Global Entry with Thomas Taggart – a bi-weekly column about navigating global trade, e-commerce and compliance in a changing world
When the Canada Border Services Agency (CBSA) finalizes its long-planned assessment-for-duty adjustments — which are expected to take effect in early 2026 — it will represent the most significant reform of customs assessment in a generation.
In essence, this change replaces a long-standing debate in Canada “first sale” Interpretation with A “Last sale” a base. The reform ensures that imported goods are valued in the final transaction that leads to their export to Canada, and not at prior transfer prices or sales between companies in multi-tier supply chains.
For e-commerce platforms and cross-border logistics, the implications are far-reaching. The rule directly affects non-resident importers (NRIs) and B2B2C models that rely on transfer pricing or “paper” affiliates to reduce the declared customs value.
NRI use case: A substance-based forensic model
Under current Canadian law, a foreign trader can import without forming a Canadian subsidiary by registering as a Non-Resident Importer (NRI). The NRI obtains a Business Number (BN) and the necessary import/export and GST/HST accounts, allowing him to act as a registered importer for his shipments.
If the goods are imported as unsold inventory – meaning they have not yet been sold to a Canadian buyer – NRIs may declare the cost of goods (COGS) as the duty value. This approach is consistent with Evaluation of fee regulationswhich recognizes the buyer in Canada only when the importer has entered into an agreement to sell the goods prior to importation.
This distinction is important: NRIs may import goods at cost only while there is no Canadian buyer yet. Once a retail sale to a Canadian customer results in an export, the declared value must reflect that retail transaction.
The Canada Border Services Agency’s Customs Valuation Guide (2024) reinforces this principle: All imports must declare the duty value – even where no duty is due – and the transaction value method only applies when there is an export sale to a buyer in Canada. Without an actual Canadian buyer, NRIs must rely on alternative methods such as calculated or inferred value.
The “leaf branch” problem.
In recent years, some providers have promoted the off-the-shelf B2B2C “paper branch” model – a structure in which a foreign trader creates a nominal Canadian entity, often without a physical presence, to act as the importer of record. The entity uses the internal transfer price (sometimes 60-80% less than the retail price) as the declared value of the fee.
The Canada Border Services Agency (CBSA) has made it clear that this model does not stand up to scrutiny. In correspondence with industry stakeholders, the agency explained that because these subsidiaries lack an established place of business in Canada from which to conduct business, they do not qualify as “purchasers in Canada.” As a result, an intercompany sale cannot be used as an export sale.
The Canada Border Services Agency (CBSA) has also expressed concern about… promotion of these simplified B2B2C models, warning that future compliance checks may target importers who rely on related party pricing structures.
This reflects the language used in the 2021 CBSA consultation, which made clear that a permanent establishment must have contracting authority and cannot merely act as a conduit. In short: A mailing address or GST registration alone does not create a buyer in Canada.
Without a true local presence – staff, management control or operational substance – B2B “selling” will be ignored. Instead, the CBSA will treat subsequent retail sales to a Canadian consumer as a related sale for export.
Next “last sale” rule
the 2023 Canada Official Gazette The proposal formalizes this interpretation, defining the phrase “sale for export to Canada” as follows:
“… be subject to an agreement, understanding or other arrangement that is transferred, in exchange for payment, for the purpose of being exported to Canada; and if the goods are subject to two or more such arrangements, the applicable arrangement is the one that relates to the final transfer of the goods in the supply chain.”
In practice, this means that the last sale – the transaction that actually results in the export to Canada – determines the customs value, even if ownership is later transferred.
This aligns Canada’s approach more closely with the WTO Customs Valuation Agreement, enhancing trade realism and fairness while closing a perceived loophole that has allowed some NRIs to under-declare their values. Implementation is expected in early 2026.
IOR reform and related party pricing: a tightening network
Along with valuation reforms, the CBSA is also moving to implement joint and several liability between owner, importer and importer of record (IOR) – a model inspired by OECD best practices. This joint liability framework would make e-commerce platforms, logistics service providers, and their customers collectively responsible for duties and taxes.
For related-party transactions, CBSA Memorandum D13-4-5 warns that transfer prices based on dividend methods such as TNMM are often insufficient to demonstrate that prices are not influenced by relationships. Importers must prove that the declared price represents an arm’s length transaction or guarantee recovery of the full cost plus a representative profit.
Together, these reforms form a consistent compliance framework:
The declared customs value must reflect the true price of the transaction that actually results in export to Canada.
Practical takeaways for cross-border sellers
For e-commerce brands that ship directly to Canadian consumers, several key principles emerge:
- Matter over form. “Paper” subsidiaries with no physical presence in Canada will not qualify as buyers.
- Non-resident Indians remain viable. NRIs can still import without forming a subsidiary – but only for unsold or speculative stock.
- Retail sales drive valuation. Once a consumer purchase results in an export, the retail price determines the customs value.
- Prepare for transparency. Expect more scrutiny as to whether the declared values match the final hash transactions.
- The plan is for 2026. the Last sale The rule and IOR reforms are expected to take effect together, reshaping how e-commerce imports are structured.
Bottom line
As Canada finalizes its new assessment of tariff regulations, the message is clear: only the last sale matters.
For e-commerce merchants evaluating B2B2C import solutions, it is important to scrutinize any provider that offers “duty savings” through creative evaluation plans. Under the new framework, what looks like a compliant improvement today could be a false declaration of value for duty tomorrow – a serious compliance risk in an era of heightened CBSA enforcement.
Author biography
Thomas Taggart is Vice President of Global Commerce at Passport, a leading global provider of e-commerce solutions that helps brands like Ridge, HexClad and Wildflower Cases expand globally through cross-border shipping, expert compliance support, and in-country enablement services. To learn more about the passport, visit Passportglobal.com. Going Global with Thomas Taggart is a bi-weekly column in World Trade magazine covering the strategies, regulations and ideas shaping the future of cross-border trade.
