Do you frequently import goods, pay the duties and then re-export those goods, either as-is or incorporated into a finished product?
Even if you’ve done this hundreds of times, you may not know that duties can usually be recovered on those items. Filing a duty drawback can have significant benefits – reducing your costs and enabling you to price your goods more competitively.
What is Duty Drawback?
It is a Canada Border Services Agency (CBSA) program that aims to improve the competitiveness of Canadian businesses by offering relief from the payment of most duties and taxes on imported goods that are ultimately exported.
A successful filing for duty drawback can get you a refund of customs duties, anti-dumping duties and countervailing duties paid at the time of importation.
What goods are eligible?
If you are the importer, exporter, processor, owner or producer of the goods, you may qualify for a drawback if one of the following applies:
- you are directly or indirectly involved in importing goods that are later exported in the same condition they were imported; or
- you further manufacture or use imported goods in a limited manner to produce other goods for export.
NOTE: Because USMCA/CUSMA has virtually eliminated customs duties for goods imported from the U.S. or Mexico, duty drawback has the greatest benefit for Canadian companies importing from overseas suppliers.
Filing for Drawback
After the goods have been exported from Canada, a claim for a drawback of the duties may be filed. This can be done up to four years after the goods were imported.
To apply for duty drawback, claimants must submit a form (Form K32 – Drawback Claim), together with supporting documentation, to a CBSA office. The supporting documentation includes items such as the export sales invoice, bill of lading, and other details of the import, shipping and export of the goods.
But wait… there’s more.
You may me interested to know that CBSA offers the drawback program as part of a three-part Duty Deferral Program. Your business may also benefit from the other components of the Duty Deferral Program:
These programs can be used individually or in combination – whichever best suits your business needs.
Want some help?
Information provided by: Customs Consulting Dept. - Cole International