Dutycalc Data Systems was founded in 1988 as a software and consulting company that designs, develops and implements management support systems for the import, export and brokerage communities. Our primary area of focus is Duty Drawback and the implementation of our fully automated Drawback System.
Monday, 29 March 2021 / Published in Drawback, drawback service, drawback software, export tax, import tax
Duty Drawback 101
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If you are new to the import and export business then it can be hard to understand what duty drawback is. Duty drawback is similar to how you are refunded sales tax when you return an item to a store. You essentially claim a duty refund when you export an item that was previously imported. It is a refund of duties, fees and taxes paid on goods imported into the U.S. that are subsequently exported from the U.S. With that said there are three major types of drawback. Unused merchandise drawback, manufacturing drawback, and rejected merchandise drawback.
Unused merchandise duty drawback is when you import something and then export it in the same, unused condition. For example, you import 50 generators paying Customs duties of $500 or $10 per generator. You come to realize that you only need 30 generators and you want to export the remaining 20 to a foreign customer. The unused merchandise can then be exported and you will qualify for a refund for the duty you originally paid.
Manufacturing drawback is slightly different. This type of drawback applies when you import an item that is then manufactured into a different item. For example, if you imported bicycle tires and export finished bicycles, then you can get the duty you paid for the bicycle tires refunded when you export the finished product.
Rejected merchandise drawback is when imported merchandise does not conform to sample or specifications, shipped without consent, or determined to be defective at the time of import. For example, if one of those generators or a few of those bicycle tires arrive in bad condition or are simply the wrong model that you ordered then you qualify for rejected merchandise drawback. You qualify to get a duty refund on all of the defective products.
Understanding duty drawback can be challenging especially if you are new to the import and export industry. If you have any questions please do not hesitate to reach out to us here at DutyCalc.