Auditor General Raises Concerns With CBSA Administration of Courier Low Value Shipment Program
The Canada Border Services Agency should review the Courier Low Value Shipment Program "to improve the validation and collection" of sales taxes, the Auditor General of Canada said in a recently released report. The report focused on the growth of e-commerce from 2014 through February of 2019. "We found that existing legislation, combined with the Canada Border Services Agency’s poor data management of low-value shipments imported into Canada by courier companies, placed Canadian businesses at an unfair disadvantage in relation to foreign vendors," the Auditor General said. "According to the Department of Finance Canada, the situation could have encouraged domestic vendors to move their operations abroad and could have discouraged foreign investment in Canada."
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Among other issues, the audit found that "for physical products imported into Canada and supplied by foreign vendors, the Canada Revenue Agency does not have the legislative authority to require foreign vendors to register for, collect, and remit" the required sales taxes. Farrow said in a May 9 blog post that "Canadian companies should exercise particular care with regards to Low Value Shipments."
The CBSA said it agreed with the assessment. It "will review processes within the Courier Low Value Shipment Program to improve the validation of taxes collected," the CBSA said. "The Agency will participate in the World Customs Organization Working Group to identify revenue collection models and evaluate other countries’ best practices by September 2019." The CBSA will also "seek authority and funding to regulate shipment data in advance and develop a reconciliation process by December 2019." The CBSA also plans to propose "an approach on conducting statistically valid courier compliance activities based on courier data to ensure revenue-related requirements are met by March 2020" and will "examine options to further automate the program, including the ability to receive, process, and analyze customs data by March 2023."