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How to do business in Canada

Legal considerations

Canada is a federal state, with federal jurisdiction mostly focussed on particular kinds of business, property and behaviour. English common law is the basis of the law in nine provinces and three territories of Canada, and French civil law in the province of Québec. If you have business in Canada it will be subject to both federal and provincial or territorial laws.

In addition, some industry sectors have national regulations in Canada. More information on these, including details of specific regulations, permits and licences can be found at: https://canadabusiness.ca/government/regulations/regulated-industries.

Controlled goods export licences

Any goods, software, technical information and technology which are on the UK Strategic Export Control Lists will require a licence for Canada. See: https://www.gov.uk/government/publications/uk-strategic-export-control-lists-the-consolidated-list-of-strategic-military-and-dual-use-items-that-require-export-authorisation for details of the lists.

There are a number of open general export licences (OGELs) which are available for exporting military and certain dual-use controlled items to Canada – these have a straightforward registration process. Visit: https://www.gov.uk/government/collections/open-general-export-licences-ogels for further details of OGELs.

If you cannot use an open licence you will have to apply for a standard licence. See: https://www.gov.uk/guidance/export-military-or-dual-use-goods-services-or-technology-special-rules. You should also check if you need an export licence, at: https://www.ecochecker.trade.gov.uk/spirefox5live/fox/spire/OGEL_GOODS_CHECKER_LANDING_PAGE/new and apply via SPIRE: https://www.spire.trade.gov.uk/spire/fox/espire/LOGIN/login.

Some additional products, including consumer items, may require further certification or licensing before they can be exported to Canada. See the UK Government’s guidance on export licences and special rules at: https://www.gov.uk/starting-to-export/licences.

Import restrictions

The importing of certain goods into Canada is prohibited. More details of these can be found at: http://www.cbsa-asfc.gc.ca/publications/dm-md/d9-eng.html. In addition, some goods are subject to import controls. See: https://www.international.gc.ca/controls-controles/about-a_propos/impor/permits-licences.aspx?lang=eng.

Standards and technical regulations

Your product or service will need to conform to the legal requirements set out in the relevant Canadian standard. All suppliers and manufacturers have an obligation to ensure products are safe and meet relevant safety standards, have clear instructions for proper use and include warnings against possible misuse.

The Standards Council of Canada (SCC) oversees Canada’s National Standards System and ensures standards are implemented across the country. See: http://www.scc.ca/en for further details.

There are four accredited standards development organisations in Canada:

Product liability insurance

Product liability insurance covers the cost of compensation for anyone injured by a faulty product. If you design, manufacture or supply a physical product you should therefore consider taking out product liability insurance. See: https://www.abi.org.uk/products-and-issues/choosing-the-right-insurance/business-insurance/liability-insurance/product-liability-insurance/ for further information, or alternatively contact the DIT team in Toronto at: http://www.gov.uk/world/organisations/department-for-international-trade-canada#contact-us for contacts of local insurers or specialist brokers.

Packaging regulations

All packaging has to meet the requirements set out in Canada’s Consumer Packaging and Labelling Act. See: https://laws-lois.justice.gc.ca/eng/acts/C-38/, and consumer products must comply with the Consumer Packaging and Labelling Regulations. See: https://laws-lois.justice.gc.ca/eng/regulations/C.R.C.,_c._417/index.html.

Bags, canvas, used sacks and other similar packing materials are not permitted for use as packaging, but information on wood packaging can be found at: https://www.gov.uk/wood-packaging-import-export.

Labelling your products

Labels for consumer goods must include:

  • product identity declaration in both French and English

  • supplier’s name and address

  • net quantity in metric units

All products sold in Québec must have French labelling displayed in equal prominence to English, which applies to:

  • all labelling

  • warranty certificates

  • product manuals

  • instructions for use

Details of food labelling requirements can be found at: http://www.inspection.gc.ca/food/requirements-and-guidance/labelling/industry/eng/1383607266489/1383607344939, and labelling for textiles and precious metals, at: https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/h_01436.html.

Any environmental claims must meet Canada’s guiding principles on use of environmental labelling. A guide for industry and advertisers on the use of environmental claims in Canada is available from the Canadian Government at: https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02701.html.

Contact the Department for International Trade (DIT) team in Toronto at: https://www.gov.uk/world/organisations/department-for-international-trade-canada#contact-us for further detailed information and advice on labelling requirements.

[Source – Government of Canada, DIT Trade and Investment guide: Canada, gov.uk]

 

Taxation

Double taxation agreement

The Canada Revenue Agency (CRA) at: https://www.canada.ca/en/revenue-agency.html has overall responsibility for taxation in Canada, although you will need to be aware of local regulations as this responsibility is shared with the provinces and territories.

The UK and Canada have signed a double taxation agreement, which allows some taxes paid in one country to be deducted in the other, so this should prevent any double tax liability from UK and Canadian authorities over the same income. See: www.gov.uk/government/publications/canada-tax-treaties. However, UK companies operating in Canada will be subject to local taxation requirements. 

