Canadian business leaders are pivoting to understand how tariff remission can help combat the additional cost of importing goods that is ultimately impacting sales and profitability. But what does remission mean, and should your business pursue it? Read on to find answers to these and other questions arising from the new trade environment.
What is tariff remission?
Remission allows relief from the payment of tariffs at the time of import or, in some cases, a refund of tariffs already paid.
A general remission allows businesses to take advantage of an existing Order in Council (OIC) and a specific remission can be achieved by filing a remission request as a business.
Submissions for a specific remission are submitted to and reviewed by the Department of Finance (DOF) in conjunction with other federal departments and interested parties such as domestic producers.
If an imported good does not qualify for the general remission program for tariffs on products, the specific remission process is still available to businesses that incur tariffs and meet the specific remission order requirements.
Preparing for tariffs
What are the differences between general and specific remissions?
Simply put, a general remission order allows a business to take advantage of an existing OIC at the time of import, while a specific remission order requires a business to file a formal request with the DOF. The following provides more details on the differences.
- Undue hardship: Tariffs are causing significant financial distress or potential bankruptcy, leading to major layoffs and negatively impacting the Canadian economy.
- Inability to source goods domestically: Materials cannot be sourced within Canada, requiring proof of attempts to source from Canadian suppliers or existing contracts with foreign suppliers.
Companies must submit detailed remission requests outlining the impact of tariffs and providing supporting documentation such as purchase orders and commercial invoices. The DOF will verify the remission claims, only considering remission where it is required to address exceptional and compelling circumstances that outweigh the reasons for the implementation of the tariffs. Successful Canadian businesses will have their business number added to an OIC.
Importers planning to undertake the process of filing specific remission order requests should be aware that there is a high rejection rate, approximately 85% currently.
How BDO can help?
Remission may be the right answer for your business, but it is important to consider the following questions to achieve the best outcome while minimizing costs.
- Are the imports subject to tariffs included as part of a general remission OIC?
- Are the goods being sourced domestically and are there specific barriers to the purchase process preventing domestic buying?
- How significant is the financial distress being experienced by your business as a result of tariffs?
- Do the costs of filing for relief outweigh the costs of the tariffs being incurred?
- Is your business losing competitive advantage by not filing for relief, or worse, not taking advantage of an existing OIC?
BDO’s digital tool, Tariff Origin Value Analytics (TOVA), can provide quick visibility of the tariffs you are incurring and help determine key criteria supporting a remission order as well as other relief measures that may exist such as trade agreements or possibly foreign market expansion.
For more information or to confirm your customs and supply chain strategy, please contact our Customs & International Trade Services team.
Brian Morcombe, Partner, Global Indirect Tax Practice Leader
Charmaine Goddeeris, Director, Customs & International Trade
Krunal Soni, Senior Manager, Customs & International Trade Services