CUSTOMER SOLUTIONS

Duty Drawback and Credit Note Protocol

The Nigeria Customs Service (NCS) has granted strategic exemptions from the 4% Free-on-Board (FOB) levy to key economic players, including the Manufacturers Association of Nigeria (MAN) members, commercial airline operators, healathcare goods and government projects with Import Duty Exemption Certificates (IDEC).

Speaking at the event recently the Custom Comptroller General granted Credit/future usage for Prior Payments: Any 4% FOB payments already made by manufacturers who are yet to be onboarded will be held as credit and utilized for future customs-related transactions.

In the intricate world of international trade, various mechanisms exist to facilitate smoother transactions and encourage commerce across borders. One such mechanism is duty drawback, a process that offers significant benefits. Let Our Expertise work for you on this.

What is Duty Drawback?

Duty drawback is a customs procedure that allows businesses to claim a refund of certain duties, taxes, and fees paid on imported goods when those goods are subsequently exported or used in the production of exported goods. Essentially, it serves as a mechanism to alleviate the burden of import duties, encouraging businesses to engage in international trade.

Duty drawback is a valuable tool for businesses engaged in international trade, offering cost savings, cash flow improvement, and competitive advantages. By understanding the intricacies of duty drawback and navigating the associated challenges effectively, Your businesses can maximize their benefits and enhance their competitiveness in the global marketplace.

Types of duty drawback

  • • Direct Export Drawback: This type of drawback applies when imported goods are exported in the same condition as they were imported, without undergoing any further processing or manufacturing.
  • • Indirect Export Drawback: Indirect export drawback applies when imported goods are used as inputs in the production of exported goods. In this case, the drawback is claimed based on the quantity or value of the imported inputs used in the exported products.
  • • Substitution Drawback: Substitution drawback allows businesses to substitute domestic goods for imported goods in the production process. This can be advantageous when domestic inputs are cheaper or more readily available than imported ones.
  • • Unused Merchandise Drawback: If imported goods are exported or destroyed without being used in the production of other goods, businesses may be eligible for unused merchandise drawback, wherein they can claim a refund of the duties paid on the unused goods.

Benefits

  • • Cost Savings: By reclaiming import duties, businesses can significantly reduce their production costs, making their products more competitive in the global market.
  • • Cash Flow Improvement: Duty drawback provides businesses with a source of cash flow, as they receive refunds for duties paid on imported goods. This liquidity can be reinvested into the business or used for other operational expenses.
  • • Promotion of Exportation: Duty drawback serves as an incentive for businesses to export goods, thereby promoting international trade and economic growth.
  • • Competitive Advantage: Businesses that leverage duty drawback effectively gain a competitive advantage in the marketplace, as they can offer lower prices or higher profit margins compared to competitors who do not utilize duty drawback.

Cost-Benefit Analysis: Before engaging in duty drawback, businesses should engage Mickey Excellency to conduct a thorough cost-benefit analysis to assess the potential savings and determine if the administrative burden outweighs the benefits.

Won't you rather deal with Mickey Excellency to take you through the Customs process technicality as it relates with your shipments with ease,our efficiency and expertise will work for you.

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