Why this is important to Wisconsin businesses: E-commerce has generated many opportunities, and understanding the de minimis value guidelines can provide opportunities for further access to the Canadian market.
Cross-border e-commerce has generated many opportunities. Online sales have been growing over the past few years, accelerated during the pandemic, and are expected to remain strong. This is fueling cross-border sales and a surge in e-commerce shipping. Understanding the de minimis threshold value guidelines—which spell out the minimum price at which customs fees and taxes kick in—is beneficial for consumers and for companies involved in cross-border trade between the U.S. and Canada.
Canada was ranked as one of the top countries in e-commerce retail sales growth in 2020. Canadian e-commerce retail sales are expected to reach $40.3 billion USD ($51.4 billion CAD) by 2025. In 2021, more than 27 million people in Canada purchased items online—72.5% of the population—and the number is expected to grow to 77.6% in 2025, according to the International Trade Administration of the U.S. Department of Commerce.
As e-commerce continues to accelerate, so will the amount of goods shipped across the border. Many are low-value, express shipments and will qualify for tax and duty exemptions. Under the new trade agreement for the U.S., Canada and Mexico, the minimum-value threshold for imports to Canada was increased to allow for greater access to the market and to help facilitate clearance, streamline and expedite the importation process. Higher levels are also a potential cost saving to the consumer.
Minimum threshold levels vary between countries, and customs taxes can be avoided if the value of the shipment doesn’t exceed those levels. In Canada, the Postal Imports Remission Order and the Courier Imports Remission Order provide the applicable regulatory outline. Procedures for express shipments are also outlined in CUSMA/USMCA Article 7:8.
The threshold levels for imported goods shipped into Canada by courier with a total price below $31.36 USD ($40 CAD) are exempt from both taxes and duty fees. For goods valued between $31.36 USD ($40 CAD) and $117.58 USD ($150 CAD), only tax will be collected, and for goods over $117.58 USD ($150 CAD), both duty fees and taxes apply. The minimum level for postal service shipments is $15.68 USD ($20 CAD), with no tax or duty fee.
The Courier Low Value Shipment (CLVS) program provides additional benefits for a shipment valued at under $2,587 USD ($3,300 CAD). Designed for the clearance of express shipments, CLVS streamlines the reporting, release and accounting procedures for certain goods that are transported by courier. The courier company must be authorized by Canada Border Services Agency (CBSA) to participate. However, the CBSA placed a moratorium on applications for participation in the CLVS Program effective June 3, 2019, until further notice, in order to revamp to accommodate e-commerce transactions.
Cross-border e-commerce continues to change, evolve and grow exponentially, and this presents opportunities for Wisconsin companies to expand their reach to further develop their business in Canada. The higher de minimis threshold values benefit both Canadian consumers and businesses and U.S. companies exporting to Canada. Companies interested in learning more and exploring best options for their business should consult with a customs broker or other trade advisors.
