The Free Trade Agreement Act is meant to be a way for US companies to sell goods and services in Canada, Mexico, and the European Union as of July 1. This means that design firms, marketing agencies, and other businesses will be required to comply with the act. If you don’t want to lose your clientele from these areas or risk fines from the U.S., read on for some tips on how to comply with this new law.
What Is The Free Trade Agreement Act?
The Free Trade Agreement Act, also called the U.S.-EU-Canada-Mexico Agreement Act, is a new law passed by the United States. It was signed on June 27th and went into effect on July 1st.
This act allows for free trade in goods and services between the United States, Canada, Mexico, and the European Union. This includes items like:
How To Comply With The Free Trade Agreement Act
The act mandates that businesses with a physical presence in Canada, Mexico, and the European Union must comply with the agreement. This includes companies that are not currently subject to trade restrictions but wish to be exempt from this new law.
There are several ways for businesses to comply with the act:
1. Complying With The Agreement: If your company is already operating in one of these three countries, you will need to comply with the agreement without any changes.
2. Not Working In One Of The Three Countries: To be exempt from complying with the act, your business cannot work in one of these three countries at any point during your tax year (which ends on December 31). You can then either wait until next year or apply for an extension.
3. Importing Or Exporting Products Into The U.S.: Businesses may import or export products into the U.S., so long as they don’t exceed $500,000 worth of goods in a 12-month period (which would be 24 transactions).
Businesses that must comply with the FTA
The Free Trade Agreement Act will require all businesses with 15 or more employees to comply with the FTA.
This includes design firms, marketing agencies, and other businesses. If your business falls in these categories, you’ll need to make sure that you comply with the FTA by July 1.
Some of the benefits of complying are that it’s easier for your company to sell goods and services in Canada, Mexico, and the European Union. Additionally, it’s easier for U.S.-based companies to gain market share in these areas because they’re not competing with other businesses from these countries.
If you’re not sure if you have 15 or more employees or if you have a question about what constitutes a “commercial enterprise,” ask your accountant. They’ll be able to answer all of your questions on compliance!
Businesses that are exempt from the FTA
The FTA is meant to help US businesses sell products in Canada and Mexico. However, the act has some exemptions. For example, if your company sells exclusively online or products that are primarily made from digital materials, you’re exempt from the FTA.
Additionally, if your business is able to prove it’s a small business with less than $350K in gross receipts each year, you’re also exempt from the FTA. If you’re unsure about whether or not your company qualifies for an exemption, talk to a lawyer or tax professional about how to apply for one.
Conclusion
It is important to know what is required of businesses under the FTA to ensure they are able to provide customers with the best service possible. Furthermore, it is important to know what businesses must comply with the FTA and which don’t. This article provides a summary of the requirements for businesses and also provides a list of businesses that must comply with the FTA.
