Import tax refund is a key benefit for exporters that allows them to obtain a refund of the ad valorem tax paid on the importation of various inputs and goods. This mechanism is essential to maintain the competitiveness and liquidity of exporting companies, alleviating the tax burden and facilitating international trade.
Learn more about the DRAWBACK Program here, a scheme that allows exporters to request a refund of the General Import Tax (IGI) paid on the import of inputs and other materials. Find out who can benefit from this program and how you can request a refund of these taxes through the information below.
What is the DRAWBACK Program?
The DRAWBACK Program is an import tax refund scheme intended for exporters. It allows requesting the reimbursement of the IGI paid on the import of inputs, raw materials, parts and components, packaging and containers, fuels, lubricants and other materials incorporated into the exported product or returned in the same state. This program is an internationally accepted practice endorsed by the World Trade Organization (WTO).
The main objective of the DRAWBACK is that exported goods only pay taxes in the country where they are consumed. This helps to avoid double taxation and ensures that exporters can compete on a level playing field in the global market.
DRAWBACK program beneficiaries
The import tax refund is made to legal entities resident in the country that import and export inputs or goods under the definitive regime, if they request it. For example, a clothing company that imports fabric, buttons and other inputs necessary for the manufacture of shirts may request a refund of the tax paid on the importation of these inputs, once they are exported.
Likewise, a marketing company that has imported merchandise may return it to the supplier and request the IGI paid on import when:
- There is a surplus of merchandise.
- The merchandise is defective.
- The merchandise is out of season.
- The merchandise was not ordered.
- The goods do not meet the requested specifications (color, size, presentation, etc.).
Methods of returning goods
There are two main modalities for the refund of import taxes under the DRAWBACK Program:
- Goods and inputs incorporated into export goods (processed materials): Applicable to imported inputs or goods used in the manufacture of an export product.
- Goods that are returned abroad in the same state or after repair or alteration processes: Applicable to goods that are exported in the same condition or that have been subjected to processes that do not materially alter their characteristics, such as cleaning, conservation, labeling, packaging, etc.
Benefits of the DRAWBACK program to recover import taxes
The DRAWBACK Program offers important benefits for export companies, allowing them to recover import taxes paid on imported goods that return abroad in the same state. The taxes refunded are deposited by the Ministry of Finance and Public Credit in the beneficiary’s account through authorized banking institutions, helping companies to have the necessary liquidity to operate efficiently.
This program ensures that definitive imports have been made within the one-year timeframe and exports within two months prior to the application, providing significant tax relief. By taking advantage of the DRAWBACK Program, companies can improve their competitiveness in the international market and benefit from import tax refunds, which contributes to the growth and stability of their operations.
Source:
Gob.mx. (s. f.). gob.mx. https://www.gob.mx/tramites/ficha/devolucion-de-importes-de-cuentas-aduaneras/SAT5058
Nina. (2022, 20 junio). Adquirir apoyos para comercio exterior. Secretaría de Economía. https://e.economia.gob.mx/guias/adquirir-apoyos-para-comercio-exterior/
