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It's All about Compliance
Perhaps you have often asked yourself the following question: What do I have to do in order for my company to not only survive, but succeed in the year 2000 and beyond? You might be the CEO, the president or a decision maker in your organization. If you are reading this article you are definitely someone who is playing a vital role in your companys normal business operations.
It has also been said that knowledge is power. Well, that is not necessarily the case. Knowledge is not power unless it is put to use. Whatever the title or role you play in your company, there is a great likelihood that you are able to share your knowledge and be a positive influence in your companys success in international trade. Tremendous changes are taking place in Canada that will directly impact how your company will import and export raw materials, components, finished products or any other combination of goods. Change is not always easy. In fact, it is sometimes painful and costly. But sometimes change is really beneficial, and it can enhance ones competitiveness and chance for success in the international marketplace. Maybe you cant do it alone. Maybe you need to establish stronger partnerships with your suppliers, carriers, freight forwarders, customs brokers and customers. By involving these key stakeholders there is a greater chance of success. However, one major stakeholder typically always gets left out and that is the government.
Historically, when one looked at higher duty rates for imports into Canada, no one would deny that the government was a major partner in your cost of doing business. As duty rates have fallen over time and still continue to fall, where does that leave the government? It leaves the government with a major change in focus from the protection of revenues for the country to an increasing concentration on compliance. Whats all the fuss about compliance?
In the new world of doing business, the government will continue to be a vital stakeholder and will have a definite influence on your success or failure as a company. The government is desperately trying to sell compliance. Compliance can be looked at in two different ways. It can be looked at as an unfortunate cost of doing business or as a strategy that can make one more competitive. If the strategy is used properly it will enable you to import and export with greater ease and with lower cost and furthermore reduce your overall cycle time.
The way you view compliance will impact your decision about the resources you dedicate towards this initiative. According to Canadas Minister of National Revenue, the Honourable Martin Cauchon, Compliance is the key to our success. One school of thought may be: So what if customs picks up on a few administrative errors here and there? So what if the goods are described or classified incorrectly? It usually has no or very little duty and GST implication. The business must go on and any minor nuisance penalties are just the cost of doing business. Well, you better have pretty deep pockets to cover these so-called nuisance penalties. The Canada Customs and Revenue Agency (CCRA) is planning to implement something called the Administrative Monetary Penalty System (AMPS) in April 2001.
To ensure compliance, one of the tools that the CCRA will use will be responsible enforcement. The AMPS program will be a part of the modern sanctions program for Customs. It will consist of a series of graduated penalties for non-compliance ranging from initial warnings to a maximum fine of $25,000 per incident. Multiply that maximum penalty amount by the volume of your business, considering both imports and exports, and you quickly get the picture of what non-compliance will cost.
On the other hand, if compliance is given the attention that it deserves in the new world of doing business, significant benefits can be gained. Greater compliance results in fewer Customs inspections. This translates into shorter cycle times. This means getting your product to your customer more quickly and getting paid more quickly. Compliance can be used as a tool to gain a competitive edge over your competition. Sure, there is an investment to make. Do the cost benefit analysis and make the right business decision.