US confirms permanent tax credit rules for imported craft beverages

The US Alcohol and Tobacco Tax and Trade Bureau (TTB) has finalised a rule making permanent the system that allows foreign producers to assign excise tax benefits to importers under the Craft Beverage Modernisation Act (CBMA).

The final rule locks in the reduced tax rate refund procedures for imported spirits, wine and beer. The regulation takes effect on 29 October, according to the TTB.

The rule makes permanent the temporary provisions first established under the CBMA, allowing foreign producers to assign reduced excise tax rates and tax credits to US importers. It also grants foreign producers an extra calendar quarter to submit their tax benefit assignments for a given year, moving the deadline from 31 December to 31 March of the following year.

According to the TTB, the change provides greater regulatory stability for importers who rely on these benefits to manage costs. The final rule also confirms that only the producer of the distilled spirits, wine or beer may assign the tax benefits.

Transition from CBP to TTB refund system

The CBMA, part of the US Internal Revenue Code, offers reduced tax rates or credits on qualifying volumes of beer, wine and spirits, including imported products. Previously, the US Customs and Border Protection (CBP) administered the system from 2018 to 2022.

From 1 January 2023, responsibility shifted from CBP to the TTB. As per the TTB, importers must now pay the full excise tax upfront to CBP before claiming a refund from TTB for any tax credits assigned to them by foreign producers.

The TTB stated that the final rule will not affect the existing processes within the TTB CBMA imports module, except for the extended assignment deadline.

Tariff threat casts shadow over festive season

The regulatory update comes as the US drinks sector faces growing pressure from potential trade barriers. A 15% tariff on European Union goods could reduce alcohol sales by nearly US$2 billion and threaten 25,000 American jobs, as reported by the drinks business.

A coalition of 57 alcohol industry organisations, including Diageo and Pernod Ricard, has written to President Donald Trump urging a resolution before the key holiday trading period. The appeal, issued through the Toasts Not Tariffs Coalition, argues that the tariffs could damage businesses during their busiest months.

“With the crucial holiday season approaching, a period that is essential to the success of our industries, we implore you to secure this important deal for the US as soon as possible,” the letter read.

Wine and spirits sector faces compounding pressures

Washington and Brussels agreed in July to impose a 15% tariff on most EU goods, avoiding a broader trade war but excluding wine and spirits from any exemption. Industry representatives have warned that this could raise prices for consumers, damage American hospitality businesses and intensify existing pressures.

Wine sales have already been slipping in favour of other drink categories, while spirits, which recently overtook beer in popularity, are also being squeezed by rising living costs and shifting consumer preferences.

Europe remains a key market for US whiskey and other spirits, while the US is the largest export destination for European wine and spirits. The EU has included some US alcohol products on a list for potential retaliatory measures, but has delayed implementation for six months.

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