Canada's Duty Drawback Program for imported then exported goods.

Trade Incentive Programs in Canada

Maximize Profitability on Your Exports Out of Canada

Kyzo Third Party Logistics provides international shipping support to help manage the duty drawback for both large and small brands who are importing and exporting their goods in then out of Canada and the United States. The government of Canada, under the Foreign Trade Zone, provides incentive relief programs to help businesses who import products into Canada, who then exports those products outside of Canada, within a specific time frame, to recoup some of their duty costs and to encourage more trade into and out of Canada. This is called Drawback, or Duty Drawback.

What is Duty Drawback?

A Drawback is essentially a refund of customs duties and taxes that a business pays while importing products into Canada that are later exported to a different country. The Canadian Foreign Trade Zone (FTZ), administered by the Canadian Border Service Agency (CBSA), provide this business incentive to help promote Canadian innovation and manufacturing internationally. This incentive is call Duty Deferral Program (DDP).

According to the government of Canada, the “DDP is Canada’s main FTZ-type program and covers three components which can be used individually or in combination, depending on your unique business needs”. This includes:

1. The duties relief program which provides upfront duties relief
2. The drawback program which provides repayment of import duties (after the imported goods have been re-exported or used in the manufacture of exported goods); and
3. the customs bonded warehouse program (CBW) – allows for the deferral of duties and GST/HST for up to four years.

Duty drawback is a way to offer businesses who qualify an opportunity to reduce the amount of impact of tariff duties by providing a refund of up to 99% on the percent they paid in taxes and certain fees collected upon the importation of goods.

How does Duty Drawback work?

Duty Drawback Example

Let’s say a company has $500,000 worth of product manufactured in India and the duties paid on that product entering into Canada is 25%. This means that you have to pay $125,000 in duty fees. Assuming that all this product will subsequently be exported back out of Canada to either the United States or another country, under the trade incentive program, we can recover those duties back either in full or partially.

Trying to manage duty drawback can get quite complicated to navigate for any business. Kyzo 3PL has the experience, knowledge and processes in place to help small to large retailers manage and handle all duty drawback efforts to ensure they recoup as much duties and taxes paid as possible.