OTTAWA: Canada is missing out on more than $1.3 billion a year in tax and duties on e-commerce shipments, according to new research. The study by consultancy Copenhagen Economics found that there is a significant discrepancy in how packages sent to Canada are treated by customs, depending on if they are shipped via postal carriers or express services, such UPS or FedEx. The research, which was prepared on behalf of UPS, found that sales tax is collected on only 25 per cent of shipments sent through postal carriers, compared to 100 per cent on those done through express operators.
It also found that customs are only collecting import duties on six per cent of packages sent by postal carriers, which pales in comparison to the 98 per cent taken on those that arrive by express operator shipment. “We find that these shipments are treated differently at customs clearance, where sales tax (HST/PST) and import duty should be applied, depending on the type of delivery operator,” said the report. “We conclude that sales tax and import duty are significantly less likely to be collected when shipments are sent via postal versus express operators.”
E-commerce imports into Canada are subject to federal and provincial sales if the total value of the content of a shipment is more than $20. The same goes for import duties. To see if these charges were being universally applied, researchers shipped more than 200 online purchases to Canada from China, France, Japan, the United Kingdom and the United States, half using the national postal operator in the country of origin to Canada post and the other half using FedEx and UPS. All of the shipments contained “general consumers goods,” purchased from independent e-retailers that were subject to duty and sales tax. Some of the packages were valued at between $30 and $60, and some were worth $185 to $235. The research found that postal carriers were significantly more likely to collect duty and sales tax on the latter.
