Glossary / Inward Processing
Inward Processing — explained
Inward processing (IP) is a conditional customs procedure that allows raw materials or intermediate goods to be used in manufacturing a product for export to be imported either without paying customs duty, or with the duty paid and later refunded, in exchange for an export undertaking.
Under Articles 108-122 of Customs Law No. 4458, inward processing has two forms of application: under the conditional relief system, duty is secured by a guarantee, and the guarantee is released once the goods are converted into the export product and leave the country; under the drawback system, the duty collected on entry of the goods into free circulation is refunded once the processed product has been exported.
To benefit from the procedure, an Inward Processing Authorisation (DİİB) must first be obtained; the authorisation defines in advance which raw material converts into the processed product at what rate (including wastage), and the timetable by which the export undertaking must be closed. The length of the undertaking period varies with the product group and the manufacturing process; the exact period is set by the relevant authority at the application stage.
The difference between the two systems is the timing of payment, not the relief itself: under conditional relief, duty is never collected and a guarantee is used instead; under the drawback system, duty is collected first and refunded once the undertaking is fulfilled. A company's cash flow and guarantee capacity determine which of the two systems is preferred.
When You Encounter It
For a manufacturer that buys raw materials or intermediate goods from abroad, processes them, and re-exports them, IP is a choice that removes import duty from the equation at the outset — but that choice creates an export undertaking. The decision is made at the production planning stage, not at the moment of import; switching to IP afterwards is not always as straightforward.
If the same manufacturer also wants to use part of the imported input for domestic sale — that is, not all of the production will be exported — the scope of the procedure and the undertaking rate are narrowed accordingly; this mixed use must be declared from the outset in the authorisation application. We explain what this procedure means in practice for a manufacturing exporter on our manufacturing exports sector page.
What It Doesn't Cover
- If the export undertaking is not discharged on time, the suspended duty is recovered with default interest, and a penalty may also arise depending on the circumstances; exactly how much extra time can be granted and under what conditions is decided by the relevant customs authority on a case-by-case basis — giving a single fixed figure here would be misleading.
Often Confused With
| Comparison | Difference |
|---|---|
| Inward Processing vs Customs Warehousing | In a customs warehouse, goods are held as they are, without being processed. Under inward processing, the goods must go through a manufacturing or processing operation and be converted into a new product, and it is that product that is exported — the two are separate procedures serving different purposes. |
| Inward Processing vs Temporary Admission | Under temporary admission, the goods themselves are used for a set period without being processed, and are then re-exported unchanged. Under inward processing, the goods are processed and converted into a different product, which is then exported in that new form; the state of the goods at the point of exit is different under each procedure. |
Frequently Asked Questions
What is inward processing?+
It is a conditional customs procedure that allows raw materials or intermediate goods to be used in manufacturing a product for export to be imported either without paying customs duty, or with the duty paid and later refunded, in exchange for an export undertaking.
What is an Inward Processing Authorisation (DİİB)?+
DİİB is the authorisation that must be obtained before import in order to benefit from inward processing; it defines in advance which raw material converts into the processed product at what rate, and the timetable for the export undertaking.
What is the difference between the conditional relief system and the drawback system?+
Under conditional relief, duty is never collected and a guarantee is used instead, which is released once the undertaking is fulfilled. Under the drawback system, duty is collected first and refunded once the export undertaking has been completed. The difference lies in the timing of payment, not in the relief itself.
What does the export undertaking mean under inward processing?+
The export undertaking is a binding declaration a company gives to the customs authority that the imported raw material will be converted into the processed product at the set rate and exported. Until the undertaking is closed, the duty advantage the procedure provides does not become final.
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Related Terms
Where This Term Comes Up in Our Work
Inward Processing is one of the documents we track in our customs brokerage service.
Customs BrokeragePreparation, registration, and tracking of your import and export customs declarations.The Turkish original of this page was reviewed by our licensed customs broker. This translation is provided for information; the Turkish version prevails.
Source
Customs Law No. 4458, Articles 108-122 — Republic of Türkiye Presidency Legislation Information System — The provisions governing the conditional relief and drawback systems under inward processing. Implementation detail is set out in the Customs Regulation, Articles 319 and 345-369.
Last updated: September 27, 2026