Form B228 "North American Free Trade Agreement (Nafta) Origin Verification Questionnaire Regional Value Content - Net Cost Method" - Canada

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Download Form B228 "North American Free Trade Agreement (Nafta) Origin Verification Questionnaire Regional Value Content - Net Cost Method" - Canada

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NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA)
ORIGIN VERIFICATION QUESTIONNAIRE
REGIONAL VALUE CONTENT — NET COST METHOD
DISPONIBLE EN FRANÇAIS
~
DISPONIBLE EN ESPANOL
B228 E (01)
Printed in Canada
Questionnaire confidential when completed
NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA)
ORIGIN VERIFICATION QUESTIONNAIRE
REGIONAL VALUE CONTENT — NET COST METHOD
DISPONIBLE EN FRANÇAIS
~
DISPONIBLE EN ESPANOL
B228 E (01)
Printed in Canada
NAFTA ORIGIN VERIFICATION QUESTIONNAIRE
REGIONAL VALUE CONTENT — NET COST METHOD
GENERAL INFORMATION
Purpose
The purpose of this questionnaire is to request that you provide the Canada Customs and Revenue Agency (CCRA) with the
information that you used to determine your eligibility for North American Free Trade Agreement (hereinafter referred to as "the
NAFTA"). This information is required to conduct a verification of origin of specified goods imported into Canada, pursuant to
Article 506(1) of the NAFTA, for which a claim for preferential tariff treatment was made on the basis that the goods originate in
the NAFTA territory as a result of meeting a rule of origin under paragraphs 4(2)(b) or (c), or subsection 4(4), of the NAFTA
Rules of Origin Regulations (hereinafter referred to as “the Regulations”), requiring that the regional value content based on the
net cost of the good minus the value of non-originating materials divided by the net cost of the good is not less than a specified
percentage (e.g. 50%).
Producers and suppliers of automotive goods are, in addition to the general rules, required to comply with the rules of origin set
out in Part V of the Regulations and shall in accordance with those rules of origin, complete this questionnaire with such
modifications as are appropriate.
CCRA may further verify the origin of the goods and/or determine the accuracy of any or all of the information provided in the
completed questionnaire by sending a subsequent verification questionnaire or verification letter, and/or conducting a verification
visit in accordance with Article 506(1) of the NAFTA.
Where materials used in the production of a good are obtained from suppliers in respect of which the exporter/producer claims
that such materials are originating, it is incumbent upon that exporter/producer to substantiate the basis on which that claim was
made. The exporter/producer may substantiate such a claim on the basis of a written representation from the supplier of the
materials that the materials qualify as originating in respect of which the exporter/producer may be reasonably entitled to rely. As
part of the overall verification process, the suppliers of those materials may be requested to complete a verification questionnaire
and/or be the subject of a verification visit by CCRA.
A failure to maintain records relating to the origin of the goods that are the subject of the verification, for five years after the date
on which the Certificate of Origin was signed, or a denial of access to such records may, pursuant to Article V(4) of the Uniform
Regulations for the Interpretation, Application and Administration of Chapters Three (National Treatment and Market Access for
Goods) and Five (Customs Procedures) of the NAFTA, result in a denial of preferential tariff treatment to the goods.
This questionnaire must be completed and returned by the date specified in the covering letter accompanying the questionnaire.
Where CCRA does not receive the completed questionnaire within this specified time period, it may, subject to Paragraghs 16
through 18 of Article VI of the Uniform Regulations for the Interpretation, Application and Administration of Chapters Three and
Five (Customs Procedures) of the NAFTA, deny preferential tariff treatment to the goods that are the subject of the verification of
origin.
This questionnaire will, pursuant to Article VI (31)(a) of the Uniform Regulations for the Interpretation, Application and
Administration of Chapters Three (National Treatment and Market Access for Goods) and Five (Customs Procedures) of the
NAFTA, in addition to verifying the origin of the goods, also be used to verify the applicable rate of customs duty applied to an
originating good in accordance with the rules set out in Annex 302.2 of the NAFTA.
