De minimis values, demystified.

Cross-border e-commerce has generated enormous economic opportunities for the global economy. Online sales have grown over the past few years, accelerating during the pandemic. Growth is expected to continue, fuelling cross border sales and a surge in e-commerce shipping – and it’s important for companies to be aware of (and understand) de minimis threshold value guidelines, including express shipment exemptions.

De minimis is a Latin word meaning “lacking significance or importance: so minor as to merit disregard”. De Minimis thresholds are minimum values, over which customs duties and tax rates apply on imported goods. De minimis levels vary between countries, and duty and taxes can be avoided if the value of the shipment doesn’t exceed the de minimis value.  

Imported goods shipped into Canada by courier with a total below CA$40 are both tax and duty exempt, under de minimis thresholds; for goods valued between CA$40 and CA$150, only tax will be collected. Goods over CA$150 are subject to both duty and taxes. The de minimis level for postal service shipments is CA$20, no tax or duty. (Regulatory outlines can be found in the Postal Imports Remission Order and the Courier Imports Remission Order. Procedures for express shipments are also outlined in United States-Mexico-Canada (USMCA) Agreement Article 7:8.)

The Courier Low Value Shipment (CLVS) program provides additional benefits for shipments valued at under CA$3,300. Designed for express shipment clearance, the CLVS streamlines the reporting, release, and accounting procedures for certain goods transported by courier. The courier company must be authorized by Canada Border Services Agency (CBSA) in order to participate.  (Please note that the CBSA is revamping the CLVS program to accommodate e-commerce transactions, and has placed a moratorium on participation applications, effective June 3, 2019 and until further notice.) 

Canada was one of the leading countries in e-commerce retail sales growth in 2020 (Argentina 100.6%, Canada 75%, Singapore 73.6%, and Mexico 65.2%). Canadian e-commerce retail sales are forecasted to reach CA$96 billion in 2022, and CA$128.2 billion by 2025. In 2021 there were over 27 million digital buyers in Canada, meaning that 72.5% of the population purchased goods and services online; that number is expected to reach 77.6% in 2025. And about 56% of Canadian online shoppers are buying from the U.S., with the average number of purchases increasing from 5.3 to 8.7 in 2021.

As e-commerce adoption accelerates, so too will the volume of goods shipped across border – and many will be low-value shipments that qualify for tax and duty exemptions. De minimis thresholds were increased under USMCA to allow for greater access to the Canadian market, facilitate clearance, and expedite the importation process. Higher de minimis levels are also a potential cost saving to the consumer.

With Canada ranked as one of the top countries in e-commerce retail sales growth, higher numbers of Canadians engaging in cross-border shopping, and higher de minimis threshold values, there are opportunities for U.S.-based companies to expand in the Canadian market. Companies interested in learning more and exploring best options for their businesses should consult with a customs broker or other trade advisors. 

Disclaimer

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