What is Duty Drawback?
It’s a CBSA program that offers relief to Canadian businesses from payment of duties on imported goods that that meet certain criteria.
Duty Drawback is an incentive program for Canadian manufacturers who produce goods for export purposes using imported components. Goods that have been imported then subsequently exported may qualify for Duty Drawback when the imported goods are:
- Exported in the same condition in which they were imported
- Further processed then exported
- Placed on display or demonstrated
- Used for development or production then exported
- Surplus or obsolete goods disposed of in Canada
What’s timely about this topic?
Currently, NAFTA enables duty-free trade between Canadian, U.S. and Mexican companies. But, according to reports, the new U.S. president-elect may be planning to withdraw from NAFTA, effectively putting an end to this 22-year trade agreement. Without NAFTA, Canadian importers may once again be paying duty on U.S. and Mexican goods. In light of this, it would be wise to seek out duty relief in other ways.
Enter: the Duty Drawback Program.
How does it work?
After goods have been exported from Canada, a claim for a drawback of the import duties may be filed. This can be done up to four years after the goods were imported. The following supporting documentation must be provided:
- Form B3, Canada Customs Coding Form
- Canada Customs Invoice
- Commercial Invoice/Supplier Invoice
- Bill of Lading or other shipping documents
- Packing Slips
- Purchase Order
- A completed K32, Drawback Claim form
Export Documentation (USA)
- Export Sales Invoice
- Evidence of export (Bill of Lading or other shipping document)
- USA exports; Consumption Entry, Form 7501
- Record Keeping
Importers and exporters have a regulatory responsibility to keep records of their imports/exports for six years after the end of the calendar year of the date of the import/export. These records can be stored at the place of business of the importer or exporter/producer or at any other place that has been designated by the Minister.
If you’re not sure whether your trade activities are eligible for duty drawback, enlist the help of a professional.
Our Customs Consulting Department can provide assistance with this process – from document-gathering to filing for your duty drawback.
Information provided by: Customs Consulting Dept. - Cole International