B228 – North American Free Trade Agreement (NAFTA) Origin Verification Questionnaire Regional Value Content – Transaction Value Method

A link to the Portable Document Format (PDF) of this form is provided below. The content of the form is duplicated in HTML following the PDF link.

PDF (1.5 Mb) [help with PDF files]

Questionnaire confidential when completed

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.

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.
"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;
  • (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 thepoint 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.

Completion of the Origin Verification Questionnaire – Regional Value Content – Section A – Net Cost Method

The information requested in the questionnaire may be received by CCRA in any other suitable format. For example a bill of materials indicating the origin of materials, tariff classification, whether or not a change in tariff classification has been satisfied and the respective supplier names and addresses will be acceptable to CCRA instead of reproducing the information in the questionnaire. All information should be certified.

Step 1 – Confirm the Tariff Classification and the Applicable Rule of Origin for the Good Produced

Confirm the tariff classification (to the 6th or 8th digit level, as required by the applicable rule of origin) of the good produced. Refer to Schedule I of the Regulations to verify the applicable rule of origin.

Step 2 – Complete the Net Cost Method – Value of Materials Form

(A) Complete the top part of the form (name of producer, address, telephone number, facsimile number, name of good produced and the period covered). The tariff classification section should contain the tariff classification (to the 6th digit or 8th digit level, as applicable) of the good as established in Step 1.

(B) List all materials and the respective supplier names and addresses. List all suppliers when there is more than one supplier for a particular material. If the material is a non-originating material or a material of unknown origin, list the tariff classification number (to the 6th digit or 8th digit level, as applicable) for that material in the space provided.

(C) Indicate in the column provided, under the category "originating", "non-originating" or "origin unknown", the value of each material determined in accordance with subsection 7(1) of the Regulations.

(D) Indicate in the column provided whether or not the change in tariff classification for the non-originating materials or materials of unknown origin used in the production of the good has been satisfied. The value of the materials will remain non-originating or origin unknown for the purpose of the regional value content calculation.

(E) Add each column of Value of Materials and carry forward the totals to the appropriate columns in box A on the Net Cost Method – Summary form.

Step 3 – Complete the Net Cost Method – Net Cost of the Good Form

Note: For the purpose of this questionnaire, all costs associated with the value of materials are reflected under Step 2 of Section A and are thus not to be included in the calculation required under this Step.

(A) Complete the top part of the form.

(B) Complete the section identifying the major cost categories e.g. labour, overhead, etc. (see Note 1 below) which total the amount claimed for the net cost of the good, as well as the section identifying the country in which the production took place, and the section for the corresponding unit costs.

(C) Add all costs and carry forward the Net Cost of the Good to box B of the Net Cost Method – Summary form.

Step 4 – Complete the Net Cost Method – Summary Form

(A) Complete the top part of the form.

(B) Ensure that the Total Value of Materials from the Net Cost Method – Value of Materials form and the Net Cost of the Good from the Net Cost Method – Net Cost of the Good form have been carried forward correctly to the Net Cost Method – Summary form.

(C) Add the value in box A(4) to the value in box B and put the total in box C.

(D) Subtract the value in box A(2) and the value in box A(3) from the value in box C and put the total in box D.

(E) Divide the value in box D by the value in box C. Multiply this result by 100 to obtain the regional value content of the good produced. Place this percentage in box E.

(F) Complete the certification. This questionnaire must be completed, signed and dated by the exporter or producer of the goods or by the supplier of a material used in the production of the goods, as the case may be.

Step 5 – Complete the Net Cost Method – General Information Form

Completion of the Origin Verification Questionnaire – Regional Value Content – Section B – Intermediate Material

General Instructions

Section B is to be completed only where the producer of the good designates as an intermediate material any self-produced material that is used in the production of the good, and the specific rule of origin for that intermediate material contains a regional value-content requirement. If the rule of origin for the intermediate material contains only the tariff classification change requirement, do not proceed with this section. In this case, carry forward the costs to section A in the originating or non-originating materials column as appropriate.

Step 1 – Confirm the Tariff Classification and the Applicable Rule of Origin for the Intermediate Material

Confirm the tariff classification (to the 6th or 8th digit level, as required by the applicable rule of origin) of the intermediate material. Refer to Schedule I of the Regulations to verify the applicable rule of origin.

Step 2 – Complete the Intermediate Material – Value of Materials Form

(A) Complete the top part of the form (name of producer, address, telephone number, facsimile number, name of good produced, tariff classification of the good produced, name of the intermediate material, tariff classification of the intermediate material and the period covered). The tariff classification of the intermediate material should contain the tariff classification as established in Step 1.

