{"id":14766,"date":"2022-12-01T10:33:39","date_gmt":"2022-12-01T18:33:39","guid":{"rendered":"https:\/\/michaeljbrumm.com\/dcl-v3\/?p=14766"},"modified":"2023-11-30T11:20:38","modified_gmt":"2023-11-30T19:20:38","slug":"what-is-duty-drawback","status":"publish","type":"post","link":"https:\/\/michaeljbrumm.com\/dcl-v3\/blog\/supply-chain\/what-is-duty-drawback\/","title":{"rendered":"What is Duty Drawback?\u00a0\u00a0"},"content":{"rendered":"

Ecommerce brands shipping products internationally might not think through the entire <\/span>international returns process<\/span><\/a> before launching into a new market. While most brands start shipping internationally through direct-to-consumer sales, there are many other sales channels to pursue. Retail, B2B and online marketplace selling requires a significantly more complex returns process.\u00a0<\/span>\u00a0<\/span><\/p>\n

One of the hardest parts of international returns is reclaiming the duties, taxes, and customs fees that were paid upon import. This is especially true for retail, B2B and online marketplace returns, which is referred to as duty drawback.\u00a0<\/span>\u00a0<\/span><\/p>\n

If you are an ecommerce brand, looking to ship internationally to B2B outlets, here\u2019s what you need to know about duty drawback.\u00a0<\/span>\u00a0<\/span><\/p>\n

What are Duties?<\/span><\/b>\u00a0<\/span><\/p>\n

Anytime a product is imported into a country it incurs a duty fee, which is one of many types of customs fees. Duties differ based on the country of origin and the country of import. They are often determined by international trade negotiations, and they are based on product characteristics.\u00a0<\/span>\u00a0<\/span><\/p>\n

It\u2019s difficult to understand the <\/span>difference between duties, taxes, and tariffs<\/span><\/a>. They are all types of customs fees. One differentiator is that while duty fees change, they don’t ever go away.<\/span>\u00a0<\/span><\/p>\n

Duty rates are applied to certain categories of materials and products, and they largely depend on how much that country needs them. For most consumer goods duty fees are usually 5-7% of the import value, because these products may not have as big of an impact on the economy.<\/span>\u00a0<\/span><\/p>\n

Duties are calculated by each product\u2019s 10-digit HTS code. This is a fixed code that is dependent on the characteristics of your product. Every type of product is classified with a specific HTS code.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

What is Duty Drawback?\u00a0<\/span><\/b>\u00a0<\/span><\/p>\n

Duty drawback, also called drawbacks, is when a refund is collected for the customs fees and duties paid imported products that have then been exported back out of the country. Drawback refunds are only collected upon export.\u00a0<\/span>\u00a0<\/span><\/p>\n

The process to <\/span>reclaim customs fees from international returns<\/span><\/a> is complex. Duty drawback is specifically only used for retailers importing finished goods, then warehousing them, then exporting them to a third country. Duty drawback only applies to B2B shipments, online marketplaces and retail goods.<\/span>\u00a0<\/span><\/p>\n

Duty drawback does not apply to the following scenarios:\u00a0<\/span>\u00a0<\/span><\/p>\n