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Amway Forever: The Amazing Story of a Global Business Phenomenon by Kathryn A. Jones

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Avoiding Division and Friction in Canada

The most damaging government case, though, was yet to come. It ignited not in the United States, but across the border where Amway had launched its international business—in Canada. In November 1982, the Royal Canadian Mounted Police raided Amway Canada’s headquarters and seized records and products. Amway was accused of defrauding Revenue Canada—that country’s version of the IRS—of more than $28 million in customs duties. With penalties, the claim totaled $118 million in U.S. dollars. The revenue agency accused Amway of avoiding custom duties by undervaluing merchandise exported from the United States to Canadian distributors from 1974 to 1980. After Amway began operating in Canada in 1962, the company and Canadian customs officials had worked out a special agreement in August 1985 concerning how Amway would pay tariffs on imported items since it operated in a nontraditional way, shipping products through distributors. Canada’s customs laws imposed tariffs on imported merchandise based on its fair market value in the country of origin. Jay said that Amway agreed to pay the same tariff that its competitors selling to stores paid, that it would have paid if it had bought the products from other manufacturers, or that it would have paid if it had sold the products to non-Amway outlets in the United States. “During this time, Canadian customs officials routinely audited the valuation methods Amway used for products if shipping to Amway of Canada,” ...

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