Duty Free Shop Regulations

Link to law: http://laws-lois.justice.gc.ca/eng/regulations/SOR-86-1072/FullText.html

Subscribe to a Global-Regulation Premium Membership Today!

Key Benefits:

Subscribe Now
Duty Free Shop Regulations

SOR/86-1072CUSTOMS ACT
Registration 1986-11-06
Regulations Respecting Duty Free Shops
P.C. 1986-2530 1986-11-06Whereas, pursuant to subsection 164(3) of the Customs ActFootnote *, a copy of proposed Regulations respecting duty free shops, substantially in the form annexed hereto, was published in the Canada Gazette Part I on April 26, 1986 and a reasonable opportunity was thereby afforded to interested persons to make representations to the Minister of National Revenue with respect thereto;
Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of National Revenue, pursuant to section 30, subsection 37(1), paragraphs 164(1)(i) and (j) and section 166 of the Customs ActFootnote *, is pleased hereby to make the annexed Regulations respecting duty free shops, effective on the day that section 30, subsection 37(1), paragraphs 164(1)(i) and (j) and section 166 of the Customs Act come into force.
Return to footnote *S.C. 1986, c. 1Short Title

1 These Regulations may be cited as the Duty Free Shop Regulations.

Interpretation

2 In these Regulations,

Act
Act means the Customs Act; (Loi)
applicant
applicant means a person who applies for a licence; (demandeur)
beer
beer means beer or malt liquor as defined in section 4 of the Excise Act; (bière)
border crossing point
border crossing point means a place on the international border between Canada and the United States at which there is a customs office; (poste frontalier)
chief officer of customs
chief officer of customs, with respect to a duty free shop or a proposed duty free shop, means the manager of the customs office or customs offices that serve the area in which the duty free shop is located or is proposed to be located; (agent en chef des douanes)
Department
Department[Repealed, SOR/2002-218, s. 1]
excisable goods
excisable goods means spirits, wine, beer or tobacco products; Excise Act; (marchandises assujetties à l’accise)
excise warehouse
excise warehouse has the same meaning as in section 2 of the Excise Act, 2001; (entrepôt d’accise)
intoxicating liquor
intoxicating liquor has the same meaning as in the Importation of Intoxicating Liquors Act; (boisson enivrante)
licence
licence means a licence to operate a place as a duty free shop; (agrément)
licensee
licensee means a person to whom a licence has been issued; (exploitant)
permanent resident
permanent resident has the same meaning as in the Immigration Act, 1976. (résident permanent)

SOR/96-153, s. 1;
SOR/2002-218, s. 1;
SOR/2005-212, s. 1.

PART I Licensing of Duty Free Shops

Issuance of Licence

3 (1) For the purposes of section 24 of the Act and subject to subsection (6), a licence may be issued to any qualified person who makes an application in accordance with subsection (2) and who gives the security required under section 4.
(2) The person shall submit the application for a licence in the prescribed form to the Commissioner.

(3) A corporation is qualified to operate a duty free shop at a border crossing point if

(a) the corporation is incorporated in Canada;

(b) all the shares of the corporation are beneficially owned by

(i) a Canadian citizen or permanent resident,
(ii) another corporation that is incorporated in Canada all of whose shares are beneficially owned by a Canadian citizen or permanent resident, or
(iii) both a Canadian citizen or permanent resident and that other corporation; and

(c) the Canadian citizen or permanent resident referred to in paragraph (b)

(i) is of good character,
(ii) maintains their principal residence in Canada, and
(iii) resided in Canada for at least 183 days of the year before the year in which the corporation makes the application for the licence.

(4) A person other than a corporation is qualified to operate a duty free shop at a border crossing point if the person

(a) is a Canadian citizen or a permanent resident;
(b) is of good character;
(c) maintains his principal residence in Canada; and
(d) resided in Canada for at least 183 days of the year preceding the year in which the person makes the application for the licence.

(5) A person is qualified to operate a duty free shop at an airport or at a border crossing point if the person has been granted a lease or other right to occupy the place proposed as the duty free shop.

