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Doing business in Canada

The UK exported , making it the UK’s eighth biggest export market outside the EU. The UK is °ä²¹²Ô²¹»å²¹â€™s seventh largest source of goods imports and second largest services trading partner.

Canada has a stable political environment and a strong record of economic growth. It offers opportunities for UK companies across all sectors.

The implementation of the EU-Canada Comprehensive Economic and Trade Agreement (CETA) opens up further opportunities for UK companies as well as removing barriers to trade.

CETA also gives UK investors assured preferential access into the USA and Mexico for goods produced in Canada that comply with rules of origin requirements under the (NAFTA).

Benefits for UK businesses

There are a number of reasons to choose Canada as an export destination:

• it has similar legal and business practices to the UK
• there are fewer trade restrictions due to the CETA agreement
• it offers close proximity and easier access to the US market
• it has a strong business and consumer base
• like the UK, it is considered to have one of the most transparent legislatures, with Canada ranked as one of the

EU-Canada Comprehensive Economic and Trade Agreement (CETA)

will help strengthen trade between Canada and the UK.

Overall the CETA agreement will:

• eliminate nearly all Canadian import duties
• create more opportunities to bid for public contracts in Canada
• make it easier to access Canadian services and investment markets
• improve the framework for temporary movement of key company personnel and service-providers between the EU and Canada
• strengthen the Canadian intellectual property environment
• increase cooperation between European and Canadian standards setting bodies

Specifically the CETA agreement:

• ends customs tariffs on 98% of goods and eliminates 90.9% of tariffs on agricultural products
• bases fees charged by local liquor boards on the volume (rather than value) of alcohol, providing a more level playing field for UK exporters of high-value products
• abolishes °ä²¹²Ô²¹»å²¹â€™s requirement to blend imported bulk spirits with local spirits before bottling
• provides improved opportunities to bid on procurement contracts at all levels of government
• strengthens patent protection for pharmaceutical products

Challenges of doing business in Canada

°ä²¹²Ô²¹»å²¹â€™s government has a federal structure which means that business activities and taxation are affected by regulation and laws at federal, provincial and local levels. This can make doing business complicated for first time exporters to the country.

The Canada Border ÌìÃÀÓ°Ôº Agency provides a of goods into the country, which will help you understand the requirements.

Additionally you should be aware that:

• some UK professional accreditations may not be recognised in Canada. You can check requirements relevant to your goods or services with Canadian trade bodies, or contact the Department for International Trade (DIT) in Canada
• some agricultural import tariff quotas will remain under CETA. Read more about how CETA will affect .
• small to medium sized businesses may struggle to enter °ä²¹²Ô²¹»å²¹â€™s defence and security sector because of its industrial and technological benefit (ITB) policies. Market entry is not impossible - and speak to a member of ¶Ù±õ°Õ’s Defence and Security Organisation for support and advice about entering the Canadian market

Top goods and services imports into Canada

UN Comtrade ranks as:

1. vehicles (not railway or tramway vehicles)
2. boilers and machinery
3. electrical and electronic equipment
4. distillation products and mineral fuels, including oil
5. plastics and plastic products
6. optical, technical, photographic and medical apparatus
7. pharmaceuticals
8. pearls, precious stones, metals and coins
9. furniture, lighting, signs and prefabricated buildings
10. iron or steel products

UN Comtrade ranks as:

1. travel
2. transport
3. government services

Researching the Canadian market

Market research and planning are important before starting to sell your products and services in Canada. Doing so will help prevent mistakes and increase the potential for profits.

°ä²¹²Ô²¹»å²¹â€™s federal structure means that there are different regulatory structures in place in each province or territory. Therefore good local research is needed to ensure you meet the legal requirements for your products at all appropriate levels of government control.

In addition, you need to research market entry requirements in specific provinces or territories for certain products, using desk research or visits to the country.

You need to determine whether:

• there is a market for your product or service
• your pricing is competitive
• you need to change your product, its packaging and marketing due to cultural considerations
• you need to adapt your business model

Find out more about .

¶Ù±õ°Õ’s trade specialists can help you commission services from local experts in Canada. This includes:

• country and sector advice
• local market research
• support during overseas visits
• identification of possible business partners
• preparation for exhibitions and events

Opportunities for UK businesses in Canada

DIT provides free international export sales leads from its worldwide network. Find .

Government tenders in Canada

You must and obtain a Procurement Business Number (PBN) to access opportunities with the federal government.

