Duties paid in cash or recorded in books at the time of importation on raw materials, including components, parts, and semi-finished goods, for export products are allowed to be refunded or offset after exportation of the finished products. The practice is also known as duty drawback which may include forms such as "duties and taxes offset," "account offset" and "cash refund."
    Refund of customs duty on raw materials for export products is an internationally accepted mechnism. Paragraph 4 of Article 6 of the the General Agreement on Tariffs and Trade (GATT) provides, “No product of the territory of any contracting party imported into the territory of any other contracting party shall be subject to anti-dumping or countervailing duty by reason of the exemption of such product from duties or taxes borne by the like product when destined for consumption in the country of origin or exportation, or by reason of the refund of such duties or taxes.” Therefore, duty drawback may reduce production cost and enhance commercial competitiveness for the traders while free them from retaliation actions, such as anti-dumping or countervailing duty, taken by other countries.
    Application for offsetting or refund of duties and taxes on raw materials for exported products shall be filed within the prescribed time limit.  Applicants shall submit the application form along with duplicate copies of export declaration, import declaration and relevant supporting documents to Customs.
    Duties and taxes on raw materials for exported products applicable for offset and refund are limited to the following three categories:

1. Import duty.
2. Commodity tax.  (limited to those levied by Customs)
3. Business tax (limited to those levied by Customs)

    The business tax payable on imported raw materials which has been approved to be recorded on account shall be offset on a monthly basis based on the total exports in the same month. If the tax is paid in cash, the tax collection authority is in charge of the refund.
    The offset or refund follows the first-in first-out principle and the amount will be wire-transferred to the manufacturer's account by Bank of Taiwan.
   Standards for offsetting and refund of duties and taxes for export products:

1. General standard:Applicable for all manufacturers’ export products with the same product names and specifications (valid for five years maximum)
2. Special standard for individual manufacturer:Applicable for individual manufacturer only (valid for three years maximum)