The 2016 Federal Budget and follow-up announcements by the Government have confirmed Canada is committed to “swiftly” implementing the Canada-European Union Comprehensive Economic and Trade Agreement. However, there is no mention of the compensation for the agriculture industry promised by the previous Government. The current Government has also signalled that it is interested in strengthening its trade relationships with major emerging markets such as India and China.
Following are some additional Budget highlights:
Budget 2016 announces that the Government will eliminate tariffs on about a dozen manufacturing inputs, providing an estimated $9 million in tariff savings over the next five years to Canadian manufacturers in the consumer goods and transportation sectors.
Customs Import Duties Projections
Customs import duties are projected to increase by 13.2% in 2015–16, reflecting strong year-to-date overall import growth and the removal of benefits for certain countries under Canada’s General Preferential Tariff regime, effective January 1, 2015. Customs import duties are projected to decrease slightly over the remainder of the projection period, mainly as a result of the expected impacts of the ongoing implementation of the Canada-Korea Free Trade Agreement, as well as the planned introduction of the Canada-European Union Comprehensive Economic and Trade Agreement and the potential introduction of the Trans-Pacific Partnership.
Budget 2016 proposes new legislation to strengthen transfer pricing documentation by introducing country-by-country reporting for large multinational enterprises. The Canada Revenue Agency is applying revised international guidance on transfer pricing by multinational enterprises, which provides an improved interpretation of the arm’s-length principle.
Improving Export Verifications
Canada needs to ensure that its exports do not pose health, safety or security threats to Canadians and its allies and that Canada continues to respect international commitments. The Canada Border Services Agency’s export verifications support this objective by preventing the proliferation of weapons of mass destruction and the export of goods that have been obtained illegally. Budget 2016 proposes to provide $13.9 million over five years, starting in 2016–17, to improve export verifications by enabling the Agency to enhance identification processes and increase examination rates of high-risk shipments.
For more information, contact Brian Rowe, General Manager – Customs Consulting Services.