DDTC to Finalize Increased Registration Fees Next Month
The State Department is finalizing an April proposed rule that will raise fees for registration with the Directorate of Defense Trade Controls, the agency’s first fee increase in 15 years (see 2404230033).
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The agency “assessed that after fifteen years of inflation, increasing technological improvements, and improved services, that an increase in the amount of registration fees is necessary for the continued and modernized operations of DDTC," it said.
The final rule, effective Jan. 9, will raise fees for Tier 1 registration from $2,250 to $3,000 per year, and the Tier 2 registration fee will rise from $2,750 to $4,000. The baseline Tier 3 registration fee also will rise, from $2,750 to $4,000, and those registrants will face an additional, higher fee multiplier for each favorable license determination in the past year, which will rise from $250 to $1,100 each. The rule also will make other revisions to the tier criteria for certain registrants.
The rule is largely unchanged from the proposed version, with one minor correction to fix a typo in the agency’s additional fee multiplier, which had been incorrectly listed in two places as $1,110 instead of the correct amount of $1,100.
DDTC also used the final rule to respond to public comments it received on the proposed version, saying that some companies said they were worried the increased fees would be a “barrier to entry” and an “unjust burden on small business.” One commenter specifically said the new fees will be “especially difficult” for manufacturers that don’t export but are required by large corporations to register with DDTC before the corporation will do business with them. For some smaller companies and manufacturers, the registration fee may be as much as “1 percent of their gross revenue,” the commenter said, according to DDTC.
The agency stressed that any businesses not “manufacturing, exporting, or temporarily importing defense articles are not required” to register with DDTC, adding that any requirement by a large corporation that forces a non-exporter to do so is “outside the scope” of the International Traffic in Arms Regulations.
DDTC also said it “acknowledges and understands” concerns about how fees may impact small businesses, and said it will allow certain Tier 1 registrants to petition the agency for a $500 discount off their fee. Those registrants “must provide some form of proof that $3,000 was 1 percent or more of their total revenue for the last calendar year.”
The agency also said Tier 2 and Tier 3 registrants whose registration fees are greater than $3,500 can petition DDTC for a “pre-set alternate payment schedule” if they can prove the fee is more than 1% of their total sales in the given year. DDTC also offers discounts for certain Tier 3 renewals, it said.