Drawback is the repayment of customs duties for input materials used in the production of a finished product for export.
Note: An update of this article is pending. Please note that some terms and/or references may differ from the Movement of Goods Act and the Customs Duty Act that enters into force from the 1st of January 2023. |
The majority of free trade agreements prohibit this, and also prohibit issuing proofs of origin for products that contain input materials for which drawback has been granted. Nonetheless, there are also some transitional arrangements and exceptions in place.
If you have used input materials for which you have paid customs duties, you cannot apply for repayment of those duties when you export the finished product as an originating products accompanied by a preferential proof of origin.
Drawback also includes schemes with temporary tax relief against a deposit.
The main rule that a proof of origin cannot be issued if drawback is granted does not apply if the input material is not within the product coverage of the agreement.
Yu can decide for yourself whether you want to apply for repayment of duties, or sell the exported goods as originating products.
It is often worth choosing to sell the goods with originating status, rather than receiving a repayment of duties.