Further opportunities are available through °ä²¹²Ô²¹»å²¹â€™s state governments and the broader public sector. You can find out about selling to °ä²¹²Ô²¹»å²¹â€™s provincial or territorial and local governments on the .

Getting started in the Canadian market

Once you’ve done some initial research you should create an and identify your best route to market.

Direct exports and sales in Canada

Selling directly to customers means you handle all the logistics of marketing, selling, sending your goods overseas and getting paid. Direct exports are possible if you’re selling online or responding to enquiries from Canadian companies.

Selling in Canada through local agents, distributors or wholesalers

Distance and time zone issues may mean it’s more effective to use local representation.

A local point of contact may be important if you need to service customer queries and problems regarding your product or service. Options include using an agent, distributor or wholesaler.

Canada is a big country by land mass. If you’re looking to use an agent you should check they’re based near to your potential buyers.

Setting up a company or office in Canada

You can incorporate your business federally or through °ä²¹²Ô²¹»å²¹â€™s provinces or territories. You should get advice from local lawyers and accountants as to which option best suits your business as there are tax implications depending on which option you choose.

Find out more about .

Find out about .

If you choose provincial or territorial incorporation you must also register with the (CRA) to get a business number.

However, if you will not need to notify the CRA if you incorporate with the federal government.

Find out more about .

²Ï³Üé²ú±ð³¦ requires a business operating in the province to use a French as well as an English version of its name.

Online selling to Canada

A digital presence can help you gain new customers 24 hours a day, often at low cost. Like many developed economies, online purchasing is becoming increasingly popular in Canada especially with consumers. Companies and government departments are also increasingly likely to purchase small orders over the Internet.

Find out more about .

You must not charge Value Added Tax (VAT) for online sales to Canada. You must fill out a customs declaration when you ship the products and keep proof of export.

Licensing or franchising in Canada

You can license a product or service to be sold in Canada. It’s is a cheap way to enter the market as there are no set-up costs apart from the cost of a legal agreement.

You should undertake due diligence on licensees to ensure your intellectual property (IP) rights are protected.

Alberta, British Colombia, Manitoba, New Brunswick, Ontario and Prince Edward Island are the only . There is no federal legislation.

Getting finance to fulfil an export contract to Canada

To make it easier to fulfil an export contract and grow your business, schemes are available to UK companies selling products and services in Canada. Contact your bank or specialist financial organisation for assistance.

UK Export Finance (UKEF) has significant risk capacity to support exports to Canada.

Getting paid in Canada

You may wish to talk to a specialist about finance, including how to get paid in Canada. This could be a bank, accountant, or you can contact the DIT team in Canada to help find a financial adviser in Canada.

Your contract will specify the terms for payment. You need to use secure terms of payment in Canada through a letter of credit, cash, or partial payment in advance.

You should only use (delivery of goods or services before payment) when you have an established trading relationship.

Customers in Canada may require credit terms to buy your products and services. Payment conditions must be factored into prices. For business-to-business transactions these can range from immediate payments on receipt of goods (often with a negotiated small discount) to a negotiated 60-day payment.

Payment risks in Canada

UKEF helps UK companies get paid by insuring against buyer default.

Currency risks when exporting to Canada

If you have not fixed your exchange rate you have not fixed your price. You should consider whether the best option for you is to agree terms in sterling or Canadian dollars in any contract. You should also consider getting expert financial advice on exchange rates (sometimes called FX).

Transferring money from Canada

In principle, capital can be moved in and out of Canada without any restrictions.

Currency transfers of CAD10,000 or more must be reported to the (FINTRAC).

Legal considerations of doing business in Canada

English common law is the basis for the law in 9 provinces and 3 territories. French civil law is the basis of the law in ²Ï³Üé²ú±ð³¦.

Canada is a federal state. Federal jurisdiction tends to be narrowly focussed on particular kinds of business, property and behaviour.

Your business in Canada will be subject to both federal and provincial or territorial laws.

Some industry sectors are regulated in Canada. Find out more about the .

Controlled goods export licences for Canada

You must have a licence to supply any goods, software, technical information and technology to Canada which are on the UK Strategic Export Control Lists.

There are a number of open licences available for exporting military and certain dual use controlled items to Canada with a straightforward registration process. If you can’t use an open licence you’ll have to apply for a standard licence.

Some other products, including consumer items, may need additional certification or licensing.