(B) List all materials and the respective supplier names and addresses. List all suppliers when there is more than one supplier for a particular material. If the material is a non-originating material or a material of unknown origin, list the tariff classification (to the 6th digit or 8th digit levels, as required by the rule of origin applicable to the intermediate material) for that material in the space provided.

(C) Indicate in the column provided, under the category "originating", "non-originating" or "origin unknown", the value of each material determined in accordance with section 7 of the Regulations. A running total should be carried forward to each additional Intermediate Material – Value of Materials form. It is important that the value of a material be placed in the correct column as either originating, non-originating or origin unknown.

(D) Indicate in the column provided whether or not the change in tariff classification for the non-originating materials or materials of unknown origin used in the production of the good has been satisfied. If the space provided is insufficient to provide all required information, carry forward all totals on subsequent photocopied page(s) appropriately numbered and cross-referenced.

(E) Add each column of Total Intermediate Material – Value of Materials on the Intermediate Materials – Value of Materials form. Carry forward the totals to the appropriate columns in box A on the Intermediate Material – Summary form.

Step 3 – Complete the Intermediate Material – Net Cost of the Good Form

Note: For purposes of this questionnaire, all costs associated with the value of materials are reflected under Step 2 of Section B and are thus not to be included in the calculation required under this Step.

(A) Complete the top part of the form.

(B) Complete the section identifying the major cost categories e.g. labour, overhead, etc. (see Note 2 below) which total the amount claimed for the net cost of the good, as well as the section identifying the country in which the production took place, and the section for the corresponding unit costs.

(C) Add all costs and carry forward the Intermediate Material – Net Cost of the Good to box B of the Intermediate Material – Summary form.

Step 4 – Complete the Intermediate Material – Summary Form

(A) Complete the top part of the form.

(B) Ensure that the Total Value of Materials from the Intermediate Material – Value of Materials form and the Net Cost of the Good from the Intermediate Material – Net Cost of the Good form have been carried forward correctly to the Intermediate Material – Summary Form

(C) Add the value in box A(4) to the value in box B and put the total in box C.

(D) Subtract the value in box A(2) and the value in box A(3) from the value in box C and put the total in box D.

(E) Divide the value in box D by the value in box C. Multiply this by 100 to obtain the regional value content of the intermediate material produced. Place this percentage in box E.

Completion of the Origin Verification Questionnaire – Regional Value Content – Section C – De Minimis Calculation

General Instructions

Section C 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 pursuant to section 5 (De Minimis provision) of the Regulations.

De Minimis means that a good shall be considered to originate in the territory of a NAFTA country where the value of all non originating materials that are used in the production of the good and that do not undergo an applicable change in tariff classification as the result of production occurring entirely in the territory of one or more of the NAFTA countries is not more than seven per cent (7%):

Note 1: A good that is subject to a regional value-content requirement shall be considered to originate in the territory of a NAFTA country and shall not be required to satisfy that requirement where:

Note 2: Please note that the De Minimis provision does not apply to:

Complete the De Minimis Calculation Form

(A) Complete the general information section of the form (name of producer, address, telephone number, facsimile number, name of the good produced and the tariff classification of the good (to the 6th or 8th digit level, as applicable)).

(B) Complete the Non-Originating Materials That Do Not Undergo An Applicable Tariff Classification Change section of this form.

(C) Total the Value of Non-Originating Materials That Do Not Undergo An Applicable Tariff Classification Change and place this figure in box (A).

(D) Complete the De Minimis calculation on the form.

(E) Complete the certification section of the De Minimis calculation form. This form must be completed, signed and dated by the exporter or producer of the goods or by the supplier of a material used in the production of the goods, as the case may be.

Origin Verification Questionnaire – Regional Value Content – Net Cost Method (Section A)

Value of Materials

Net Cost of the Good

Summary

General Information

Origin Verification Questionnaire – Regional Value Content – Net Cost Method – Intermediate Material (Section B)

Value of Materials

Net Cost of the Good

Summary

Origin Verification Questionnaire – Regional Value Content – Net Cost Method – De Minimis Calculation (Section C)

General Information

Non-Originating Materials That Do Not Undergo an Applicable Tariff Classification Change

De Minimis Calculation

All Chapters Excluding Chapters 50 to 63 of the Harmonized System:

Certification

Date modified: