Update n Duty Drawback Hsted by United States Fashin Industry Assciatin (USFIA) and PwC March 6, 2018 2:00 P.M. Eastern/11:00 A.M. Pacific
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www.pwc.cm Update n Duty Drawback: Managing the Upcming Changes USFIA Webinar Series March 6, 2018
Agenda Duty Drawback Recap Trade Facilitatin and Trade Enfrcement Act f 2015 (TFTEA) Interim Guidance Transitin Perid Accelerated Payment Manufacturing WPN Substitutin Next Steps Q&A 4
Duty Drawback: A Quick Recap A refund f duty paid n imprted merchandise that is linked t an exprtatin (r destructin) f an article. Allws the refund up t 99% f duties paid n imprtatin. Three Main Categries 1. Manufacturing 2. Unused merchandise 3. Rejected merchandise The exprtatin r destructin* under Custms supervisin f duty paid merchandise gives rise t the pprtunity fr Drawback T be eligible fr drawback: An article must be imprted and duty-paid, and That article (r substitute) must be destryed r exprted Withut being used, r After being used t prduce anther prduct in the U.S. 3-year time frame fr filing f claims frm the date f exprt NAFTA impsed certain limitatins/restrictins n drawback% *Destructin must ccur under Custms supervisin unless ther apprval frm Custms has been granted 5
Drawback Updates (there s gd news) In 2016, Cngress signed int law the Trade Facilitatin and Trade Enfrcement Ace f 2015 (TFTEA) bringing sweeping changes t drawback Expanded substitutin at the eight-digit HTS cde Eliminates the current requisite criteria f same kind and quality (cmmercially interchangeable) The TFTEA cntains an anti-abuse lesser f prvisin prviding that the claim amunt will be limited t the lesser f the duties, taxes r fees that were paid n the imprted item r that wuld have been paid n the exprted item if it had been imprted. 6
Example Hw Substitutin is Dne Tday Exprt f: T-shirt SKU: XYZ123 White Medium 6109.10.0005 Imprt f: T-shirt SKU: XYZ123 White Medium 6109.10.0005 US Brder US Brder A refund f duties, taxes, and fees n imprted merchandise that is cmmercially interchangeable with the exprted merchandise Cmmercially interchangeable = Based n assessment f : gvernment/industrial standards; part numbers; HTS classificatin; and relative value 7
Example Substitutin Under TFTEA Exprt f clred t- shirt HTS - 6109.10.00(12) Imprt f white t- shirt HTS - 6109.10.00(05) US Brder US Brder Ways t match imprts and exprts under substitutin ging frward HTS cdes - Same 8 digit classificatin - 6109.10.00 8
Drawback Updates (there s mre gd news) Expanded refund pprtunity Nw MPF and HMF refunds will be available fr Manufacturing drawback; and Rejected merchandise Electrnic filing All claims must be filed electrnically Timeline changes t claim drawback Five years frm the date f imprtatin Dcumentatin All supprting recrds nw must be maintained fr three years frm the date f liquidatin f the claim Eliminatin f certificates f delivery replacement by business recrds kept in in the nrmal curse f business 9
Interim Guidance Custms & Brder Prtectin published guidance fr filling TFTEA drawback claims Link: https://www.cbp.gv/sites/default/files/assets/dcuments/2018- Feb/ACE%20Drawback%20Interim%20Guidance%20%2802-09-2018%29.pdf Cnsider subscribing t CBP s email updates as the interim guidance is regularly updated Link https://public.gvdelivery.cm/accunts/usdhscbp/subscriber/new?preferen ces=true#tab1 10
Interim Guidance Transitinal Issues Delay f Accelerated Payment (AP) During the Interim Perid Claimants previusly granted AP privileges must be aware that a certificatin f cnfrmity, acknwledged thrugh ACE, will be required. Accelerated Payment (AP) will nt be prcessed n TFTEA claims until the TFTEAdrawback regulatins are implemented. AP will be available fr cre drawback claims under 19 CFR Part 191. TFTEA drawback claims submitted in ACE with an indicatr t request AP privileges will nt be accepted. The TFTEA drawback claim will need t be re-transmitted withut the AP indicatr in rder fr the TFTEA drawback claim t be accepted in ACE. TFTEA drawback claims can be amended fr a AP after the regulatins are implemented. 11
Interim Guidance Transitinal Issues TFTEA Manufacturing Rulings Existing manufacturing rulings were issued based n the requirements f 19 CFR Part 191, which differ frm the TFTEA drawback requirements Fr eligibility under TFTEA drawback based n an existing manufacturing ruling, a claimant/manufacturer, r prducer must file a supplemental applicatin fr a limited mdificatin t that ruling. If applicant des nt have an existing manufacturing ruling, they shuld apply fr a ruling under 19 CFR Part 191 and attach an applicatin fr limited mdificatin in rder t make the ruling TFTEA-cmpliant. Detailed prcess can be fund at interim guidance link 12
Interim Guidance Transitinal Issues Waiver f Prir Ntice (WPN) WPN f intent t exprt r destry privileges granted under 19 CFR Part 191 fr will nt be in accrdance with TFTEA drawback requirements. Claimants previusly granted WPN, including ne-time waivers, must be aware that a certificatin f cnfrmity, acknwledged thrugh ACE, is required with each drawback claim filed under TFTEA drawback. Claimants may cntinue using their existing privileges withut this certificatin when using nn-tftea drawback during the transitin year. Additinally, WPN r AP privileges granted fr Direct ID unused merchandise drawback claims will autmatically be apprved fr thse privileges fr substitutin unused merchandise drawback claims 13
Interim Guidance Transitinal Issues Substitutin Drawback TFTEA substitutin drawback claims are generally subject t the lesser f rule. The amunt t be refunded may nt exceed the lesser f the refund amunts assciated with the designated merchandise r the substituted merchandise (based n the applicable cmparative value) 14
Interim Guidance Gd t Knw Sme issues may arise what t d then? If unable t transmit via ABI? Cntact assigned CBP Client Representative, r CBP Help Desk at 1-866-530-4172. What if yu receive a number f rejects? If Drawback Errr Message use Dictinary prvided in the CATAIR t research yur errr message. If existing errr message, update the claim and resend. If yu d nt agree with the errr message, send yur issue t OTDRAWBACK@cbp.dhs.gv. If transmitting claims via ABI and n respnse message? Cntact yur CBP Client Representative r CBP Help Desk at 1-866-530-4172. 15
Call t Actin Review yur drawback prgram Determine if new rules have expanded yur pprtunities Determine whether they may be any peratinal changes required t supprt under TFTEA drawback Are new applicatins required? Will yur next claim be under cre drawback vs. TFTEA? Mnitr updates 16
Q&A Any questins? 17
Thank Yu. Mark Truchan Directr PwC Custms & Internatinal Trade Practice +1 (646) 471 2102 / mark.truchan@pwc.cm 18
Thank yu fr attending! Fr additinal questins and infrmatin: Email: inf@usfashinindustry.cm Twitter: @usfashin Phne: +1-202-419-0444