Value added tax (VAT)

Provided you get and keep evidence of your export, and comply with all other laws, you can zero-rate the sale of your goods to Canada. You will need to ensure the goods are exported, and provide evidence within three months from the time of sale.

Further information on VAT in non-EU markets and zero-rating conditions is available at: https://www.gov.uk/guidance/vat-exports-dispatches-and-supplying-goods-abroad.

Goods and Services Tax (GST)

In most Canadian provinces, GST is levied at 5% and is imposed on the supply of goods and services purchased in Canada. GST is often included in the price of sales to customers. See: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses.html.

Harmonised sales tax (HST)

HST is a consumption tax used in some provinces, where both the federal GST and the regional provincial sales tax (PST) have been combined into a single value added sales tax. In Ontario HST is charged at 13%, and at 15% in:

  • New Brunswick

  • Newfoundland and Labrador

  • Nova Scotia

  • Prince Edward Island

Québec places an additional levy, the Québec sales tax (QST), in addition to GST. See: https://www.revenuquebec.ca/en/businesses/consumption-taxes/gsthst-and-qst/basic-rules-for-applying-the-gsthst-and-qst/tables-of-gst-and-qst-rates/.

Where appropriate, Canada’s provinces and territories can choose to exempt different items from these sales taxes.

Excise duty

You will need to pay excise duty on any alcohol, fuel, tobacco or other excise-equivalent products you send to Canada.

You can find out more about excise duty and duty drawback outside the EU at: https://www.gov.uk/government/publications/excise-notice-207-excise-duty-drawback/excise-notice-207-excise-duty-drawback, and about excise duty in Canada at: https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies.html.

Company and corporate tax

The basic federal corporate tax rate is 38% of taxable income, but after potential abatements and reductions the net rate is 15%.

Higher and lower income tax rates are set by provinces and territories operating a dual tax system. Visit: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/provincial-territorial-corporation-tax/dual-tax-rates.html for further information.

The provinces of Alberta and Québec do not have corporate tax collection agreements with the CRA. For details of corporate income tax arrangements in Alberta see: https://www.alberta.ca/corporate-income-tax.aspx, and for Québec see: https://www.revenuquebec.ca/fr/entreprises/impots/impot-des-societes/ (in French only).

Further details about federal, provincial and territorial corporate tax rates in Canada can be found on the Government of Canada site at: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/corporation-tax-rates.html.

The DIT team in Toronto at: https://www.gov.uk/world/organisations/department-for-international-trade-canada#contact-us can help you find tax advisers before entering into agreements in Canada.

More information on GST in non-EU markets can be found at: https://www.gov.uk/guidance/vat-exports-dispatches-and-supplying-goods-abroad.

Information about temporary imports into Canada and trade incentive programmes can be found on the Government of Canada site at: http://www.cbsa-asfc.gc.ca/trade-commerce/tip-pec-eng.html.

[Source – Government of Canada, DIT Trade and Investment guide: Canada, gov.uk]

 

Customs and documentation

All goods imported into Canada are regulated by the Canada Border Services Agency (CBSA), see: http://www.cbsa-asfc.gc.ca/menu-eng.html. They provide a step-by-step guide to importing commercial goods into Canada, at: http://www.cbsa-asfc.gc.ca/import/guide-eng.html.

To check which federal government departments and agencies are responsible for granting commodity-specific import permits or certificates, visit: http://www.cbsa-asfc.gc.ca/import/reflist-listeref-eng.html.

The EU’s Market Access Database (MADB) at: http://madb.europa.eu/madb/indexPubli.htm provides information on import conditions into Canada, including:

  • import tariffs

  • customs clearance formalities and documentation

  • sanitary (animal-related) and phytosanitary (plant-related) restrictions

Complying with HMRC regulations to export

To export your goods to Canada you must make export declarations to HMRC through the National Export System (NES). Visit: https://www.gov.uk/guidance/export-declarations-and-the-national-export-system-export-procedures for further details.

You must classify your goods as part of the declaration, including a commodity code and a customs procedure code (CPC). Commodity codes and other details applying to exports in the UK Trade Tariff can be found at: https://www.gov.uk/trade-tariff.

Contact the HMRC Tariff Classification Service at: https://www.gov.uk/guidance/finding-commodity-codes-for-imports-or-exports#list-of-useful-contacts for more help.

The EU’s Market Access Database (MADB) also has details about import tariffs. Visit: http://madb.europa.eu/madb/indexPubli.htm.

You must declare any goods that you take with you in your luggage to sell outside the EU. See: https://www.gov.uk/take-goods-sell-abroad for further information.

Benefiting from new preferential tariff treatment

As a result of the preferential trade deal between the EU and Canada, the CETA, UK goods exported to Canada may benefit from new preferential duties if they meet rules of origin requirements. Visit: https://www.gov.uk/guidance/preferential-trade-deal-between-eu-and-canada-cip10#rules-of-origin for further information.

