Running an import business requires immense expertise beyond the regular trade practices. The main concern is compliance with international trade laws and customs guidelines. Duties and taxes on imported merchandise can easily burn a hole in your wallet, but not paying them can land you in legal trouble. The good thing is that you can claim a refund of these duties and taxes with the duty drawback program.
Duty Drawback relates to refunds paid on goods after they are exported (or they have to be destroyed for some reason). The refund covers 99% of the duties, taxes, or fees originally paid, so it is worth the effort. But be prepared for some effort in the first place because the process involves multiple steps. However, you need not worry about completing them, provided you follow the best practices. Here are the ones to make a smooth sail.
Know Your Eligibility
The main reason why companies fail to avail of the advantage of the duty drawback program is that they do not even know such a program exists. Likewise, they may not be aware of their eligibility for the recovery. The truth is that most importers are eligible for duty drawbacks, so everything boils down to understanding the requirements. Manufacturing businesses are in a good place because they have various options to claim refunds. These include drawbacks for manufacturing merchandise, substitution manufacturing, unused merchandise, and rejected merchandise. Businesses across different manufacturing verticals can be eligible. These include pharmaceuticals and medical devices, agricultural products, alcohol and beverages, steel and metal alloys, textiles, automotive and aviation components, petrochemicals and industrial chemicals, petroleum and derivatives, and packaged and consumer goods. You can consult an expert to understand whether your commodity is eligible for the program.
Organize Your Paperwork
Good documentation is the cornerstone of success for the Duty Drawback process. The consignee party has to submit appropriate documents to claim recovery. The document list includes separate sets for both imports and exports. It is vital to be aware of the paperwork requirements and have the documents in place before initiating the process. Errors or omissions can slow down or even hinder the process, so make sure you are prepared beforehand. Most business owners miss out on this front, so experts recommend getting the services of an experienced duty drawback broker to stay on track. Having experts showing the way means you will not have to worry about delays and glitches. Moreover, you can focus on your business while they take care of the document gathering process.
Know Where to File the Claim
It is also vital to know that you cannot file a duty drawback claim at a random US port because the Customs Department defines the locations. It processes claims at only four locations- Newark/ New York, Houston, San Francisco, and Chicago. You can hire a broker to do the needful because they are aware of the exact steps involved. Fortunately, it is now possible to file the Drawback claim online using the Automated Broker Interface (ABI). You have better chances of closing the process quickly through the ABI.
Be Aware of the Timelines to File the Claim
Another duty drawback best practice you cannot overlook is to be aware of the timelines to file the claim. Timelines may differ from category to category, so ensure to dig deeper to stay on track. For example, you must file a claim within three years for unused and rejected goods. Manufactured goods come in two categories- direct identification goods and substitution manufactured goods. The direct identification goods are not used before export or destruction, and you can file the claim for them within five years. For substitution manufactured goods, the importer has to manufacture within three years and export within five years from the date of export. Since these timelines are complex, it is best to seek guidance from an expert broker to be on the right side.
The Duty Drawback process can go a long way in bringing revenues to your business and saving costs in the long run. Although the steps to file and process a claim sound complex, you should not miss out on them. Luckily, you need not worry about completing them on your own because expert brokers can do it for you. Find a dependable specialist to cover them for you and ensure that you do not miss out on the opportunity to recover the overpaid duties and taxes. Your business deserves to get back its hard-earned money, so do not skimp on it only because the process sounds challenging.
