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Voluntary Disclosures

Border Security and Transport

Since October 7, 2002, importers are liable for penalties of up to Cdn.$25,000 per contravention in accordance with the customs administrative monetary penalty system (AMPS). Under the AMPS, importers may be held liable for penalties ranging from a warning, flat rate amount, or amount based on the value of the goods in question. In addition, the penalties are increased for repeat offenders. The Canada Border Services Agency maintains a “compliance history” for each importer. Each contravention is included on the importer’s compliance history and is purged after one year and in some cases after three years.

Companies that become aware that they have contravened Canadian customs legisla- tion, provided the time periods to use the corrective mechanisms in the Customs Act have expired, may make a voluntary disclosure in order to be relieved of potential penalties and interest arising from an instance of non-compliance. The purpose of the voluntary disclosures program is to promote voluntary compliance with the accounting and payment of duty and tax provisions under the Customs Act, Customs Tariff, Excise Tax Act and Income Tax Act. To qualify, companies must come forward "in good faith” to voluntarily disclose past omissions and errors.

In order for the voluntary disclosure to be “valid,” it must be made voluntarily (e.g., before any enforcement or verification activities are undertaken by authorities). Also, it must be complete, must involve at least one penalty, and must not be part of a pattern of non-compliance or an attempt to avoid legal obligations. Finally, the existing correc- tive mechanisms must not apply.

Companies that have made a voluntary disclosure are required to pay the duties and taxes owing on the imported goods plus interest. The interest charge payable will be calculated at the prescribed rate as opposed to the higher specified rate.

To keep pace with security measures adopted in the U.S., Canada has imposed a num- ber of border security measures that impact the transportation of goods between the two countries. For instance, the Canada Border Services Agency has implemented the Partners in Protection (PIP) program that is the Canadian equivalent of the U.S. Customs-Trade Partnership Against Terrorism (C-TPAT) to strengthen the security of supply chains. Participating in the PIP program allows for more efficient customs processing of shipments.

In addition, PIP participants may be eligible to participate in the Free and Secure Trade (FAST) program, which is a joint initiative between the U.S. and Canada to make cross- border shipments simpler and reduce delays, while enhancing security. The FAST pro- gram allows pre-approved goods to move across the U.S/Canada border more quickly by verifying trade compliance away from the border. Certain lanes at border-crossings are devoted exclusively for FAST participants.

There are a number of other initiatives underway to reduce border-crossing delays while enhancing security for trade between Canada and the United States.

Visa e-commerce cross-border handbook for U.S. retailers

Copyright 2010 Visa. All rights reserved.


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