Background

Amendments to the CBSA’s Valuation for Duty Regulations (Regulations) first proposed, and subject to public consultation, in May 2023 continue to hang in the balance (Amendments). In December 2025, the Canada Border Services Agency (CBSA) released a summary (CBSA Summary) of proposed revisions to the Amendments (Revisions), open for consultation with stakeholders until January 23, 2026 (2025 Consultation). In 2023, we wrote about the Amendments in detail here and in December, we wrote about the 2025 Consultation here.

While the CBSA has not followed the typical legislative process for amending regulations, and has not made available the legislative text of the Revisions to the Amendments, the text has recently circulated publicly. We have reviewed the text and this article provides our insights and predictions on the Amendments.

Overview of the Amendments and the Revisions

The Amendments define the “sale” to be used when selecting the declared value for duty of goods imported into Canada. By proposing a “last sale” approach to customs valuation, the Revisions define “sold for export to Canada” as goods subject to an:

“agreement, understanding or any other type of arrangement – regardless of its form – for the transfer of ownership of the goods, in exchange for payments, for the purpose of exporting them to Canada, regardless of whether the transfer of ownership of the goods is completed before or after the goods are imported.”

The definition uproots a 25 year old finding by the Supreme Court of Canada that the relevant “sale for export” is the sale by which title to the goods passes to the importer. If/when the Amendments have the force of law, the relevant sale for export will be the last transfer of ownership in a series of transactions. However, the proposed legislative text exempts specific agreements/arrangements from the definition of “sold for export to Canada”.  

The Amendment’s definition of “purchaser in Canada” remains unchanged by the Revisions:

“in respect of goods that are subject to an agreement, understanding or any other type of arrangement, referred to in [the definition of ‘sold for export to Canada’], the person who, under that agreement, understanding or other type of arrangement, purchases or will purchase the goods, regardless of whether the person is the importer of the goods or when the person makes payments for the goods.”

During a 2023 consultation on the Amendments, a significant criticism arose: the Amendments may have required importers to declare the value of a Canadian domestic sales transaction (between a Canadian resident seller and a Canadian resident purchaser). The Revisions appear to address this criticism by exempting sales between two persons who are each either an individual residing in Canada or an entity that meets a list of criteria demonstrating it has a “substantial presence” in Canada (Substantial Presence Criteria).

The CBSA has not advised whether the Amendments will be subject to further revisions, when the Amendments will enter into force, and whether importers will be provided time to review their supply chains against the Amendments prior to them coming into force.

From a supply chain planning perspective, customs and tax liability will continue to dictate the structure of Canadian operations. While historically, valuation disputes with the CBSA have focused on determining the proper “purchaser in Canada” to identify the correct transaction for customs valuation, the Amendments shift the focus to the new definition of “sold for export to Canada”. Importers will now be required to determine the last transfer of ownership, subject to the legislative exemptions, as the correct transaction for customs valuation. 

The Amendments will challenge historical ways of doing business in Canada, especially for those entities with centralized administrative, management and procurement functions located outside Canada. In particular, entities with a historically thin operational presence in Canada will need to weigh the costs of (1) whether to increase their Canadian operational presence in order to rely on a lower value upstream sale transaction for valuation purposes; or (2) remove or maintain their current operational presence and rely on a higher downstream sale transaction for valuation purposes. 

FAQs

1. Our business imports goods into Canada. Are the Amendments relevant?

Yes – If you are importing goods and valuing those goods using the transaction value method (TVM), then you should review the Amendments. In order to rely on the TVM, there must be a “sale for export to a Purchaser in Canada”. The Amendments seek to define “sale for export” and “Purchaser in Canada”. The existing definition of “Purchaser in Canada”, will substantially change if the Amendments enter into force as drafted. 

2. Our importing business does not value goods using the transaction value method (TVM). Are the Amendments relevant?

No. Assuming your valuation methodology is correct, then the Amendments will not impact your valuation methodology. The Amendments seek to define “sale for export” and “Purchaser in Canada”, which are only relevant to valuation under the TVM.

3. Our importing business relies on intercompany transfer pricing as the declared value for duty. Are the Amendments relevant?

Resellers relying on the TVM and declaring the transfer price of a sale transaction between a foreign entity and a Canadian affiliate as the value for duty, may be impacted by the Amendments.

Resellers must carefully review the Substantial Presence Criteria (see Q&A #5) in order to determine whether the Canadian affiliate has a sufficient presence in Canada. If the Canadian affiliate does not have a sufficient presence (i.e. does not meet all the Substantial Presence Criteria), a subsequent transaction between the Canadian affiliate and a customer will not be exempt from consideration as the ‘sale for export’ (the last transfer of ownership). This would result in the value of the further downstream sale transaction (i.e. between Canadian affiliate and its Canadian customers), and not the intercompany sale, to be declared as the value for duty.

