Export Distribution Centre Program
The Export Distribution Centre Program enables qualified companies to import goods and/or acquire goods in Canada without paying the Goods and Services Tax/Harmonized Sales Tax (GST/HST) on purchases worth $1,000 or more, as long as they later export the goods. This program may be relevant to you if:
- You are registered for GST/HST purposes;
- Exports are at least 90% of your revenue (no producing or manufacturing);
- At least 90% of your operations in a fiscal year are commercial activities;
- You do not substantially alter property; and
- You add only limited value to goods (10% or less in non-basic services; or 20% or less in total).
As indicated above, “basic services” are distinguished from “non-basic services” when the value added is assessed. “Basic service” means a type of service that can be performed in a customs bonded warehouse, and include:
- disassembling or reassembling the goods, if they have been assembled or disassembled for packing, handling or transport;
- displaying, inspecting, labelling, packing, storing or testing the goods;
- removing a small sample of the goods to solicit orders for goods or services; and
- cleaning, diluting, maintaining, servicing, preserving, separating defective goods, sorting or grading, trimming, filing, slitting, cutting, and complying with any applicable law of Canada or a province, as long as the characteristics of the goods are not materially altered.
Generally speaking, if a service does not fulfil one of these functions, it is a non-basic service.
To apply to the program, complete GST Form 528, Authorization to Use an Export Distribution Centre, and submit it to the Verification Audit Enforcement Division (VAED) of the local Canada Revenue Agency Tax Services Office.
The VAED will contact you to review your application. Assuming the CRA authorizes you to use the EDCP, it will notify you in writing of the effective date and the expiry date of your authorization. You will be provided with an EDCP authorization number that you can use to purchase or import goods tax-free.
Note that you have to renew your EDCP authorization every three years. You do this by submitting GST Form 528 again to your nearest CRA Tax Services Office, at least three months before expiry.