Tax perspectives for exporters indirect taxation and duty drawback - kay biscopink, elliott davis - 25 january 2012

Going Global: Partnering for International Growth

Export Ready

“Tax Perspectives for Exporters: Indirect
Taxation and Duty Drawback”

Kay Biscopink
Shareholder
International Tax Chair
January 25, 2012

© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
1

This material was used by Elliott Davis during an oral presentation; it is not
a complete record of the discussion. This presentation is for informational
purposes and does not contain or convey specific advice. It should not be
used or relied upon in regard to any particular situation or circumstances
without first consulting the appropriate advisor. No part of the presentation
may be circulated, quoted, or reproduced for distribution without prior
written approval from Elliott Davis.

2

Indirect Taxes

• Indirect taxation includes customs
duties, value added taxes, sales tax, etc.
Duty drawbacks and free trade zones are
techniques to minimize indirect taxation
and maximize cash flow.

• Regular Duties, internal revenue taxes
paid upon import and fees (merchandise
processing fees and harbor
maintenance) are all drawback eligible

3

Indirect Taxes

• How your product is warehoused locally,
and where the title is passed has a
significant impact on cash flow and
foreign tax credit utilization

4

Duty Drawback

Drawback is a refund of monies – customs
duties, certain internal revenue taxes and
other fees collected at importation

To be paid the imported merchandise must be
exported or destroyed under Customs and
Border Protection (CBP) supervision after
importation.

5

Duty Drawback

Three Primary Types of Drawback

• Manufacturing Drawback

• Unused-Merchandise Drawback

• Rejected-Merchandise Drawback

6

Manufacturing Drawback

Imported Merchandise designated for use in
Manufacturing

• Exported or Destroyed
• Manufactured within Three Years of Receipt
• Exported or Destroyed within Five Years of
Importation
• Available on Commercially Interchangeable
Merchandise

7

Manufacturing Drawback

Example:

US Manufacturer imports prunes and uses them to produce prune
juice, which is subsequently exported. Upon export of the juice
the US exporter receives a refund of the 14% duty associated
with the prunes used to make the juice.

8

Unused-Merchandise Drawback

Unused –Merchandise Drawback

• Imported Merchandise
• Exported or Destroyed without Undergoing any Manufacturing
• Never used in the US
• Exported within Three Years of Importation

9

Unused-Merchandise Drawback

Example:

European Sunglass Manufacturer imports frames to a US distribution
center. The center ships within the US and to Canada and Mexico.
Upon export the US importer can request a drawback refund of
the regular duty and any other fees (merchandise processing and
harbor maintenance fees) incurred upon the initial importation.

10

Rejected-Merchandise Drawback

• Does not Conform to Sample or Specifications

• Shipped without the Consignee’s Consent

• Defective at Time of Importation

11

Substitution

• Drawback is a Function of Matching Exports to Corresponding
Imports

• A Company Can Match Exports and Imports of Like Materials

• Substitution

12

Drawback Benefits

• Refund of 99% of Customs Duties

• Accelerated Payment (30 to 45 days) Available

• Period of Three Years From the Date of Export to File Claim

• Multiple Party Drawbacks (Exporter has first right)

• Consolidated Filings

13

Foreign-Trade Zones

Foreign-Trade Zones are secure areas legally outside the customs territory
of the US

Purpose: To attract and promote international trade and commerce

Subzones are special-purpose facilities for companies that cannot operate
effectively at public zone sites

14

Foreign-Trade Zone

• Zones are usually located in or near CBP ports of entry

• CBP is responsible for activitating foreign-trade zones, controlling
dutiable merchandise moving in and out, protecting and
collecting revenue and other administration.

• Foreign or domestic merchandise may enter these areas without
a formal customs entry or the payment of customs duties or
government excise taxes and without a thorough examination.

15

Permissible Activities Within the Zone

• Merchandise lawfully brought into the zones may be stored, sold,
exhibited, broken up, repacked, assembled, distributed, sorted,
tested, repaired, sampled, salvaged, relabeled, destroyed,
processed, graded, cleaned, mixed with foreign or domestic
merchandise or otherwise manipulated or manufactured

• Savings in shipping charges, duty and taxes may result from such
operations as shipping unassembled or disassembled furniture,
machinery, etc. to the zone and assembling or reassembling it
there.

16

Foreign Trade Zones

• Generally, merchandise is exempt from payment of duty even if it is:
– Manipulated
– Used in a manufacturing process
– Inspected
– Combined with other domestic or foreign materials
– Displayed for sale
– Re-exported
– Spoiled or damaged goods or waste materials may be disposed of or re-exported
without payment of duty.

17

Foreign – Trade Zones

• If the final product is exported from the United States,
no custom duty is levied. If the final product is
imported into the U.S., duty and excise taxes are due
at the time of transfer from the foreign trade zone
and formal entry is made into the U.S. Duty is paid on
the product itself or its imported parts, whichever is
lower

18

Foreign Trade Zones

Businesses save on personal property and sales and use taxes since

state and local governments generally do not impose such taxes on items in

the FTZ. Additional savings on interest, labor and shipping costs may

also result.

19

Foreign-Trade Zones in North Carolina

Source : Thrive in North Carolina http://thrivenc.com/incentives/financial/other-cost-saving-programs/foreign-trade-zones

20

Going Global: Partnering for International Growth

Export Ready

Questions?

Kay Biscopink
Shareholder
International Tax Chair
January 25, 2012
kbiscopink@elliottdavis.com

21

Tax perspectives for exporters indirect taxation and duty drawback - kay biscopink, elliott davis - 25 january 2012

Recomendados

Recomendados

Mais conteúdo relacionado

Semelhante a Tax perspectives for exporters indirect taxation and duty drawback - kay biscopink, elliott davis - 25 january 2012

Semelhante a Tax perspectives for exporters indirect taxation and duty drawback - kay biscopink, elliott davis - 25 january 2012 (14)

Mais de Jessica Roch

Mais de Jessica Roch (13)

Tax perspectives for exporters indirect taxation and duty drawback - kay biscopink, elliott davis - 25 january 2012