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Shipping to Canada: Taxes, Duties & Tariffs

September 14th, 2018

 

With over 20 million English-speaking digital buyers, it’s easy to see why Canada is an attractive place to sell for U.S. based e-commerce merchants. Canada even has one of the strongest e-commerce infrastructures in the Americas, including broadband internet access and widespread mobile phone usage for completing online transactions. Selling internationally doesn’t come without its challenges, however. Like any other country, Canada has duties, taxes and tariffs you will need to be aware of. If you haven’t gone through the process to become a Non-Resident Importer your Canadian buyer is responsible for duties, taxes, and tariffs that are imposed on imported goods.  It is important you communicate these additional fees to your customers at checkout so as to avoid unpleasant surprises at the time of package delivery.

 

Duties and Taxes

There are 3 kinds of duties and taxes for items being imported into Canada:

  1. Goods and Services Tax (GST): This is a 5% federal tax that applies to items being sold to Canadian customers for domestic consumption.
  2. Harmonized Tax (HST): A handful of Canadian provinces have opted to harmonize their provincial sales tax with the general sales tax and the total rate is known as Harmonized Tax.
  3. Provincial Sales Tax (PST): Provinces that do not participate in the HST collection process impose their own taxes at the local level. The tax rate varies by province and can range from 5% to 9.75%.

 

Tariffs

Along with duties and taxes, your Canadian customer may also need to pay tariffs. Tariffs depend on the country of manufacture, not the country from where the product is purchased.  NAFTA eliminates tariffs on all goods that are manufactured in the U.S. and shipped to Canada.  However, if your product includes components that were manufactured outside the U.S., then your Canadian customer will need to pay tariffs on those components.

 

Shipping to Canada

Over one-third of Canadian e-commerce sales are currently coming from U.S.-based websites. That’s nearly $50 billion dollars flowing in from north of the border. With annual growth predicted at over 12% for the next three years, now is the time to open your business to eager Canadian buyers. If you are looking to sell in Canada be sure to check out the Stamps.com Guide: How to Ship to Canada.

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