Import restrictions into Canada

Certain goods cannot be imported into Canada.

Find out about .

Other goods are subject to .

Consumer protection in Canada

If you’re selling to consumers (rather than businesses) you must comply with °ä²¹²Ô²¹»å²¹â€™s consumer protection laws, which guarantee consumer rights when buying goods and services.

Consumer rights across Canada can be different as legislation is set at federal, provincial and territorial level.

Professional indemnity insurance for doing business in Canada

If you provide a service and want to protect yourself against negligence claims from clients or third parties, you may wish to consider taking out .

Standards and technical regulations in Canada

You must check that your product, process or service conforms to the legal requirements set out in the relevant Canadian standard.

Suppliers and manufacturers have an obligation to make sure products are safe. Products must meet relevant safety standards, have clear instructions for proper use and include warnings against possible misuse.

The (SCC) oversees °ä²¹²Ô²¹»å²¹â€™s National Standards System which implements standards in Canada.

Canada has 4 accredited standards development organisations. These are:

• (CSA)
• (ULC)
• (CGSB)
• (BNQ)

Product liability insurance for doing business in Canada

You should consider taking out if you manufacture or supply a physical product.

Packaging regulation in Canada

Packaging must meet the requirements that are set out in °ä²¹²Ô²¹»å²¹â€™s . Consumer products must comply with the .

Used sacks, bags, canvas and other similar packing materials cannot be used as packaging.

Labelling your products for Canada

Labels for consumer goods must include:

• product identity declaration in both French and English
• net quantity in metric units
• supplier’s name and address

Products sold in ²Ï³Üé²ú±ð³¦ must have French labelling displayed in equal prominence to English. This requirement extends to:

• all labelling
• warranty certificates
• product manuals
• instructions for use

Find out about .

Find out about labelling for .

Any claims about a product being ‘environmentally friendly’ must meet °ä²¹²Ô²¹»å²¹â€™s guiding principles on use of environmental labelling.

Protecting your intellectual property (IP) in Canada

Trademarks, designs, patents and copyright are the principal forms of IP available under common law in Canada. They are all governed by legislation.

Find out about .

Taxation in Canada

The UK and Canada have signed a double taxation agreement.

This agreement should, in most cases, prevent any double tax liability from UK and Canadian authorities over the same income.

UK companies operating in Canada will be subject to local taxation requirements.

The (CRA) has overall responsibility for taxation in Canada, but this responsibility is shared with the provinces and territories.

Value Added Tax (VAT) on goods exported to Canada

You can zero-rate the sale of your goods to Canada, provided you get and keep evidence of your export, and comply with all other laws. You must also make sure the goods are exported, and you must get the evidence within 3 months from the time of sale.

Goods and services tax (GST) and harmonised sales tax (HST) in Canada

°ä²¹²Ô²¹»å²¹â€™s is levied at 5% for most Canadian provinces. GST is imposed on the supply of goods and services purchased in Canada, and it’s often included in the price of sales to customers.

HST is a consumption tax, used in provinces where both the federal GST and the regional provincial sales tax (PST) have been combined into a single value added sales tax. HST is charged at 13% in Ontario, and is levied at 15% in:

• New Brunswick
• Newfoundland and Labrador
• Nova Scotia
• Prince Edward Island

²Ï³Üé²ú±ð³¦ places an additional levy called (QST) on top of GST.

°ä²¹²Ô²¹»å²¹â€™s provinces and territories can exempt different items from these taxes.

Excise duty in Canada

You should check you’ve paid excise duty on any alcohol, fuel, tobacco or other excise equivalent products you send to Canada.

Find out more about excise duty and duty drawback outside the EU.

Find out about .

Company and corporate tax in Canada

The basic federal corporation tax rate is 38% of taxable income. However, after potential abatements and reductions the net rate is 15%.

Provinces and territories operate a setting their own higher and lower income tax rates.

and (in French only) do not have corporate tax collection agreements with the CRA.

Find out more about .

Customs and documentation in Canada

Complying with HMRC regulations to export to Canada

You must make export declarations to HMRC through the National Export System (NES) to export your goods to Canada.

Find out how to declare your exports to Canada through the NES.

You must classify your goods as part of the declaration, including a commodity code and a Customs Procedure Code (CPC).

Contact the HMRC Tariff Classification Service for more help on tariffs.

Benefiting from preferential tariff treatment in Canada

UK goods exported to Canada may benefit from new preferential duties if they meet rules of origin requirements.

