In the context of an ecommerce brand shipping internationally, being a Non-Resident Importer refers to a company or individual located outside the destination country but taking on the responsibilities of an importer in that country. This model is often used to streamline the customs clearance and delivery process for the end customer.
NRI isn’t right for all brands. It’s best to work with an international shipping expert to help you determine the most efficient strategy.
What is NRI?
A Non-Resident Importer (NRI) is a concept mainly used in international trade and commerce. When a business is located outside of Canada ships goods to Canadian customers, the non-resident importer assumes the responsibilities for customs clearance, import taxes, and more.
For example, many US-based ecommerce brands have customers (retail or DTC customers) in Canada. By being the NRI the brand assumes the responsibility for customs clearance and other import-related requirements.
The alternative to establishing NRI when shipping into Canada is to place the customs responsibility on the end-customer, the Canadian recipient of the goods.
How to Apply for a Non-Resident Importer
A business can register for the NRI program through an international broker. The criteria to establish NRI includes:
- US brand must be compliant as an exporter to Canada
- Vet that the US company is taking advantage of USMCA benefits wherever possible
- Obtain a Canadian Business Number
- Complete the Agreement for Maintaining Books and Records Outside of Canada
3 Core Responsibilities of a Non-Resident Importer
As an NRI, the ecommerce brand assumes the responsibilities typically handled by the customer or a local importer in the destination country. While they may vary based on each country, here are the core responsibilities of an NRI.
1. Pay Tariffs, Taxes, and Duties
The NRI is responsible for calculating, collecting, and paying any applicable tariffs, duties, or taxes associated with importing goods into the destination country. This helps in providing a more predictable and transparent pricing structure for the customers.
2. Complete Customs Documentation
The Non-Resident Importer must ensure that all required customs documentation is accurate and complete. This may include commercial invoices, packing lists, and any other documents required by the customs authorities of the destination country.
3. Ensure Compliance with Local Regulations
The Non-Resident Importer needs to be aware of and comply with the import regulations, tax laws, and any other relevant requirements of the destination country. This may involve obtaining the necessary licenses or permits to import goods into that specific market.
Some countries may require a physical presence or a representative within their borders for an entity to act as an importer. In such cases, the ecommerce brand may need to establish a legal presence or work with a local partner to fulfill these requirements.
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Pros and Cons of NRI for Ecommerce Brands
Establishing your brand as the non-resident importer isn’t always the best strategy. It all depends on your product specifications and who your end-customer is.
For example, being the NRI for shipments as a direct-to-consumer (DTC) brand may create more problems than it solves.
Benefits
- Simplified Customer Experience. By taking on the role of the importer, the ecommerce brand aims to provide a smoother and more transparent experience for the international customers. This can lead to faster shipping times, reduced customs-related delays, and potentially lower costs for the end customer.
- Increases Your Competitive Advantage. By consolidating shipments, a US brand can clear the goods in their own name as one clearance and reduce the cost of shipping, creating significant savings that can be passed on to the Canadian customers.
- Simplifies Pricing. By including transportation costs, customs clearance fees, duties and taxes in the selling price of the goods, the U.S. company creates price certainty for their Canadian customers. This eliminates ‘surprise’ additional fees once the goods pass into Canada.
Disadvantages
- Tax and Financial Implications. By being the responsible party for all customs fees and clearance, brands put themselves in position of greater risk and liability. Smaller brands may not be able to take this on initially.
- Potential to Increase Import Taxes. When a US business is listed as the importer, the values of multiple shipments to different consumers must be combined as if they were all part of a single shipment, making it almost certain to surpass the de minimis thresholds. As a result, duties and taxes may be incurred on imports that might otherwise have been cleared under these thresholds established by the current USMCA policy.
- Administrative Burden. Canada has specific regulations and requirements for importing goods, and these regulations can be complex. Navigating the Canadian Customs system may require a good understanding of the rules and may involve additional administrative burdens. Also, for direct-to-consumer goods the importer of record (IOR) is defaulted to the Canadian customer.
This post was written by Maureen Walsh, Marketing Manager at DCL Logistics. A writer and blogging specialist for over 15 years, she helps create quality resources for ecommerce brands looking to optimize their business.
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