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Duty Drawback

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Issues and Challenges

It’s a standard operating procedure to pay duties to US Customs when importing goods. These duty payments can represent a significant portion of your product costs, and if eliminated, you could be much more competitive in foreign markets. There’s a program in place—the Duty Drawback program—that enables you to reclaim 99 percent of your duty payments when you either re-export the goods, use them in the manufacture of exported goods, or if they are destroyed. This refund is available to you even if someone else did the importing. It’s estimated that over $600 million is recovered annually through the US Duty Drawback program.

However, many companies struggle to use the program efficiently because the program is recognized as the most complex commercial program Customs and Border Protection (CBP) administers. It involves every aspect of Customs’ business, including both imports and exports. Historically, duty drawback relied on subjective analysis of “commercial interchangeability” making it difficult for many companies to take advantage of substituted merchandise. In many cases, companies end up paying 20 percent of their recovered duties to service providers to help them navigate the program and maintain appropriate documentation. As a result, US Customs estimates that up to 85 percent of potential duty drawback goes unclaimed each year.

How Amber Road Can Help

Amber Road’s Duty Drawback solution helps companies automate the identification of opportunities to recover duties and fees previously paid to US Customs. This program allows companies to scale existing drawback programs exponentially or to begin a program where one was not feasible before. By identifying these cost recovery opportunities, companies can reduce supply chain costs, increase global competitiveness, and maximize available cash.

The Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) brings significant changes to Duty Drawback policy and implementation.

The primary goal of the TFTEA is to encourage international trade through the simplification of US trade regulations.

  1. Streamlined product substitution rules; goods interchangeable at the 8-digit HTS level (with some exceptions)

  2. Simplified filing time frame: 5 years from import
Highlighted Capabilities
  • Transaction Management

    • Aggregate import and export data from multiple sources
    • Validate transactions for duty drawback eligibility
    • Verify business and compliance data
    • Leverage existing import and export transaction data
    • Utilize master data such as product classifications to verify or fill in missing transaction compliance data

  • Claim Opportunity Analysis

    • Process qualified import and export transactions using approved tracking or accounting methods
    • Automate the accounting of goods available for drawback while tracking goods already claimed or expired
    • Leverage Direct ID matching or use the modernized HTS Substitution match aligning with the complex TFTEA rule
    • Configure and implement multiple sites or trade-lane specific matching rules

  • Trade Content

    • Leverage the published Harmonized Tariff Schedule descriptions to automate the processing of TFTEA substitution matching

  • Claim Opportunity Reporting

    • Generate a claim opportunity report aligning with standard CBP claim formats and service provider data requirements
    • Decrease the potential for errors involved in manual claim reporting
    • Maintain supporting inventory tracking records that form an audit trail

Duty Management

Free trade agreements such as NAFTA, CAFTA and others represent an attractive opportunity for exporters to grow their business overseas by making their products more affordable in growing markets. And for importers, FTAs allow them to dramatically lower the duties and taxes they pay.

Today there are more than 500 free or preferential agreements around the world for companies to use.

KEY CUSTOMERS

DonaldsonNCRXylem

“With Amber Road, we have higher awareness and consideration of preferential customs tariffs, which enriches our strategic decision making.”

 

In-House Legal Counsel
ABB

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Global Trade Minute #3 - Duties versus Tariffs

While often used interchangeably, duties and tariffs are not the same. Take a minute to learn the difference -- it will help you identify cost savings opportunities within your supply chain!

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