(6) The Minister shall not issue a licence to an applicant unless

(a) the applicant meets the qualifications referred to in subsection (3) or (4) and subsection (5) in the case of a duty free shop at a border crossing point, or subsection (5) in the case of a duty free shop at an airport;
(b) [Repealed, SOR/96-153, s. 2]
(c) the applicant has sufficient financial resources to enable him to lease or purchase the place proposed to be operated as a duty free shop;
(d) the applicant has sufficient financial resources to enable him to provide the facilities, equipment and personnel required under these Regulations;
(e) an adequate range of goods is not available in, or adequate service is not provided by, any duty free shop already located in the area in which the proposed duty free shop is to be located;
(f) the establishment of a duty free shop will not impede the flow of traffic in the vicinity in which the proposed duty free shop is to be located; and
(g) the Agency is able to provide customs services with respect to the proposed duty free shop.

(7) [Repealed, SOR/96-153, s. 2]

SOR/92-189, s. 1;
SOR/96-153, s. 2;
SOR/2002-218, s. 2;
SOR/2005-182, s. 1.

Security

4 (1) An applicant shall, before a licence is issued to him, give security in an amount that is determined by the Minister, but in no case shall the amount of security be less than $10,000.
(2) The Minister may at any time require a licensee to increase the amount of security given under subsection (1) to an amount sufficient to ensure the payment of any duties payable in respect of the goods in the duty free shop.

(3) The security given under subsection (1) shall be deposited with the chief officer of customs and shall be in the form of

(a) cash;
(b) a certified cheque;
(c) a transferable bond issued by the Government of Canada; or

(d) a bond issued by

(i) a company that is registered and holds a certificate of registry to carry on the fidelity or surety class of insurance business and that is approved by the President of the Treasury Board as a company whose bonds may be accepted by the Government of Canada,
(ii) a member of the Canadian Payments Association referred to in section 4 of the Canadian Payments Association Act,
(iii) a corporation that accepts deposits insured by the Canada Deposit Insurance Corporation or the Régie de l’assurance-dépôts du Québec to the maximum amounts permitted by the statutes under which those institutions were established,
(iv) a credit union as defined in subsection 137(6) of the Income Tax Act, or
(v) a corporation that accepts deposits from the public, if repayment of the deposits is guaranteed by Her Majesty in right of a province.

SOR/91-274;
SOR/2001-197, s. 7.

5 [Repealed, SOR/2002-218, s. 3]

Term of Licence

6 (1) Subject to subsection (2), a licence is valid for a period beginning on the date indicated on the licence as being the date on which the licence becomes effective and ending on the date indicated on the licence as being the date on which the licence expires.
(2) No licence shall be valid for more than five years.

Amendment of Licence

7 (1) The Minister may amend a licence only for the following purposes:

(a) subject to subsection (2),

(i) to change a restriction specified in the licence as to the classes of goods that may be received in the duty free shop, or to specify such a restriction,
(ii) to change the circumstances specified in the licence in which goods may be received in the duty free shop, or to specify such circumstances; or

(b) to change the name of the licensee, where the name of the licensee is changed.

(2) The Minister may amend a licence for the purposes set out in subparagraph (1)(a)(i) or (ii) only where he has given 90 days notice of the proposed amendment.

Cancellation or Suspension of Licences

8 The Minister may cancel a licence where the licensee

(a) no longer owns or leases the place that is licensed as a duty free shop;
(b) requests the Minister in writing to cancel the licence; or
(c) is bankrupt.

SOR/96-153, s. 3.

9 (1) Subject to section 10, the Minister may suspend or cancel a licence where the licensee

(a) is the subject of a receivership in respect of his debts;
(b) fails to comply with any Act of Parliament, or any regulation made pursuant thereto, that prohibits, controls or regulates the importation or exportation of goods, or that relates to customs and excise;
(c) [Repealed, SOR/96-153, s. 4]
(d) has, in the course of his operation of the duty free shop, acted dishonestly in his business dealings with customers, suppliers, customs brokers, carriers, Her Majesty or servants of Her Majesty; or
(e) has failed to carry out, within a reasonable time and in a reasonable manner, any proposal made in the application for the licence.

