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Foreign Trade Zone

Unmatched Investment Climate

Canada has taken important steps in providing new trade advantages for business. Canada’s duty and tax relief is geographically flexible making the Halifax Gateway the ideal location for your business to take advantage of these programs.

Programs such as the Duty Deferral, Export Distribution Center and Exporters of Processing Services make it possible to create an FTZ environment in the Halifax Gateway and offers all the benefits that you would find in the traditional FTZ.

We want to connect your business with the programs.

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Canada not only has a business-friendly tax regime, but also has good and services tax (GST) and customs duties advantages. For example, Budget 2009 eliminated the tariff on a wide range of machinery and equipment.

Canada also offers 3 of the most export-friendly programs in the world:

  • Duty Deferral Program

    The DDP is administered by the Canada Border Services Agency (CBSA). If you qualify for the program, the CBSA can postpone or refund duties and taxes you would otherwise have to pay on goods you import. By eliminating or deferring these costs, the DDP can increase your cash flow, free up your working capital and allow you to price your exports more competitively. Taking advantage of the DDP can also help you develop your business by making it easier to attract investment and to partner with other companies.

    How does the DDP work?

    The DDP has (3) components that you can use individually or in combination, depending on the unique needs of your company.

    These components are the:

    • Customs bonded warehouse
    • Duties relief
    • Drawback of duties on exported goods.

    You may qualify for the DDP if you:

    • store goods before releasing them for sale into the Canadian marketplace; or
    • import goods and later export them without substantially altering them; or
    • use imported goods in the production of other goods for export.
  • Export Distribution Centre Program

    The EDCP is administered by the Canada Revenue Agency (CRA) and is intended to benefit businesses that import goods and/or acquire goods in Canada, process them to add limited value and then export them.

    If you qualify for the program, you don’t have to pay GST/HST on most of your imported goods, or on domestic purchases of goods worth $1,000 or more. This improves your cash flow because you don’t need to pay the taxes up front, claim an input tax credit on your GST/HST return and then wait for your net tax refund to arrive.

    How does the EDCP work?

    EDCP participants typically import goods from abroad and/or acquire them in Canada, process them to add limited value and then export the value-added goods to customers outside Canada. The “limited value” criterion is a key factor here, since the EDCP is not intended to benefit companies that manufacture or pro- duce new products that they then export.

    The program is therefore of particular benefit to businesses that are involved in the processing of goods such as distributing, disassembling, reassembling, displaying, inspecting, labelling, packing, storing, testing, cleaning, diluting, maintaining and servicing, preserving, sorting, grading, trimming, filing, slitting or cutting.

    Who can participate in the EDCP?

    You may be eligible for the EDCP if the following applies to you:

    • At least 90 per cent of your operations for the fiscal year are commercial activities.
    • At least 90 per cent of your business revenues for the fiscal year come from export sales.
    • You add only limited value to your customers’ goods that you import or take possession of in Canada during the fiscal year, as follows:
      - the value you add through the provision of non-basic services is 10 per cent or less; or
      - the value you add, calculated as the total of non-basic services provided plus basic services provided, is 20 per cent or less.
    • You do not substantially alter goods, for example by producing or manufacturing goods.
  • Exporters of Processing Services Program

    The EOPS Program is administered by the CRA. It relieves participants of the obligation to pay GST/HST on imports of goods belonging to non- residents, provided that these goods are imported for processing, distribution or storage and are subsequently exported. Participating in the program thus helps your cash flow and reduces your operat- ing expenses.

    Unlike the EDCP, however, the EOPS Program imposes no minimum level of export sales that you must meet in order to maintain your eligi- bility. It also sets no limits on the value you can add to a non-resident’s goods, which means you can use those goods to manufacture or produce other products for foreign customers, all without endangering your EOPS eligibility.

    How does the EOPS work?

    As an EOPS Program participant, you use your EOPS authorization number to be relieved of the obligation to pay GST/HST on the goods of non- residents that you import for process- ing, distribution or storage and subsequent export.

    Who can participate in the EOPS Program?

    To participate in the EOPS Program, you have to meet the following eligibility requirements.

    • You cannot own the imported goods or resultant processed goods at any time while they are in Canada. They must always be owned by a non-resident and the customer cannot be resident in Canada.
    • You must import the goods for the sole purpose of supplying storage, distribution, processing, manufacturing or production services to your foreign customer.
    • You cannot be closely related (generally, where there is a degree of common owner- ship of at least 90 per cent) to your foreign customer or a foreign owner of the goods.
    • You cannot transfer physical possession of the goods to another business in Canada, except for storage or transportation.
    • You must export the goods within four years of accounting for them.
    • The goods cannot be consumed or used in Canada.
    • You must provide any financial security that is required to import the goods.
  • Supporting FTZ Programs

    Customs Bonded Warehouse

    A customs bonded warehouse is a storage facility that your company operates under the authority of the CBSA. However, it does not have to be a conventional warehouse — it could be part of your office building or even a hotel conference room, depending on your immediate requirements. This gives you enormous flexibility in how you store, handle and move your goods, which can translate into a valuable competitive edge.

    The following are some of the benefits of using a customs bonded warehouse:

    • You do not pay duties and taxes until the goods enter the Canadian marketplace.
    • If you export the goods from Canada, you do not pay duties and taxes.
    • You can import goods in bulk, store them in your warehouse and remove them as you need them. This reduces your up-front costs because you pay duties and taxes only on the goods that enter the Canadian market.
    • You can store the goods in your warehouse for up to 4 years, during which time you can handle them in a variety of ways, providing that you do not substantially alter the goods.

    Drawback (refunding of duties)

    Did you already pay duties on goods that you subsequently exported? You may still be able to recover those duties under the duty draw- back option. It allows you to apply for a refund of duties you paid on imported goods that you later export. You have to file the claim within four years of the date of importation.

    You can apply for a drawback if you export the goods in the same condition in which they were imported, or if you use them in the manufacture of other goods that are exported.

    You can also receive a drawback of duties paid on imported goods that become obsolete or surplus to your needs, or that have been manufactured into a product that is obsolete or surplus. To be eligible, the goods have to be undamaged, unused, and must be destroyed under the supervision of the CBSA. In this case, you can file a drawback claim up to five years after you imported the goods, but not until the goods have actually been destroyed.

Download the full Foreign Trade Zone Booklet

Import. Export. Support.

The strategically located Halifax Gateway saves you time, money and frustration when moving goods and people. It offers advanced multi-modal transportation and logistics, excep- tional service and easy access between North America and the globe.

The Gateway encompasses the Halifax Stanfield International Airport, the Port of Halifax, 2 container terminals, CN Rail, a strong logistics and warehousing sector, and excellent class1 highway infrastructure.

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Contact Us:

Halifax Gateway Council
1969 Upper Water Street
Purdy’s Tower 2 • Suite 2101
Halifax, Nova Scotia Canada B3J 3R7

1.800.565.1191

Nancy Phillips
Executive Director
nphillips@HalifaxPartnership.com
@Halifax_Gateway


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