Law Firm Sees Problems With Canada's Proposed 'Last Sale' Regulatory Change

Canada's proposed "last sale" change to its customs valuation practice could present a host of problems for customs brokers, law firm Neville Peterson said in a blog post. If the regulatory change, which would require imports to be assessed duties according to the price of their "sale for export," is approved, brokers would have to examine resales to accurately file entries and would "no doubt be required to file many post-importation adjustments," the firm said.

Under the proposal, auditors would need to examine importers' sales and resales instead of just their purchases and the new definition of "transaction value" would apply to regional value content calculations under the USMCA. This definition would make "it more difficult for traders to satisfy RVC requirements and obtain USMCA 'originating' status for their goods," the firm said.

The change also could also lead to importers paying an excess Goods and Services Tax, the firm noted. For instance, if a good were valued at $2,000 on import and the importer resold the good for $1,500, GST would be overpaid. Importers also could face supply-chain inefficiencies, the firm said, posing a hypothetical where the importer brings all goods into its inventory, does not accept orders until the goods are in the inventory, then stops "drop shipments" of imports to customers.