An origin declaration must accompany the goods, and appear on a commercial document or invoice (excluding the bill of lading). You must use the Origin Declaration text on page 1.11/485 of Council Decision (EU) 2017/37 at: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2017:011:FULL&from=EN.

HMRC pre-registered all UK exporters holding a valid Economic Operator Registration and Identification (EORI) number who exported goods to Canada between 1st December 2015 and 1st December 2016. 

To check whether you have been pre-registered on the Registered Exporters Database Details, and for further information about the registration of UK exporters to Canada, visit the UK Government information at: https://www.gov.uk/guidance/preferential-trade-deal-between-eu-and-canada-cip10#registration-of-uk-exporters-to-canada.

If you have any queries about the implementation of Preferential Duty Rates as a result of the CETA, contact: dutyliability.policy@hmrc.gsi.gov.uk for help and advice.

Temporary export of goods

You can use an ATA (Admission Temporaire/Temporary Admission) Carnet to simplify the customs procedures needed to temporarily take any goods on the UK export controls lists into Canada, such as commercial samples or goods for:

  • demonstration

  • exhibition

  • use in repair or maintenance

Visit: https://www.gov.uk/taking-goods-out-uk-temporarily for further information.

You can check at: https://www.ecochecker.trade.gov.uk/spirefox5live/fox/spire/OGEL_GOODS_CHECKER_LANDING_PAGE/new whether you can use an open general export licence (OGEL) for your temporary export. If not, you will need to apply for a temporary export licence. You will need a permanent export licence if the goods are not being returned.

To apply for a temporary export licence, use the SPIRE system at: https://www.spire.trade.gov.uk/spire/fox/espire/LOGIN/login.

Documentation

To clear customs in Canada you will need the following:

  • Canada customs invoice or equivalent

  • Canada customs coding form (Form B3)

  • cargo control document

  • bill of lading

  • relevant permits or certificates

More details about these and other export documents you need to move goods overseas can be found at the Institute of Export & International Trade site at: https://www.export.org.uk/page/Key_Exporting_Terms.

You may choose to work with a Canadian customs agent. Contact the DIT team in Toronto at: https://www.gov.uk/world/organisations/department-for-international-trade-canada#contact-us for further advice and lists of agents.

[Source – Government of Canada, DIT Trade and Investment guide: Canada, Official Journal of the European Union, European Commission, HMRC, Institute of Export & International Trade, gov.uk]

 

Shipping your goods

You can use a freight forwarder to move your goods if you are not knowledgeable about international shipping procedures. A freight forwarder will have vast expertise and familiarity with local documentation requirements, regulations, transportation costs and banking practices in Canada.

The British International Freight Association (BIFA) at: http://www.bifa.org/home and the Freight Transport Association (FTA) at: http://www.fta.co.uk/ can assist in locating freight forwarders to transport your goods to Canada.

Posting goods

For information about sending goods by post to Canada visit Royal Mail at: http://www.royalmail.com/canada.

[Source – Royal Mail]

Shipping restricted, banned and dangerous goods

Certain goods are classed as restricted or dangerous. If you wish to import any of these goods into Canada they are subject to special rules. For more information visit: https://www.gov.uk/shipping-dangerous-goods/what-are-dangerous-goods.

You can employ a local agent who will have knowledge of the latest import licensing requirements. For information and assistance contact the Department for International Trade (DIT) team in Canada at: https://www.gov.uk/world/organisations/department-for-international-trade-canada#contact-us.

Terms of delivery

You should have a clear written contract in all international commercial transactions, to minimise any risk of misunderstanding.

Incoterms are a series of widely used commercial terms for international trade in goods, which clarify for example:

  • where the goods will be delivered

  • who arranges transport

  • who handles customs procedures

  • who is responsible for insuring the goods, and who pays for insurance

  • who pays any duties and taxes

Incoterms do not apply to the delivery of services. Contracts for the international delivery of services should include a service level agreement (SLA), focusing on desired outcomes such as what the service should achieve.

The International Chamber of Commerce (ICC) publishes Incoterm rules, at: https://iccwbo.org/resources-for-business/incoterms-rules, and the UK Government has further general advice and details about Incoterms at: https://www.gov.uk/guidance/international-trade-paperwork-the-basics#international-trade-contracts-and-incoterms.

Reporting a trade barrier in Canada

Regulatory, tariff or technical barriers in an overseas market can make imported goods and services less competitive than those produced locally. If you are aware of any trade barriers in Canada, you should report them to DIT’s Market Access Team at: https://www.gov.uk/report-trade-barriers.

UK Export Finance

The UK Government can provide finance or credit insurance specifically to support UK exports through UK Export Finance (UKEF) – the UK’s export credit agency. See: https://www.gov.uk/government/organisations/uk-export-finance.

For up-to-date country-specific information on the support available see UKEF’s cover policy and indicators for Canada at: https://www.gov.uk/guidance/country-cover-policy-and-indicators#canada.

[Source – DIT Trade and Investment guide: Canada, ICC, UKEF, gov.uk]


 

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