Can I Apply for Individual Refunds for Past Exports Upon First-Time Approval for Non-Application of Simplified Fixed Rate? Released

Regarding your inquiry concerning the approval for the non-application of the simplified fixed rate refund, if this is your initial approval and you have no prior record of receiving customs refunds, it is indeed possible to apply for an individual refund (bypassing the fixed rate schedule) for goods for which the export declaration was accepted prior to the approval date.

Legal Basis and General Principles

This matter is clearly stipulated in the Proviso of Article 14, Paragraph 7 of the Act on Special Cases Concerning the Refund of Customs Duties, etc. (hereinafter referred to as the 'Act').

In principle, when an approval for the non-application of the simplified fixed rate refund is granted, the fixed rate schedule is excluded only for goods offered for export or traded under a local letter of credit after the approval date. Therefore, the general rule dictates that exports prior to the approval date are subject to the simplified fixed rate.

Exceptions for First-Time Applicants

However, the Act provides a specific exception. If an applicant has no record of receiving customs refunds and receives the non-application approval for the first time, they may exclude the application of the fixed rate schedule even for goods exported prior to the approval date.

Please note regarding the "no record of refunds":

• Refunds for exports in the original state (under Article 3, Paragraph 1, Subparagraph 2 of the Act) are excluded from this history check.
• This exclusion exists because refunds for re-exporting imported goods in their original state (without manufacturing or processing) differ in nature from refunds based on manufacturing exports.

Consequently, if you meet these conditions, you qualify to apply for refunds via the Individual Refund Method for past exports. This provision serves as a systemic safeguard to prevent refund gaps or disadvantages when a company transitions from the simplified fixed rate system to the individual refund system.

Understanding Individual Refunds

The individual refund method involves calculating and refunding the exact duties paid on raw materials used in the manufacture of each export item. While this method is more complex than the simplified fixed rate system and requires extensive documentation (such as proof of material usage), it offers distinct advantages:

• Maximizing Refunds: If the duty rates on raw materials are high or the import unit prices are significant, the refund amount is often higher than what the fixed rate schedule would offer.
• Strategic Purpose: One of the primary reasons companies seek non-application of the simplified fixed rate is to leverage these benefits and maximize their duty drawback.

Required Documentation and Recommendations

When applying for an individual refund for the relevant export goods, you must prepare and submit a comprehensive set of documents, including:

• Import Declaration Certificates for the raw materials used.
• Statement of Calculation of Raw Materials (BOM/Usage Proof).
• Manufacturing Process Charts.
• Purchase and Production Ledgers.

Since applying for individual refunds for exports prior to the approval date involves retroactive application, the accuracy and completeness of your supporting documents are critical. It is highly recommended to prepare these documents thoroughly, potentially with the assistance of a professional Customs Broker, to ensure accurate calculation and successful processing of your claim.