What Israeli Companies with U.S Operations Should Review Now
Tax update, May 2026: U.S customs duty refunds have become a prominent issue in recent months for companies operating in the U.S market, importing goods into the United States, or maintaining an international operating structure. For Israeli companies, this issue is not limited to the question of whether money can be recovered. It also relates to documentation, the way import costs were treated within the group, and the potential impact on pricing, reporting, and commercial agreements.
In the U.S market, companies are already reviewing refunds in significant amounts. For an average Israeli company, the amounts will usually be lower, but the complexity can be very similar. Once a company operates through several entities or sells in the United States through a group structure, a customs duty refund turns from an operational issue into one that requires a broader and more organized review.
This article explains what Israeli companies should review before taking action to obtain U.S customs duty refunds, which documents should be gathered, and how to assess the potential impact on pricing, intra-group settlements, and international operations
First question: Who actually absorbed the customs duty cost?
The first step is to identify who is listed as the importer, but the review should not stop there. In most cases, it is also necessary to examine who actually bore the cost. There are cases where the U.S company paid the customs duty at the border, but the cost was later passed on to customers, to a distributor, or to another company in the group. If that is what happened, the refund cannot be treated as “clean” money that automatically remains with the entity that made the payment.
This point has very practical significance for Israeli companies operating in the United States through several layers of activity. If the cost was already included in the price, or considered in settlements between related companies, the implications of receiving the refund within that structure need to be understood. Without that review, it is very easy to reach a conclusion too quickly.
Second question: What has the company already done with the customs duty cost?
In many companies, import costs do not remain merely an internal expense line. They affect the price at which products are sold, the profitability of U.S activity, and the way the group evaluates the performance of related companies. Therefore, before reviewing a refund, the company should look back and examine how that cost was treated in real time.
If prices in the United States were updated because of import costs, and if the profitability of the subsidiary was affected by those costs, a later refund may raise questions that are not limited to customs. It may require a fresh review of pricing, internal documents, and intra-group settlements. Not every case requires a change, but the company should understand whether the refund fits into the existing picture or changes it.
Third question: Do the documents tell one clear story?
This is where many companies discover that the main difficulty is not the entitlement itself, but the ability to prove the facts in an organized way. The customs documents may be held by one person, the accounting records by another, the customer agreements elsewhere, and the settlements between group companies may not be gathered in one file at all. In that situation, even if there is a real possibility of obtaining a refund, the path toward it becomes more complex.
Before moving forward, the factual basis should therefore be collected: import records, payment confirmations, accounting reports, commercial agreements, and agreements between related companies, if any. The purpose is not only to show that customs duty was paid, but to present a consistent picture of how the cost was recorded, allocated, or passed on throughout the transaction chain.
Fourth question: Could anyone else be affected by the refund?
A customs duty refund does not always remain an internal matter between the company and the customs authorities. If customer pricing was previously affected by import costs, commercial questions may arise. If a distributor or business partner bore part of the economic impact, that party may also view the outcome differently. Within an international group, one company may hold the import documents, while another company may argue that it bore part of the cost.
The reason to consider this in advance is straightforward: a company that does not review the full picture may handle one aspect correctly while creating disorder elsewhere. When action is taken on time and in an organized manner, these points can be identified in advance, and a more consistent approach can be built.
Illustrative example
Assume that an Israeli company sells products in the United States through a U.S subsidiary
During the year, the subsidiary imported goods in approximately 15 million $ and paid customs duties of approximately $900,000. Following the increase in import costs, the company raised prices on some products in the United States, while also reviewing the profitability of the local activity based on the new cost structure.
A possibility now arises to review a refund of $600,000. At this stage, the company cannot limit itself to asking whether it meets the conditions for receiving the money. It needs to examine whether the cost that was already considered in prices and profitability reviews now requires an additional review. It also needs to be understood whether the refund should remain entirely with the U.S company, or whether it affects the intra-group settlement. Without clear answers to these questions, even a refund that appears positive can become an issue that creates internal disputes and duplicated work.
How should companies prepare now?
The right approach starts with the facts. The company should map the imports, the costs, the parties involved, and the documents. It should then examine how the cost was treated in practice – in prices, in reports, and in settlements between entities. Only once the picture is clear can the company decide how to proceed.
For companies with international operations, this stage usually requires a broader view than the customs aspect alone. The internal teams, the countries involved, and the operational, legal, and tax aspects should be aligned. Proper strategic guidance can assist not only in reviewing entitlement, but also in building an organized process that reduces uncertainty later on.
In summary, U.S customs duty refunds can create real value for Israeli companies operating in the U.S market. However, the decision on how to proceed should not be based only on the potential refund amount. The company should understand who bore the cost, how the cost was treated, which documents support the picture, and whether the refund also affects other parties within or outside the group.
A company that reviews these matters in advance is in a better position to act in a precise, consistent, and organized manner. This is usually the right way to turn a complex event into an opportunity that is properly managed.
Nimrod Yaron & Co. specializes in Israeli and international taxation. Our team is composed of professionals with years of experience at the Israel Tax Authority, as well as experience at leading firms and law offices, bringing together a legal and economic perspective. We advise private and public companies, Israeli and foreign companies, global venture capital funds, and clients seeking focused advice in clear and accessible language. We also work with a professional network of accounting firms and law firms around the world, enabling us to provide comprehensive support in cross-border matters.
If your company imports into the United States, operates through a U.S subsidiary, or is reviewing the possibility of customs duty refunds, this is the time to conduct a strategic cross-border review. Early guidance can help map entitlement, build appropriate documentation, review commercial and tax implications, and formulate a consistent approach across Israel, the United States, and the other jurisdictions relevant to your operations.
FAQ
Can every company that paid customs duties in the United States receive a refund?
No. The importer’s identity, the type of entries, the relevant deadlines, and the quality of the supporting documentation must be reviewed.
Why is it not enough to check only who paid the customs duty?
Because a technical payment at the border does not always reflect who actually bore the cost within the transaction chain or the group.
Which documents should be gathered at the beginning of the review?
Import records, payment confirmations, accounting reports, commercial agreements, and documentation of settlements between related companies.
What is the first step a company should take now?
Prepare an organized mapping of the imports, costs, documents, and impact on pricing, profitability, and intra-group settlements.