(2) Subject to section 10, the Minister may suspend or cancel a licence where

(a) the volume of goods sold in the duty free shop is no longer sufficient to warrant the continued operation of the duty free shop;
(b) there is no longer a need for a duty free shop in the area in which the duty free shop is located;
(c) the Agency is no longer able to provide customs services with respect to the duty free shop; or

(d) the licensee has altered the structure of the duty free shop in a manner that

(i) contravenes a requirement related to the storage or sale of goods set out in the Act or in these Regulations,
(ii) impedes the flow of traffic in the vicinity in which the duty free shop is located, or
(iii) detrimentally affects the immediate export of goods.

(3) Subject to section 10, the Minister may cancel a licence where the licensee

(a) has made a misrepresentation in the application for the licence; or
(b) no longer qualifies under these Regulations for a licence.

SOR/96-153, s. 4;
SOR/2002-218, s. 4;
SOR/2005-182, s. 2.

10 (1) The Minister shall, immediately after suspending a licence, give to the licensee a notice confirming the suspension and providing all relevant information concerning the grounds on which the Minister has suspended the licence.
(2) The licensee may, within 30 days after the day on which the licence is suspended, make representations to the Minister regarding why the licence should be reinstated.
(3) The Minister shall, before cancelling a licence under section 9, give the licensee 90 days notice of the proposed cancellation and provide the licensee with all relevant information concerning the grounds on which the Minister proposes to cancel the licence.
(4) The licensee may, within 90 days after the day on which the notice referred to in subsection (3) is given, make representations to the Minister regarding why the licence should not be cancelled.

SOR/96-153, s. 5.

Reinstatement and Renewal of Licences

11 The Minister may reinstate a suspended licence where the Minister is satisfied that the cause for the suspension no longer exists.

12 The Minister may renew a licence on the expiration of its term on condition that

(a) in the case of a duty free shop at a border crossing point, the licensee submits an application in the prescribed form to the Commissioner at least 90 days before the date on which the licence is to expire;
(b) in the case of a duty free shop at an airport, the licensee has been granted a new lease, an extension of the existing lease or a new right to occupy the place operated as a duty free shop; and
(c) no grounds exist for the Minister to suspend or cancel the licence.

SOR/2002-218, s. 5;
SOR/2005-182, s. 3.

PART II Operation of Duty Free Shops

Facilities, Services and Standards

13 (1) Every licensee shall, at the duty free shop in respect of which his licence was issued,

(a) provide or make available public washroom facilities that are easily accessible to disabled persons;
(b) provide or make available public telephones that are easily accessible to disabled persons, if the telephone company providing service to the duty free shop agrees to provide such telephone service;
(c) provide service in English and French if the duty free shop is located in an area in which customs services are provided in English and French; and

(d) display notices in English and French indicating

(i) that the goods sold in the duty free shop are for immediate exportation only and must be reported under the Act if they are returned to Canada,
(ii) the circumstances in which goods imported into the United States by individuals are exempt from duties, and
(iii) the circumstances in which goods imported into Canada by individuals are exempt from duties.

(e) and (f) [Repealed, SOR/96-153, s. 6]

(2) Where a duty free shop forms only part of a building, the licensee shall keep the duty free shop separate from the remainder of the building by a partition or other suitable structure.
(3) [Repealed, SOR/96-153, s. 6]

SOR/96-153, s. 6.