Questionnaire
The questionnaire is divided into three sections:
Section A , entitled Net Cost Method , is required to be completed in all cases where the goods are claimed to originate in the
territory of the NAFTA countries as a result of meeting a rule of origin under paragraphs 4(2)(b) or (c), or subsection 4(4) of the
Regulations and where the net cost method is being used to determine the regional value content of the goods. A general
information form is also included such that CCRA may obtain additional information about the goods that are the subject of the
origin verification.
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Regional Value Content – Net Cost Method
General Information
Section B , entitled Intermediate Material , is required to be completed only where the producer of the good designates as an
intermediate material, in accordance with subsection 7(4) of the Regulations, any self-produced material that is used in the
production of the good. Where more than one intermediate material is designated, a separate set of Section B forms are required
to be completed for each intermediate material designated. Instructions on the Section B summary form should be followed to
carry forward the totals to the Section A forms.
Section C , entitled De Minimis Calculation , is required to be completed by the exporter/producer of the goods only where
preferential tariff treatment was claimed on the basis that the goods qualify as originating goods pursuant to section 5 (De
Minimis provision) of the Regulations.
Where there is insufficient space in this questionnaire to adequately respond to a request for information, photocopy and attach
the relevant page appropriately numbered and cross-referenced.
Additional Information
For additional information and/or clarification regarding the completion of this questionnaire, please contact the CCRA official
identified in the covering letter accompanying the questionnaire.
Confidentiality
CCRA shall, in accordance with Article 507 of the NAFTA, protect the confidentiality of all confidential business information
submitted in this questionnaire, and shall not, under any circumstances, disclose such information to a third party without prior
consultation with your company.
Currency
All currencies reflected in this questionnaire shall, where the value of a good or a material is expressed in a currency other than
the currency of the country in which the producer is located, be converted to the currency of the country in which the producer is
located in accordance with section 3 of the Regulations. Please identify the currency used to complete the questionnaire.
Definitions
The following definitions contained in this questionnaire are intended for reference purposes only. In the event of any
inconsistency with the definitions set out in section 2 or any section of the Regulations, the definitions and/or section set out in
the Regulations shall take precedence.
"accumulation" means, for purposes of determining whether a good is an originating good, the combining of production is
respect of that good by one or more producers in the territory of one or more of the NAFTA countries so as to be considered the
production of one producer.
"applicable change in tariff classification" means, with respect to a non-originating material used in the production of a good,
a change in tariff classification specified in a rule set out in Schedule I of the Regulations for the tariff provision under which the
good is classified.
"fungible goods or fungible materials" means goods or materials that are interchangeable for commercial purposes and the
properties of which are essentially identical.
"Harmonized System" means the Harmonized Commodity Description and Coding System, including its General Rules of
Interpretation, Section Notes and Chapter Notes as adopted and implemented by Canada under the Customs Tariff.
"intermediate material" means a self-produced material that is used in the production of a good and is designated as an
intermediate material under subsection 7(4) of the Regulations.
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General Information
Regional Value Content – Net Cost Method
"net cost" means total cost minus sales promotion, marketing and after-sales service costs, royalties, shipping and packing
costs and non-allowable interest costs that are included in the total cost.
"net cost of the good" means the net cost that can be reasonably allocated to a good using one of the methods set out in
Schedule VII of the Regulations.
"net cost method" means the method of calculating the regional value content of a good that is set out in subsection 6(3) of the
Regulations.
"non-allowable interest costs" means interest costs incurred by a producer on the producer’s debt obligations that are more
than 700 basis points above the yield on debt obligations of comparable maturities issued by the federal government of the
country in which the producer is located.
"non-originating good or non-originating material" means a good or material that does not qualify as originating under the
Regulations.
