Print Print

UHY Study: Canadian consumers benefiting from low import duties

intl trade

(August 27, 2015) Consumers in Canada benefit from one of the world’s smallest import duty burdens, thanks to low import duties according to a new study by UHY, the international accounting and consultancy network.

UHY studied customs duties levied by 18 economies around the world as a percentage of each economy’s size as a simple indicator of the impact of a country’s trade barriers.

The study found that Canada charges import taxes equating to 0.21% of its GDP, compared to a global average of 0.48%, thanks largely to high levels of trade with other NAFTA members, the US and Mexico.

The NAFTA economies raised on average just 0.20% of their GDP in customs revenues. Comparatively, those EU nations surveyed levied on average 0.13% of their GDP in customs revenues.

The study also indicates that NAFTA continues to provide each member country with significant benefits to their respective economies. As the world’s largest free trade area, NAFTA gives North American consumers and businesses access to a market that rivals the EU in terms of its openness.

Ken Shemie, a Partner at UHY Victor LLP comments: “Our Canadian clients and indeed all Canadians benefit from our low import duty burden on goods from abroad, and businesses of course also benefit from the ability to export freely across the whole of NAFTA.”

Ken Shemie adds: “The governments of Canada, US and Mexico need to ensure that NAFTA continues to build on its strong base and increase trade and investment across its members. Ultimately this will raise the standard of living across North America. The benefits to Canadian consumers and businesses could be further enhanced if NAFTA makes progress in negotiating more effective trade agreements with other non-member trading partners.”

All three NAFTA members are currently participating in the Trans-Pacific Partnership negotiations, which seek to lower trade barriers and tariffs with nations across Asia, Oceania, and South America. Ken Shemie observes: “Multilateral organisations like the Association of South East Asian Nations and Mercosur in Latin America are becoming increasingly important. It is important that NAFTA makes progress in its negotiations on trade agreements if Canada’s exports to these growing markets are not to be left at a significant disadvantage. These negotiations have significant potential to benefit Canadian businesses.”

UHY notes that while the amount levied in duties is a useful measure of the impact of a country’s trade barriers, other factors can also have a bearing. For example, some countries may also impose additional taxes which disproportionately affect imports.

In China, in addition to higher import duty rates on foreign luxury goods, there is a consumption tax on goods such as alcohol, tobacco, cars and cosmetics; categories in which the most popular brands are often foreign.

In Brazil, as well as numerous import duties, some of the taxes affecting imports are calculated based on the value of the goods themselves plus the other taxes levied. This makes for a very complex system and high costs of import.

Conversely, many other economies are creating more Free Trade Agreements (FTAs) or customs unions with a more diverse range of countries in order to increase competitiveness. Many benefit from spreading their net far wider than purely their immediate geographical neighbours.

For instance, Mexico has a network of 10n FTAs with 45 countries, as well as 30 investment agreements and 9 other limited scope agreements. In contrast, the US has 14 FTAs with countries including Korea, Singapore and Morocco. Australia has just signed an FTA with China, one of its key trading partners, which should help it to reduce the import duty costs borne by consumers in line with other developed economies.

*Information on the total amount of customs duties received on imports only

COUNTRY CUSTOMS DUTIES COLLECTED US$ (millions) CUSTOMS DUTIES COLLECTED AS % OF GDP
India 30,000 1.78%
Jamaica 231 1.61%
Nigeria 4,988 0.96%
Russia 181,495 0.92%
Emerging economies average 0.82%
Uruguay 11,669** 0.74%
Global average 0.48%
Australia*** 7,236 0.46%
China 46,138 0.44%
Netherlands 2,400 0.38%
Canada 3,831 0.21%
Japan 9,755 0.21%
NAFTA average 0.20%
US 33,926 0.19%
Mexico 2,150 0.17%
Germany 6,327 0.16%
France 3,581 0.15%
Ireland 298 0.15%
Spain 1,780 0.15%
Major EU economies average 0.13%
Croatia 76 0.13%
Italy 2,691 0.13%
Denmark 452 0.12%
UK 2,900 0.11%
Brazil figures not available
UAE figures not available

**2012 tax year – the most recent data available
***tax year to 30 June 2013 – the most recent data available


For further information please contact Ken Shemie at kshemie@uhyvictor.com or click here for the international press release.



« back to news

FAQ

Why incorporate your business?

» more


What are the advantages of the Canada Revenue Agency (CRA) and Quebec Minister of Revenue Voluntary Disclosure Programs?

» more


How can I make my IRS payment?

» more


UHY VICTOR SENCRL • LLP
Société de comptables
professionnels agréés •
Partnership of Chartered
Professional Accountants

759, rue du Square-Victoria, #400
Montréal, Québec, H2Y 2J7
Canada

+1 514 282 1836

UHY VICTOR UHY VICTOR LLP (the “Firm”) is a member of Urbach Hacker Young International Limited, a UK company, and forms part of the international UHY network of legally independent accounting and consulting firms. UHY is the brand name for the UHY international network. The services described herein are provided by the Firm and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.