Revisiting "Sale For Export To Canada" And "Purchaser In Canada" Concepts For Customs Valuation: CBSA Consultations Now Open On Revisions To Proposed Amendments To The Valuation For Duty Regulations

On December 3, 2025, the Canada Border Services Agency (the "CBSA") opened consultations on three revisions to the proposed amendments to the Valuation for Duty Regulations ("Regulations") under theCustoms Act ("Act") until January 23rd, 2026 ("Proposed Revisions").¹

These consultations mark a renewed opportunity for stakeholders to comment on the proposed amendments following the previous consultations cycle that took place between May and July 2023.²

Summary

• The Proposed Revisions re-open CBSA's attempt to address concerns that non-resident importers are in a potentially advantageous position as compared to domestic importers given the legal landscape of decisions from the Canadian International Trade Tribunal and the Supreme Court of Canada in how 'sale for export' has been defined.
• Under proposed Revision 3, sales between "two persons located in Canada" are excluded from being considered the 'last sale' under the Transaction Value Method ("Method 1").
• There remains ambiguity in whether certain sales would be captured as the 'last sale' for valuation purposes given that:
  • 'Any other type of arrangement' can be interpreted very broadly and potentially capture future bookings;
  • The specified criteria for 'located in Canada' is cumulative and key terms are undefined, such as "having decision making power over day-to-day operations in Canada" and "keeping books and records in Canada"; and
  • 'Branch' is now in effect excluded from the 'purchaser in Canada' definition; under the current Valuation for Duty Regulations the definition of "permanent establishment" includes a place of management or a branch.
• The restrictive and limited nature of the current consultation, given that the draft text of the Regulations has not been made available for public review, raises transparency and process concerns and impairs the ability of stakeholders to make meaningful contributions in the consultation process.

Background

Value for Duty ("VFD") is the starting point for calculating the dutiable base and consequently any duties and taxes owed on import. Every item that is imported into Canada must have a declared VFD in accordance with the Act.³ However, modern e-commerce and supply chains have presented challenges for the CBSA as transactions have become multi-layered. In an attempt to address concerns that imports were being undervalued by relying on an earlier sale in the transaction as the "sale for export", CBSA proposed changes to the Regulations to level the playing field between Canadian businesses and importers first in 2021 and then again in 2023.⁴

Currently, non-resident importers ("NRIs") may declare a lower VFD based on an earlier sale price in the supply chain (often the manufacturer's price) rather than the downstream price paid by the Canadian buyer. The amendments aim to clarify and ensure valuation is based on the transaction that causes the goods to be exported to or purchased in Canada, potentially imposing higher VFD rates on NRIs who currently declare purchase prices from foreign suppliers rather than from their sale prices to buyers in Canada. While potentially recoverable, a higher VFD will also mean higher Division III tax (GST) on imports which can impact the financial security amount that businesses need to post before importing.

The amendments proposed in 2023 sought to "protect the competitiveness of Canadian businesses"⁵ by revising the meanings of "purchaser in Canada" and "sold for export in Canada" under the Regulations.⁶ However, stakeholders criticized the earlier drafted amendments for vague language and uncertainty regarding how they might apply to domestic sales.

In particular, stakeholders expressed concerns relating to:

• uncertainty for importers,
• misalignment with the World Trade Organization Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade (GATT) 1994 ("WTO Valuation Agreement"),
• the need to reveal confidential pricing information,
• increased costs for businesses, and
• increased inflation to Canadians due to increased VFD.⁷

In response to these concerns, CBSA has now issued the Proposed Revisions. CBSA has not yet publicly released the updated draft Regulations, instead only sharing a summary of the Proposed Revisions for consultation.

Proposed Revisions to the Amendments to the Valuation for Duty Regulations

The Proposed Revisions seek to clarify which sale should be used to calculate VFD on imported goods. CBSA is seeking comment on three revisions to the prior amendments:

1. Defining Sale

Revision 1 seeks to address stakeholder concerns that the 2023 proposed amendments were not aligned with guidance on the WTO Valuation Agreement from the World Customs Organization (the "WCO"). The revision clarifies situations that would be excluded from the definition of "sale for export to Canada". Specifically, in line with the WCO's Customs Valuation Compendium Advisory Opinion 1.1, an agreement, understanding or any other type of arrangement will not be considered a sale if it provides for:

