Duty drawback is a Customs and Border Protection (CBP) program where companies are refunded up to 99% of customs duties, taxes and/or fees that were previously levied upon imported merchandise, and of internal revenue taxes paid on domestic alcohol as well as other excise taxes. Duty drawback, however, is one of the most complicated commercial programs managed by CBP. Thus, it is important to have a clear understanding of all facets of how the program works and develop a relationship with a reputable drawback broker, who can help you navigate the rules and international laws.
To qualify, you must meet one or more of the following
criteria, as noted by the U.S. Department of Commerce:
Unused Merchandise Drawback: Imported merchandise that was not used in the United States before it was exported or destroyed under CBP supervision. There are limited operations that can be performed on the merchandise while in the United States (i.e. repacking and testing).
Manufacturing: Imported articles used in manufacturing or production that are later exported or destroyed under CBP supervision. Drawback rulings are required for eligibility.
Rejected Merchandise Drawback: Merchandise that is defective, does not meet specific standards or is shipped without consent that is exported back to the overseas manufacturer or destroyed.
It is important to understand the different types of drawbacks as a drawback can only be triggered by a claim. By knowing specific information about your imports and exports and the duty drawback they qualify for, you are more likely to maximize earning potential.
Calculating drawback potential will give you a rough estimate of how much earnings potential your company has. Below is an example:
Annual Duty: $10,000,000
Annual Export Sales: 20%
$10,000,000 x 20% = $2,000,000
$2,000,000 x 99% = $1,980,000
Multiply your estimated annual drawback eligibility duty paid by the percentage of sales that are exported annually; multiply by 99%.
Note: This is only an estimate. The best way to be sure you are maximizing your duty drawback claims is to get an expert opinion.
Billions of dollars in duty drawback go unclaimed each year. Why? Many exporters are unaware of their eligibility or simply don’t have the right resources to file a drawback claim correctly and efficiently. That’s where Ascent Global Logistics can help. The team at Ascent Global Logistics is ready to help you navigate these complexities by developing an understanding of your process and determining if you are eligible for refunds.
Ascent offers services that handle any type of drawback to make sure clients receive any available duty back without the hassle. Get an expert opinion and build your custom duty drawback solution today with Ascent Global Logistics.