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Application of discounts to the value for duty

January 18, 2017

The Canada Border Services Agency publishes a Memorandum which outlines and explains the treatment of discounts in determining a transaction value under the Customs Act. The transaction value will become, in most instances, the "value for duty" on which duties and taxes are calculated.

The Memorandum defines the term "discount" as an arrangement whereby the vendor, in return for the purchaser's undertaking of certain obligations or accepting or meeting certain conditions, reduces the amount of the price paid or payable for the imported goods. For example, the vendor may grant a discount for prompt payment (cash discount) or because the vendor operates at a certain level of trade (trade level discount) or because the purchaser has agreed to purchase a specified quantity of the goods in the sale giving rise to their importation (quantity discount).

If a discount is granted prior to importation, the amount of that discount should be considered when calculating the price paid or payable for the imported goods.

With the exception of cash discounts, the amount of a discount effected after importation cannot be deducted from the price paid or payable for the imported goods. The importer may be required to satisfy customs that the cash discount will be or has been taken.

Further details are available in Memorandum D13-4-10 Discounts

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