Regulations
and Red Tape
Taxes and tariffs
The Goods and Services
Tax (GST) in Canada is a tax on consumption and should be considered
when developing pricing strategies for the Canada market. How the
tax will apply to you will depend the category and price of your product.
A barrier for many small
businesses and entrepreneurs has been the fear of dealing with tax
and tariff issues on international trade. Strides have been made to
reduce the barriers and the cost of doing business in other countries.
The North American Free Trade Agreement (NAFTA) specifically addresses
trade issues between the U.S., Canada and Mexico. In addition to tariff
elimination, other NAFTA benefits for entrepreneurs doing business
across North America include government procurement, investment, services
trade, intellectual-property protection, rules of origin, customs
procedures, and shipping and dispute resolution.
Sound confusing?
The U.S. Department of
Commerce can provide a great deal of information for your market research,
such as:
- Consumer buying trends
- Tariff status and data
relative to your product or service
- Canadian and U.S. competition
- Canadian standards and
regulations.
In addition to the U.S.
Department of Commerce, the Red River Trade Corridor in Crookston,
Minnesota; the Canadian General Consulate Office in Minneapolis, Minnesota,
and the Small Business Administration are excellent resources when
preparing for and doing business in Canada. Information about how
to contact these groups is in the Resources document located in this
folder.
Accounting and legal
issues
When doing business in
Canada, you need to consider accounting and legal practices which
comply with Canadian laws and regulations. Examples of accounting
issues:
- Goods and Services Tax
(GST)
- Foreign Sales Corporations
- Taxable income and deductions
Other accounting issues
may apply to your product or service. Contact a qualified professional
for assistance in researching and planning for accounting issues which
may arise. Examples of legal issues:
- Foreign Corrupt Practices
Act
- Intellectual Property
- Product Standards
Packaging and Labeling
Requirements
Other legal issues may
apply to your product or service. Contact a qualified professional
for assistance in researching and planning for legal issues which
may arise.
Additional documentation
Various documents are required
for shipment of goods into Canada. The dollar value of your shipment,
the product itself, and where and how you are going to ship into Canada
all are factors in determining what form of documentation will be
needed.
Canadian Customs Offices
can be helpful in determining the necessary documentation for transporting
your product into Canada. A freight forwarder can also provide assistance
in the shipping process. The freight forwarder acts as your agent
or broker and should be qualified to incorporate the latest policy
and documentation needs to meet your shipping strategy. Freight forwarders
usually specialize in ocean, air or ground. Some forwarders specialize
in shipping to certain countries or handling specific types of products.
Getting Paid For It
All
There are various methods
of payment for goods sold in Canada. Examples of payment methods include:
- Credit Cards: credit
cards, such as Visa, Mastercard, Diners Club, Discover and American
Express, are widely accepted and used by Canadian consumers.
- Bank Checks: including
Canadian checks drawn on United States banks or Canadian banks.
- Advance Payment: while
advance payment may be a benefit to you, it is often viewed as an
inconvenience by Canadian consumers.
- Bank Transferals: Canadian
buyers can transfer money from their bank to yours. The drawback
of bank transferals is the inconvenience to the customer, as well
as to the seller if they cannot identify the sales source.
Weigh the risks and benefits
of any potential payment method. The payment method you choose should
be the most beneficial to both you and your Canadian customer.
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Chapter...