4. Our importing business was previously subject to a trade compliance verification on valuation (i.e. an audit) by the CBSA and determined to have a permanent establishment in Canada. Are the Amendments relevant?

Yes. If the Amendments come into force as drafted, then businesses should reassess which transaction is the proper “sale for export” for customs valuation purposes. In particular, if a business is reliant on previous findings by the Canadian International Trade Tribunal (i.e. Delta Galil USA Inc., v. President of the CBSA and G-III Apparel Canada ULV v. President of the CBSA) to operate in Canada with a permanent establishment using a dependent agent, then it must reconsider whether, in light of the Amendments, it is correctly declaring the value of the relevant sale for export. 

5. What factors does a business have to meet to be considered to have a “substantial presence” in Canada?

While the proposed legislative text of the Substantial Presence Criteria has not been made widely public, we have included a summary below. Based on the proposed legislative text, an entity/ partnership/ organization must meet all of the following Substantial Presence Criteria in order to have a “substantial presence” in Canada:

1. The primary place of business, where employees work, is located in Canada (PPB). The PPB is not a branch office or a place of business of its representatives, brokers, consultants, agents, mandataries or other intermediaries;
2. Goods are ordered and purchased from the PPB;
3. Employees of the PPB have authority to make decisions on the businesses’ purchasing and payment of imported goods and day-to-day operations in Canada;
4. Employees of the PPB process requests from Canadian customers regarding imported goods, including defects and returns;
5. Records, including books of account, are maintained in Canada;
6. The primary bank accounts are held in Canada;
7. There are fixed assets in Canada; and
8. The entity/partnership/organization is liable to pay income tax in Canada.

Notably, the CBSA Summary does not advise that the criteria are conjunctive. The legislative test specifically includes the word “and”, meaning that an entity must meet all of the criteria in order to have a “substantial presence” in Canada. At this time, the CBSA has not provided any detailed guidance on the interpretation of these factors. 

6. What agreements/ arrangements are exempt from the definition of “sold for export to Canada”?

The CBSA has incorporated a policy document into the proposed legislative text, which if enacted, would give it the force of law, to exempt certain agreements/arrangements (D13-1-4, Agreements, Understandings or Arrangements That Do Not Meet the Definition of Sold for Export to Canada). This policy document is not yet published; however, the CBSA Summary provides that the an agreement/arrangement referred to in the Amendments does not include an agreement/arrangement:

1. that provides goods free of charge (for example, gifts, samples, promotional items)
2. in respect of consignment goods, where a consignee has been authorized to sell the goods on behalf of the owner of the goods (the consignor)
3. that pertains to the importation of the goods by an intermediary (for example, sales agent), who never purchases the goods, for sale on behalf of the supplier
4. between persons that are not separate legal entities (for example, branches), in respect of the importation of the goods
5. for the provision of goods in accordance with a leasing or rental contract
6. in respect of goods supplied on loan, which remain the property of the sender
7. for the destruction of goods (for example, waste or scrap), where the goods are not purchased but rather the sender pays for the destruction services

These are the exclusions identified in Advisory Opinion 1.1 of the World Customs Organization’s Customs Valuation Compendium. If the last sale in a series of transactions causing goods to be imported into Canada is included on this list, then an importer cannot rely on the TVM and must apply the next applicable valuation method, as set out under the Customs Act. 

7. Will the Amendments be subject to further revision?

The CBSA has not provided any details regarding its ongoing consultation process (closes on January 23, 2026). However, the comments by industry stakeholders in the 2023 consultation resulted in the Amendments. We expect that the CBSA may continue to further refine the Amendments to address stakeholder comments, or will consider providing guidance

8. When will the Amendments be in force? Will our business have advance notice?

The CBSA has not provided any details regarding its ongoing consultation process (which closes on January 23, 2026) and has not advised of a possible coming into force date or whether there will be a period of time for importers to adjust their supply chains.

9. Will the CBSA issue guidance?

We expect that the CBSA will issue, in addition to the Departmental Memoranda incorporated into the Amendments, guidance on the application of the final amended Valuation for Duty Regulations. In particular, the CBSA will, at the very least, be required to amend the existing guidance on customs valuation regarding the concept of a “Purchaser in Canada”. The guidance may shed further light on the Substantial Presence Criteria, by providing examples of particular business structures which, in the eyes of the CBSA, evidence a substantial presence in Canada.