Tax Services
Issue 2015-09
Canadian importers face higher customs
duties: General Preferential Tariff (GPT)
treatment ends for 72 countries
January 14, 2015
In brief
On January 1, 2015, the Canadian federal government withdrew the General Preferential Tariff (GPT)
treatment benefits from 72 developing countries (including China) on imports into Canada. As a result,
Canadian importers may now be paying more duty on certain imports. If you haven’t already done so,
you should now consider options for mitigating this increased customs duty cost.
In detail

Background
Imports into Canada that
qualify for GPT treatment may
be subject to Canadian customs
duty at a preferential duty rate,
i.e. a reduced or duty-free rate,
depending on the type of goods.

demonstrate that the goods
were shipped directly from
the GPT country to Canada
(i.e. by providing shipping
documents, such as a
through bill of lading), and
make the claim on their
Customs import accounting
(customs entry)

eligible
In certain cases, GPT claims
may be made retroactively, up
to four years, if a GPT claim was
not made at the time of import
accounting and all other
requirements are met.

qualifying goods
CBSA GPT verifications

documented (certifed), and

shipped directly to Canada
Generally, the Canada Border
Services Agency (CBSA) can
audit/verify importers that have
made GPT import claims for up
to four years after import. The
CBSA may ask to review the
documentation noted above.
What must importers do?
To claim GPT benefits when
applicable, importers must
ensure the goods are:
In addition, they normally must:

maintain evidence of
eligibility (e.g.
exporter/producer
certificates/statements)
What does the GPT change
mean?
The table on page 2 lists the 72
countries that no longer benefit
from GPT treatment. Starting
January 1, 2015, Canadian
importers may be required to
pay more duty on goods they
import from these 72 countries
– especially if no other tariff
preferences are available and
the goods are otherwise subject
to customs duty.
Example
An eligible leather case
imported from a GPT country
(China) is declared at $100.00.
The leather case would attract
customs duty under GPT of:

$7.00 before 2015

$11.00 after 2014
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However, as indicated in the table,
other types of preferential tariff
treatments may continue to be
available to several countries that
have had the GPT removed.
Example
An eligible leather case imported from
a GPT country (Columbia) is declared
at $100.00.
The leather case would attract
customs duty of:

$7.00 under GPT or nil under the
Canada-Columbia Free Trade
Agreement (FTA), before 2015

nil after 2014 (the preferential
rate under the Canada-Columbia
FTA would continue to apply, if
the requirements are met)

$11.00 after 2014, if the goods do
not meet the FTA requirements
The duty rate for the CanadaColumbia FTA for the eligible and
qualifiying leather case is 0% both
before and after the removal of GPT.
Jurisdictions that lost GPT treatment
Algeria
American Samoa
Antigua and
Barbuda [CCCT]
Antilles, Netherlands
Argentina
Azerbaijan
Bahamas [CCCT]
Bahrain
Barbados [CCCT]
Bermuda [CCCT]
Bosnia and Herzegovina
Botswana
Brazil
Brunei
Cayman Islands [CCCT]
Chile [FTA]
China
Colombia [FTA]
Costa Rica [FTA]
Croatia
Cuba
Dominica [CCCT]
Dominican Republic
Ecuador
Equatorial Guinea
French Polynesia
Gabon
Gibraltar
Grenada [CCCT]
Guam
Hong Kong
India
Indonesia
Iran
Israel [FTA]
Jamaica [CCCT]
Jordan [FTA]
Kazakhstan
Kuwait
Lebanon
Macao
Macedonia
Malaysia
Maldives
Mariana Islands
Mauritius
Mexico [FTA]
Namibia
New Caledonia and
Dependencies
Oman
Palau
Panama [FTA]
Peru [FTA]
Qatar
Russia
Saint Kitts and Nevis
[CCCT]
Saint Lucia [CCCT]
Saint Vincent and the
Grenadines [CCCT]
Seychelles
Singapore
South Africa
South Korea [FTA]
Suriname
Thailand
Trinidad and
Tobago [CCCT]
Tunisia
Turkey
Turks and Caicos
Islands [CCCT]
United Arab Emirates
Uruguay
Venezuela
Virgin Islands, USA
CCCT = May be eligible for reduced duty rates under the Commonwealth Caribbean Countries
Tariff.
FTA = May be eligible for duty preferences under one of Canada's existing free trade agreements.
Developed Countries Tariff (LDCT)
duty preferences remain available for
select countries that export to Canada.
What can you do to soften the
blow?
Columbian leather cases that do not
satisfy the FTA requirements, either
before 2015 or after 2014, attract the
Most Favoured Nations customs duty
rate of 11%.
Now is the time to consider customs
value planning and/or country
sourcing options to develop duty
reduction strategies for the supply
chain.
In addition, many developing
countries continue to enjoy GPT
status, and the more beneficial Least
Further, duty can be managed or
reduced by importing from countries
that were not affected by the change
or that still benefit from other types of
preferential tariff treatment.
It is also important to stay apprised of
developments that may reduce duty
rates. For example, Canada recently
implemented a free trade agreement
with South Korea (CKFTA). Therefore,
starting 2015, many goods exported
from, and originating in, South Korea
may possibly be imported under the
CKFTA duty preference.
Let’s talk
For a deeper discussion of how these tax issues might affect you, please contact the following:
Jaime Seidner, Tax, Customs & International Trade
+1 (416) 687 8492
[email protected]
Mario Seyer, National Indirect Tax Leader
+1 (514) 205 5285
[email protected]
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