DEFINITION of 'Drawback'

Any form of tax or tariff that is rebated to the payor. This type of rebate is awarded to importers and exporters who paid tax on goods imported into their home country, and then exported those goods after they arrived. Drawbacks allow importers to temporarily store or use their goods in the U.S. without paying a non-refundable tax.

BREAKING DOWN 'Drawback'

The goods that are exported do not have to be in the same form as when they were imported. For example, if raw materials were imported and used to manufacture another good, then the drawback will be paid if the manufactured goods are exported.

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