14 Every licensee shall ensure that

(a) the goods received in the duty free shop are stored and marked in such a manner that

(i) those goods may be readily identified and checked against the licensee’s records of inventory and, in the case of imported goods, against the relevant customs accounting documents, and
(ii) domestic goods may be readily distinguished from imported goods;

(b) the goods received in the duty free shop are held in an area designated by the chief officer of customs until, in the case of imported goods, those goods have been accounted for under the Act or, in the case of domestic goods, those goods have been approved by an officer for entry into the licensee’s inventory;
(c) the duty free shop may be locked and sealed by an officer where the chief officer of customs requests that the duty free shop be locked and sealed, for the purpose of enabling an officer to check the goods therein against the licensee’s records of inventory;

(d) the duty free shop may be locked and sealed by an officer in the event that the licensee’s licence expires or is cancelled or suspended and may be kept locked and sealed until

(i) in the case of goods in it other than excisable goods, the duties and taxes payable on the goods have been paid or the goods have been disposed of in accordance with the laws relating to customs and excise, and
(ii) in the case of goods in it that are excisable goods, the goods have been disposed of in accordance with the laws relating to customs and excise or, in the case of intoxicating liquor, in accordance with the laws relating to intoxicating liquor of the province in which the duty free shop is located; and

(e) the duty free shop is kept suitable for the safe-keeping of the goods stored in it.

SOR/2005-212, s. 2.

15 (1) No intoxicating liquor shall be sold in a duty free shop in a province unless the licensee has obtained written approval to sell intoxicating liquor from the board, commission or agency that is authorized by the laws of the province to sell or to authorize the sale of intoxicating liquor in that province.

(2) Unless a licensee has obtained written approval for the transfer from the board, commission or agency described in subsection (1), an intoxicating liquor shall not be transferred within the same province

(a) in the case of intoxicating liquors, from a duty free shop to another duty free shop;
(b) in the case of beer, from a duty free shop to a bonded warehouse; or

(c) in the case of wine or spirits,

(i) from a duty free shop to a bonded warehouse or an excise warehouse, or
(ii) from an excise warehouse to a duty free shop.

SOR/2005-212, ss. 3, 4(F).

Receipt of Goods

16 (1) Every licensee shall, on the arrival of goods at the duty free shop in respect of which his licence was issued,

(a) acknowledge the receipt of the goods by

(i) endorsing the bill of lading, way-bill or other similar transportation document presented to him by the carrier, or
(ii) endorsing the document by which the licensee accounts for inventory; and

(b) immediately notify the chief officer of customs of the receipt of the goods.

(2) Before any goods are taken into a duty free shop, the licensee shall present to the chief officer of customs any documents required to be presented to him under the Act or any regulations made pursuant thereto.

Provision of Information

17 Every licensee shall provide to the Commissioner

(a) a summary of monthly sales and remittance of fees, in the prescribed form, not later than 15 days after the last day of the month in which the sales described on the form were made; and
(b) an annual report, in the prescribed form, not later than 60 days after the end of the fiscal year of the duty free shop for which the report is made.

SOR/95-519, s. 5;
SOR/96-37, s. 1;
SOR/2005-182, s. 4.

17.1 Every licensee that is a corporation shall provide to the Commissioner 90 days written notice in advance of a proposed change in the beneficial ownership of the shares of a corporation referred to in subsection 3(3).
SOR/2005-182, s. 5.

Transfer of Ownership of Goods

18 (1) Subject to subsections (2) to (4), the ownership of goods in a duty free shop may be transferred only by sale to persons who are about to leave Canada.
(2) The ownership of goods in a duty free shop may be transferred to the person who sold them to the licensee, on condition that the goods are dealt with in accordance with the laws relating to customs and excise.
(3) The ownership of goods in a duty free shop may be transferred to a person having a licence in respect of another duty free shop, on condition that the goods are dealt with in accordance with any law relating to customs and excise, and, in the case of intoxicating liquor, in accordance with section 15.
(4) Where a licensee’s licence is about to expire or be cancelled and a new licensee is to be licensed to operate a duty free shop on the same premises as the premises of the licensee, the ownership of the goods in the duty free shop may be transferred to the proposed new licensee.

SOR/96-153, s. 7;
SOR/2005-212, s. 4(F).

19 No licensee shall sell, give or in any other manner convey any tobacco product to a person under the age of eighteen years.
SOR/95-519, s. 5.