• Goods provided free of charge (samples, gifts),
• Consignment goods where the consignee is authorized to sell the goods on behalf of the consignor,
• Importation of goods by an intermediary, who never purchases the goods (sales agents), for sale on behalf of the supplier,
• Transactions between non-separate legal entities (branches) in respect of imported goods,
• Goods in accordance with leasing or rental agreements,
• Goods supplied on loan that remain the property of the sender, or
• Goods imported for destruction (scrap/waste) where the goods are not purchased but the supplier pays for the destruction services.⁸

2. Exclusions to "Sales for Export to Canada"

The amendments will further clarify that if an excluded situation would have been the last sale for export, the goods will no longer meet the "sold for export to Canada" requirement. Method 1 will not be available to calculate the VFD. Consequently, importers will not be available to be used for an earlier sale in the transaction chain and must use a subsequent valuation method under the Act, such as the Transaction Value of Similar or Identical Goods, the Deductive Value Method, the Computed Value Method or the Residual Method.

The amendments will conversely require that where the excluded situation occurs earlier in the chain, the last sale will be used for valuation.

3. "Purchaser in Canada"

Lastly, Revision 3 proposes a new subsection that excludes sales between two persons "located in Canada" from being considered when identifying the last sale for export on which the VFD is calculated. This exclusion applies to domestic sales between two entities with 'substantial presence' in Canada.

Under Revision 3, a business will be "located in Canada" only if it has a 'substantial presence' in Canada, determined by the following specified conditions:

• A primary place of business physically located in Canada (not through a branch or agent),
• Decision-making authority over day-to-day operations in Canada,
• Ordering and purchasing functions carried out at its place of business in Canada,
• Handling requests, such as defects and returns, in Canada,
• Books and records kept in Canada,
• Primary bank accounts in Canada,
• Ownership of fixed assets in Canada, and
• Payment of income tax in Canada.

These criteria could lead to arbitrary results. For example, what if a US company primarily based in the USA has a "branch" in Canada with 500 employees and has many physical locations (retail stores, offices, and/or warehouses) in Canada? Would the branch not have a substantial enough presence in Canada to be considered located in Canada because the company's primary place of business is physically located in the USA?

The exclusion for the above-listed sales will only apply in a series of sales scenario. Where there is only one sale between two persons located in Canada which leads to the goods being exported to Canada, that sale price will continue to form the basis to calculate VFD under Method 1.

Implications for Businesses and Next Steps

The proposed changes represent a major shift in valuation rules and could potentially result in unintentional non-compliance given the ambiguity in the language, increased liability for duties and taxes or administrative burden if an alternative valuation method must be used to calculate VFD.

Though CBSA has clarified some of the key concerns stemming from the 2023 consultations period, certain considerations remain unclear. For instance, e-commerce drop-shipment models will likely be captured under the revised amendments,⁹ impacting valuation based on the sale to the Canadian end customer. CBSA has similarly not yet clarified how the "located in Canada" rules will apply when subsidiaries have a foreign board of directors; or key definitions such as "keeping records in Canada" or "decision making power in Canada".

CBSA may release additional guidance to address residual uncertainties in the revised amendments. In the interim, businesses should review their import valuation practices and consider the potential financial and operational impacts of these proposed changes, submitting comments to CBSA where practicable.

Any interested parties and stakeholders are encouraged to provide their written comments on the draft amendments via email to ctpd/dpsce@cbsa-asfc.gc.ca, and complete CBSA's questionnaire, by January 23, 2026.

McMillan LLP remains available to advise on how the revised proposed amendments may impact your business and to assist in drafting consultations submissions.

Footnotes

1. Canada Border Services Agency, Share Your Thoughts: Consultation on Revisions to Previously Proposed Amendments to the Valuation for Duty Regulations(December 3, 2025).

2. For a comprehensive overview of the previous amendments, please see McMillan's prior bulletin: CBSA's Proposal to Modernize the Valuation for Duty Regulations (June 7, 2023).

3. Canada Border Services Agency, Valuation (October 23, 2024).

4. Government of Canada, Consultation Notice: Potential Regulatory Amendments to the Valuation for Duty Regulations (July 5, 2021).

5. Canada Border Services Agency, The CBSA proposes changes to regulations to protect the competitiveness of Canadian businesses (May 29, 2023).

6. See McMillan's prior bulletin: CBSA's Proposal to Modernize the Valuation for Duty Regulations (June 7, 2023).

7. Canada Border Services Agency, What we heard report: Proposed regulatory amendments to the Valuation for Duty Regulations (May 8, 2025).

8. Canada Border Services Agency, Annex: Agreements, understandings or arrangements that do not meet the definition of sold for export to Canada (December 3, 2025).

9. Given that the drop-ship model ordinarily does not include a business with a substantial presence in Canada.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2025