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Similaire à Tax perspectives for exporters indirect taxation and duty drawback - kay biscopink, elliott davis - 25 january 2012
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Tax perspectives for exporters indirect taxation and duty drawback - kay biscopink, elliott davis - 25 january 2012
- 1. 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
- 2. 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.
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 3. 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
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 4. 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
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 5. 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.
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 6. Duty Drawback
Three Primary Types of Drawback
• Manufacturing Drawback
• Unused-Merchandise Drawback
• Rejected-Merchandise Drawback
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 7. 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
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 8. 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.
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 9. 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
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 10. 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.
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 11. Rejected-Merchandise Drawback
• Does not Conform to Sample or Specifications
• Shipped without the Consignee’s Consent
• Defective at Time of Importation
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 12. Substitution
• Drawback is a Function of Matching Exports to Corresponding
Imports
• A Company Can Match Exports and Imports of Like Materials
• Substitution
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 13. 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
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 14. 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
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 15. 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.
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 16. 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.
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 17. 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.
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 18. 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
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 19. 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.
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 20. Foreign-Trade Zones in North Carolina
Source : Thrive in North Carolina http://thrivenc.com/incentives/financial/other-cost-saving-programs/foreign-trade-zones
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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- 21. Going Global: Partnering for International Growth
Export Ready
Questions?
Kay Biscopink
Shareholder
International Tax Chair
January 25, 2012
kbiscopink@elliottdavis.com
© 2012 Elliott Davis, PLLC © 2012 Elliott Davis, LLC
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