Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

March 15, 2022
2022-5270

Canada announces update to sanctions related to Russia

Following the 24 February 2022 announcement of additional sanctions under the Special Economic Measures (Russia) Regulations and the Special Economic Measures (Ukraine) Regulations,1 from 3 March 2022 to 10 March 2022, Canada further amended the Special Economic Measures (Russia) Regulations and removed Russia and Belarus from entitlement to Most-Favoured-Nation (MFN) tariff treatment.

On 3 March 2022, the Department of Finance Canada issued the MFN Withdrawal Order (2022-1),removing Russia and Belarus from entitlement to MFN treatment under the Customs Tariff effective 2 March 2022.The issuance of this Order results in the application of the General Tariff for goods imported into Canada that originate from Russia or Belarus. Under the General Tariff, a tariff rate of 35% ad valorem will now be applicable on virtually all imports originating from Russia and Belarus.4 The Order is implemented under section 31 of the Customs Tariff and applies for 180 days unless extended by a resolution adopted by both Houses of Parliament.5

On 4 March 2022, Canada amended the Special Economic Measures (Russia) Regulations (Regulations) to add 10 executives in the Russian energy sector working for the state-owned or controlled oil entities Rosneft or Gazprom,6 as listed in Part 1 of Schedule 1 of the Regulations as amended.7

On 6 March 2022, the Regulations were further amended to add 10 current or former senior government officials and their close associates, as well as agents of disinformation, as listed in Part 1 of Schedule 1 of the Regulations as amended.8 The 6 March amendment also prohibits any ship that is registered in Russia or used, leased or chartered, in whole or part, by, on behalf of or for the benefit of Russia, a person in Russia or a designated person from docking in Canada or passing through Canadian waters.9

On 10 March 2022, the Regulations were amended once more to add 32 defense entities, most of which are owned by the Russian state or have contracts with the Government of Russia.10 Additionally, the amendment adds five individuals who are current and former senior officials and associates of the Russian regime.11 Furthermore, any person in Canada and any Canadian outside Canada is prohibited from importing specific petroleum products listed in a new Schedule 5 to the Regulations:12

Item

Goods description

Harmonized Commodity Description and Coding System Code

1

Petroleum oils and oils obtained from bituminous minerals, crude

2709

2

Petroleum oils and oils obtained from bituminous minerals, other than crude; preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations; waste oils

2710

3

Petroleum gases and other gaseous hydrocarbons

2711

_________________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (Canada), Toronto

_________________________________________

Endnotes

  1. See EY Global Tax Alert, Canada imposes new sanctions on Russia and ceases issuance of export permits for exports of goods to Russia, dated 4 March 2022.

  2. Canada cuts Russia and Belarus from Most-Favoured-Nation Tariff treatment - Canada.ca, 3 March 2022.

  3. Customs Notice 22-02: Order withdrawing the Most-Favoured-Nation status from Russia and Belarus (cbsa-asfc.gc.ca), 3 March 2022.

  4. Canada cuts Russia and Belarus from Most-Favoured-Nation Tariff treatment - Canada.ca, 3 March 2022.

  5. Customs Tariff Act (S.C. 1997, c. 36), s. 31 and s. 32.

  6. Canadian Sanctions Related to Russia (international.gc.ca), 4 March 2022.

  7. SOR/2022-046.

  8. SOR/2022-048.

  9. SOR/2022-047.

  10. SOR/2022-052.

  11. SOR/2022-053.

  12. SOR/2022-052.

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct