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Duty drawback refers to a customs program that provides financial benefits to import and export businesses. It allows companies to recover or obtain a refund on the duties and taxes paid on imported goods that are subsequently exported. Here are three reasons why duty drawback can help import and export businesses financially:
Cost savings and improved competitiveness: Duty drawback provides import and export businesses with a means to reduce their overall costs and improve their competitiveness in the global market. By recovering or obtaining refunds on the duties and taxes paid on imported goods that are later exported, companies can significantly reduce their financial burden. This can result in lower production costs, allowing businesses to offer competitive prices for their exported goods. Additionally, the cost savings from duty drawback can be reinvested in other areas of the business, such as research and development or marketing, further enhancing the company’s competitive advantage.
Cash flow optimization: Import and export businesses often face challenges related to cash flow management. Paying duties and taxes on imported goods can tie up a significant amount of capital, which can impact a company’s liquidity and ability to invest in other areas of the business. Duty drawback helps alleviate this issue by providing businesses with a mechanism to reclaim those duties and taxes. By recovering the funds, companies can optimize their cash flow, allowing them to allocate resources more effectively and seize new business opportunities.
Compliance and risk management: International trade involves complex customs regulations and compliance requirements. Non-compliance can result in penalties, delays, or even loss of goods. Duty drawback programs incentivize businesses to adhere to these regulations by providing financial benefits. To qualify for duty drawback, companies must maintain accurate records and demonstrate compliance with customs procedures. This encourages import and export businesses to establish robust internal control systems, improving overall risk management. By effectively managing compliance and mitigating risks, companies can avoid penalties and disruptions to their operations, safeguarding their financial stability.
In conclusion, duty drawback offers import and export businesses several financial benefits. It helps reduce costs, optimize cash flow, and encourages compliance and risk management. By leveraging duty drawback programs, businesses can enhance their financial position, gain a competitive edge, and improve their overall profitability in the global marketplace.
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Duty drawback can be a complicated process for import and export businesses, and navigating it successfully requires a combination of expertise, technology, and attention to detail. Here are some of the best ways to navigate duty drawback, and why a company like Duty Calc can be a valuable resource for businesses:
In summary, Duty Calc is a good resource for import and export businesses because it provides software solutions and expert guidance to help businesses navigate the complex duty drawback process. By leveraging technology and expertise, businesses can streamline their duty drawback operations and maximize their returns.
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Section 301 duties are a set of tariffs imposed by the United States government on imports from various countries, including China, the European Union, and others. These tariffs are meant to address unfair trade practices and intellectual property theft by these countries. The Section 301 duties have been in place for several years, and they have had a significant impact on businesses and consumers in the United States and around the world.
In recent months, there have been several updates to the Section 301 duties. Here are some of the most notable developments:
The Section 301 duties remain a significant issue for businesses and consumers in the United States and around the world. While there have been some updates to the tariffs, they continue to impact a wide range of products and industries. As the U.S. government continues to review and reconsider the tariffs, it remains to be seen how they will evolve in the coming months and years.
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Import and export businesses have to deal with so many more rules and regulations than domestic businesses. The intricacies can be hard to understand for new businesses but that is why we are here to help. Today we are going to review some of the most important terms that often get confused. Today we will point out the differences between customs duties, taxes, and tariffs.
According to the U.S. Customs and Border Protection a customs duty is a tariff or tax imposed on goods when transported across international borders. The reason there are customs duties is to protect each country’s economy, residents, jobs, environment, etc., by controlling the flow of goods, especially restrictive and prohibited goods, into and out of the country. Customs duties are based on product characteristics. Anytime you import a product into a country, you will incur a duty fee. These fees are fixed by the government to determine how freely a product can be let into the country.
Taxes are fixed and calculated on the total value of the product imported into the country. Import taxes are based on the standard percentage, defined by the government, of additional cost added to any imported product coming into the country. Some countries call it a Value Added Tax (VAT). Taxes and procedures vary across markets and regions.
Tariffs are most commonly confused with duties. To clarify, tariffs are fees applied to specific products from specific countries for specific times. Tariffs can be changed quickly and are determined by the whim of the government. Governments determine tariffs based on how they want to impose restrictions from certain foreign countries. Right now, the U.S., Mexico, and Canada have a trade agreement (USMCA) that states that there are no tariffs. But with China there is a blanket tariff given to any products imported into the U.S.
Understanding the different terminology is a huge part of running a successful import or export business. Use this information and these explanations to help educate yourself on what each term means to your business. If you have questions please reach out to your experts here at Duty Calc.
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If you want to import and/or export as part of your business one of the first things you might have to do is obtain a license. Determining whether or not a product requires a license involves careful research and can be a lengthy process so give yourself enough time. If you find that your product does require a license, you must apply for the license through a government agency that has oversight over that product.
Some of the common agencies to check with for import licensing requirements include the Food and Drug Administration (FDA), U.S. Department of Agriculture (USDA), U.S. Consumer Product Safety Commission (CPSC), and Animal and Plant Health Inspection Services (APHIS). When researching you should know all of the information you need. Things like the country of origin of the product and its manufacturer, product composition, intended use of the product, and pricing and payment information regarding sales to determine the value of the shipment. Knowing this critical information will help guide you to the needed agency to apply for the license.
Obtaining an export license also entails working through specific federal agencies but fortunately most exports do not require a specific license. If your product does happen to require a license for export it will probably involve goods, software, or technology with uses in commercial and military or proliferation appliances. The process requires a series of steps through different agencies. Basically, products are overseen by the Export Administration Regulations (EAR). Commodities that fall under EAR will appear on the Commerce Control List (CCL) and be assigned an Export Control Classification Number (ECCN). All shipments requiring an export license must have a Destination Control Statement (DSC) which declares that the goods are only being exported to the country or buyer indicated on official shipping documents. Once all of these steps are completed, only then will you get your export license. As mentioned before, only a small percentage of products require an export license so most of the time this process is not required.
Before you decide to start importing or exporting know that steps like obtaining a license is required. Part of your strategy and business plan should include time and effort designated towards things like this. If you have questions regarding an import or export license please reach out to us here at Duty Calc.
Why We Need To Import & Export
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The United States is an economic beast. We are home to some of the largest and most successful businesses on Earth. A big reason for that is because we are able to work internationally by importing and exporting goods and services. Cut that ability out and our economy changes. So, what exactly are the benefits? That is what we will talk about today.
We need to import from other countries for many reasons. To begin, we need to import to introduce new products to the market. A healthy market is one with different options for consumers to choose from. New products are what keeps businesses afloat and competitive. Secondly, we need to import to reduce costs. Many businesses find that importing products and resources are way more affordable than producing them here in the states. Instead of investing in modern, expensive machinery, businesses opt to import to reduce those costs. Lastly, although we are an economic beast that does not mean we are the best at everything! Some of the highest quality products are from other countries. Many factories and other highly professional sellers reside abroad and have an upper hand on quality of products compared to their competition here in the United States.
It is also important for our businesses to export to other counties as well. Just as there is a variety of benefits of importing goods and services, there are numerous reasons for exporting. The first reason being that exporting tends to increase sales potential. If businesses want to grow their business they can look internationally or even globally. Exporting is especially good for medium and large businesses – the ones that have already expanded within the local market. Additionally, exporting increases profits. Foreign orders are usually larger than those placed by local buyers. Here in the states local customers buy a few products or a pallet at a time while businesses abroad oftentimes order containers or larger loads at a time. And a product made here that has never been seen in international markets, profits increase rapidly in no time.
So, do we need to import and export to keep our economy up and running? The answer is absolutely! Businesses depend on their ability to import and export as they come with countless benefits.
For more information on importing and exporting please reach out to us here at Duty Calc.
Hiring Foreign Employees
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If your company does business internationally it is important to know what it takes to hire foreign employees. Different countries have different laws and if you do not understand how to hire properly, you could be really holding back your company. Immigration here in the United States is a complex process. This compounded by national discourse can make the process even harder. Today we are going to detail a few steps to take when hiring a global workforce.
The first thing you should do is start early. Understand that there is a lot of red tape involved. Hiring an employee in the United States can be done in a week but hiring a foreign employee can take months or even years depending on which business immigration programs are utilized. Strategize accordingly with realistic hiring timelines.
Part of an early start also means making the necessary preparations within your company. For example, you need to know what roles within your company you want to fill with foreign employees. Once you have identified these roles you need to make plans for recruitment and retention. Create a plan, train your HR department to help your business and employees stay in compliance, and go get that talent through proper internal preparation. Do not hire foreign employees and play it by ear. This will cost your company valuable time, money, and resources.
Lastly, understand your hiring options. There are different visa programs out there and you need to know which one is appropriate for the foreign employees you are interested in. For example, if you plan on your new foreign employee to eventually become a permanent resident, an employer-sponsored green card can be the most effective and predictable way to hire. In turn, if you want to open a new business or a branch of a foreign company then you should utilize the L visa, the E visa, or a strategic combination of the two.
It is important to know all of the ins and outs of hiring foreign employees but starting early, preparing the right way, and understanding all of your hiring options is a great start. If you start internally the process will be much smoother.
International Trade Myths
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International trade has many economic benefits. Free trade allows consumers to buy more, better-quality products at significantly lower costs. With free trade we get economic growth, enhanced efficiency, and increased innovation. These are some of the realities that come with international free trade. What we need to be warry of are the myths that are often associated with international trade.
First, more exports do not necessarily mean more wealth. It is actually the total level of trade that reflects economic wealth. This means total imports and total exports. More exports increase wealth only because they allow us to buy more imports and give non-Americans greater incentives to invest into the economy. If we only export and restrict imports it leaves our economy worse off.
Secondly, many think that free trade means domestic jobs go overseas. False. What really happens depends on the industry. For example, with free trade jobs in highly inefficient industries might be reduced. On the flip side, it frees up resources to create jobs in highly efficient industries, boosting overall wages and improving living standards. Protectionism might “save” some jobs but that comes with a cost. The cost of opportunities and input costs will swell for industries downstream.
Lastly, this sounds counterintuitive but trade deficits are good for us. This is because a trade deficit is usually a signal that global investors are confident in our economic future. Our trade deficit might be larger than it would otherwise be if a trading partner chooses to keep the price of its currency artificially low, but this practice harms the trading partner, not us.
While international trade can have some downsides, overall, there are so many benefits and we have to weed out the misconceptions that are often discussed with this topic. Bust these myths and know the benefits of international trade!