An origin declaration must accompany the goods, and appear on a commercial document (excluding the bill of lading) or invoice. You must use the origin declaration text on p485 of .

You must be a registered exporter to make an origin declaration for consignments above €6,000. You must use your registered exporter number (as the customs authorisation number) in your origin declaration.

If the consignment value falls below €6,000 you should include your registered exporter or approved exporter number in the origin declaration, if you have one. Otherwise the reference to the customs authorisation number on the origin declaration must be deleted or left blank.

HMRC has pre-registered all UK exporters holding a valid Economic Operator Registration and Identification (EORI) number who exported goods to Canada during 1 December 2015 to 1 December 2016.

Approved exporter numbers are valid until 21 December 2017. A registered exporter number will be required after 21 December 2017 to support preferential duty claims

If you have not been pre-registered you can apply to be become a . You’ll need:

• your EORI number
• your approved exporter number (if you have one)
• the first 2 or 4 digits of the commodity codes of the goods that you trade in

Temporary export of goods to Canada

You can use an ATA (temporary admission) Carnet to simplify the customs procedures needed to temporarily take goods into Canada. Temporary exports mean you can take your products into another country under strict time limits, usually as commercial samples or for display at exhibitions.

You’ll need a licence to temporarily take any goods on the UK export controls lists to Canada. This includes goods for:

• demonstration
• exhibition
• use in repair or maintenance

If the items aren’t being returned to the UK, you’ll need a permanent export licence.

Find out more about .

Customs in Canada

The (CBSA) regulates all goods imported into Canada. CBSA provides a step-by-step guide to .

Find out which federal government departments and agencies are responsible for granting .

The provides information on import conditions into Canada, including:

• import tariffs
• customs clearance formalities and documentation
• sanitary (animal related) and phytosanitary (plant related) restrictions

Documentation in Canada

Documents needed to clear customs include:

• a Canada customs invoice or equivalent
• form B3, Canada customs coding form
• a cargo control document
• a bill of lading
• relevant permits or certificates

Help with shipping your goods to Canada

If you’re not knowledgeable about international shipping procedures, you can use a freight forwarder to move your goods. A forwarder should have extensive knowledge of documentation requirements, regulations, transportation costs and banking practices in Canada.

Find out about .

Posting goods to Canada

Find out about to Canada.

Shipping dangerous goods to Canada

Special rules apply if you’re shipping dangerous goods to Canada.

Terms of delivery to Canada

You must have a clear written contract to minimise the risk of misunderstanding in international commercial transactions.

Incoterms are a series of widely used commercial terms for international trade in goods, which set out:

• where the goods will be delivered
• who arranges transport
• who is responsible for insuring the goods, and who pays for insurance
• who handles customs procedures, and who pays any duties and taxes

Find out more about agreements on terms of delivery using Incoterms.

The International Chamber of Commerce (ICC) publishes the .

Incoterms do not cover contracts for the delivery of services.

Contracts for the international delivery of services should focus on desired outcomes such as what the service should achieve. This should be part of a service level agreement in your contract.

Reporting a trade barrier in Canada

Regulatory, tariff or technical barriers in an overseas market can make imported goods and services less competitive than those produced locally.

Language and culture in Canada

Canada was the first country in the world to adopt an official policy of multiculturalism. It’s officially a bilingual country. The official languages spoken are English and French, but English is widely spoken outside of ²Ï³Üé²ú±ð³¦ province.

French is the language of business in ²Ï³Üé²ú±ð³¦ under provincial law. Therefore you may need an interpreter for business meetings in ²Ï³Üé²ú±ð³¦ if you do not speak French fluently.

Both French and English translations should be included on business cards in ²Ï³Üé²ú±ð³¦.

Businesses with 50 employees or more in ²Ï³Üé²ú±ð³¦ must register with the and provide satisfactory evidence to the government that workplace communications are in French.

First-name terms tend to be the norm in most business situations. However, culture does vary between °ä²¹²Ô²¹»å²¹â€™s provinces and territories as Canadians can identify very closely with their province.

Business communication is quite direct in Canada. Your own communications should also be direct and succinct.

Entry requirements for Canada

You must have a valid passport and an Electronic Travel Authorization (eTA) before travelling to Canada.

Find out about .

Travel advice for Canada

If you’re travelling to Canada for business, check the Foreign and Commonwealth Office (FCO) travel advice first.

DIT contacts for Canada