A latin term that means “about minimal things” is - ironically - taking on a huge significance for Canada in the re-negotiation of NAFTA. The de minimis level -also referred to as the low value threshold - refers to the value below which duty and taxes are not charged.
Currently, most items valued under $800 US can be imported duty free to the USA. Under the new USA Canada Free Trade agreement (USMCA) imports to Canada valued over $40 CAD are subject to duty and taxes. Express shipments valued under $150 CAD can be imported duty free (but are subject to sales tax).
Section 321 to the USA versus LVS system clearance in Canada: Serving express e-commerce imports but with much different low value thresholds.
The Most Favoured Nation (MFN) tariff rates are generally applicable for imports between Canada, Mexico and the USA. Goods that meet USCMA/CUSMA/ T-MEC rules of origin can qualify for preferential duty free import. The MFN tariff rates of Canada apply to goods imported above the de minimus levels that do not meet the rules of origin (non-originating goods) under the CUSMA.
The CUSMA facilitates the movement, release and clearance of good via a simplified framework and standardized customs procedures. Trade facilitations includes fewer clearance formalities for “express shipments” valued under CA$3,000 (to Canada) and US$2,500 (to the USA and Canada).
The origin‑certification process (that is no longer a prescribed form) is to include a set of data on the shipping paperwork (most commonly including on the invoice).
The data elements required at a minimum to claim origin underCUSMA:
- Importer/exporter or producer (indicate which is certifier)
- Name and address of certifier or
- Name and address of exporter or
- Name and address of producer
- Name and address of importer (if known)
- Description and harmonized system (HS) tariff classification of the good
- Specific origin of criteria
- Blanket period (certification is valid up to 12months in the case of multiple shipments of identical goods)
- Authorized signature and date
Check out the Canadian Border Services Agency (CBSA) page that describes the new requirements for more information and an example of a valid CUSMA certification of origin.
Duty free parcel import processes
to Canada, the USA and Mexico
The increase in Canada’s de minimis threshold (from $20 to $40) is the first increase since 1985. The $150 threshold allows cross border express parcels to be imported to Canada duty free but not tax free.
Customs de minimis policy in Canada was established as a way to ensure that the government does not spend more than it collects in duties. But it has since evolved into a critical issue for “free trade for e-commerce shipments" around the world. Domestic retailers around the world - including Canada - have rallied political support to protect their home market from what they view as unfair competition.
Canadian Retailers fought hard against raising the de minimis value and - at least according to their public statements - are in happy that with new USMCA de minimis levels. The final USMCA de minimis levels to Canada and Mexico are far less than what American negotiators has initially demanded.
CUSMA/USMCA Shipping to Canada from the USA and Mexico
The key provisions of CUSMA USMCA for parcel clearance for courier* shipments:
- Duty free and tax free entry for most US and Mexican parcels valued under CA$40
- Duty free entry for most US and Mexican parcels valued under CA$150
- Simplified "Certification of Origin" for shipments valued under CA$3,300
- Contact Jet's team for information and pricing
Different duty assessment for goods shipped via USPS and Mexican Post to Canada: Duty and taxes are assessed at parcels valued over CA$20 (versus the levels for parcels shipped via parcel carriers/ courier mentioned above):
- CA $20 (around US$14.75) and under: duty and tax free
- Above CA $20duties and taxes apply
USA: Most open market for e-commerce parcels. Canada: More open for low cost goods sent via express.
De minimis values across the world. Despite the trade rhetoric of the US President, the USA continues to lead the world when it comes to access of cross border e-commerce parcel imports.
Notes on new North American Free trade de-minimis levels
- The USA de minimis value in the USA officially applies to duty butthere is no current mechanism by US customs for collecting sales tax on behalf of states and local municipalities.
- The Canadian duty free/ tax free Canadian de minimis is CA$40. The duty free only threshold is $150. This applies only for for shipments from the US and Mexico.
- The Mexican de minimis threshold of $50 USD is both duty free and tax free. Up to $117USD, shipments to Mexico can be cleared duty free but are subject to tax.
At Jet Worldwide, we believe the new Canadian de minimis to be a great opportunity for USA companies selling to Canada using our low cost express shipment delivery from the USA to Canada.
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