"royalties" means payments of any kind, including payments under technical assistance agreements or similar agreements,
made as consideration for the use of, or right to use, any copyright, literary, artistic, or scientific work, patent, trade-mark, design,
model, plan, secret formula or process, excluding those payments under technical assistance agreements or similar agreements
that can be related to specific services such as:
(a) personnel training, without regard to where performed; and
(b) if performed in the territory of one or more of the NAFTA countries, engineering, tooling, die-setting, software design and
similar computer services, or other services.
"sales promotion, marketing and after-sales service costs" means the following costs related to sales promotion, marketing
and after-sales service:
(a) sales and marketing promotion; media advertising; advertising and market research; promotional and demonstration
materials; exhibits; sales conferences, trade shows and conventions; banners; marketing displays; free samples; sales,
marketing and after-sales service literature (product brochures, catalogues, technical literature, price lists, service
manuals, sales aid information); establishment and protection of logos and trademarks; sponsorships; wholesale and
retail restocking charges; entertainment;
(b) sales and marketing incentives; consumer, retailer or wholesaler rebates; merchandise incentives;
(c) salaries and wages, sales commissions, bonuses, benefits (for example, medical, insurance, pension), travelling and
living expenses, membership and professional fees, for sales promotion, marketing and after-sales service personnel;
(d) recruiting and training of sales promotion, marketing and after-sales service personnel, and after-sales training of
customers’ employees, where such costs are identified separately for sales promotion, marketing and after-sales service
of goods on the financial statements or cost accounts of the producer;
(e) product liability insurance;
(f) office supplies for sales promotion, marketing and after-sales service of goods, where such costs are identified
separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts
of the producer;
(g) telephone, mail and other communications, where such costs are identified separately for sales promotion, marketing
and after-sales service of goods on the financial statements or cost accounts of the producer;
(h) rent and depreciation of sales promotion, marketing and after-sales service offices and distribution centres;
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Regional Value Content – Net Cost Method
General Information
(i) property insurance premiums, taxes, cost of utilities, and repair and maintenance of sales promotion, marketing and after
sales service offices and distribution centres, where such costs are identified separately for sales promotion, marketing
and after-sales service of goods on the financial statements or cost accounts of the producer; and
(j) payments by the producer to other persons for warranty repairs.
"shipping and packing costs" means the costs incurred in packing a good for shipment and shipping the good from the
point of direct shipment to the buyer, excluding the costs of preparing and packaging the good for retail sale.
"tariff classification" refers to the tariff classification, to the 6th or 8th digit level, as applicable, based on the Harmonized
System of tariff classification and statistical coding.
"territory" means, with respect to:
(a) Canada, the territory to which its customs laws apply, including any areas beyond the territorial seas of Canada within
which, in accordance with international law and its domestic law, Canada may exercise rights with respect to the seabed
and subsoil and their natural resources;
(b) Mexico,
(i) the states of the Federation and the Federal District,
(ii) the islands, including the reefs and keys, in adjacent seas,
(iii) the islands of Guadalupe and Revillagigedo situated in the Pacific Ocean,
(iv) the continental shelf and the submarine shelf of such islands, keys and reefs,
(v) the waters of the territorial seas, in accordance with international law, and its interior maritime waters,
(vi) the space located above the national territory, in accordance with international law, and
(vii) any areas beyond the territorial seas of Mexico within which, in accordance with international law, including the
United Nations Convention on the Law of the Sea and its domestic law, Mexico may exercise rights with respect to
the seabed and subsoil and their natural resources; and
(c) the United States,
(i) the customs territory of the United States, which includes the 50 states, the District of Columbia and Puerto Rico,
(ii) the foreign trade zones located in the United States and Puerto Rico, and
(iii) any areas beyond the territorial seas of the United States within which, in accordance with international law and its
domestic law, the United States may exercise rights with respect to the seabed and subsoil and their natural
resources.
"total cost" means the total of all product costs, period costs and other costs incurred in the territory of one or more of the
NAFTA countries. Note: Please refer to subsection 6(12) of the Regulations for further details on total cost and to section 2 of
the Regulations for definitions of product costs, period costs, and other costs.
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