What is the difference between a tax refund and a tax credit?

A tax refund is a repayment of excess tax already paid (e.g. overpaid income tax or VAT on a return), while a tax credit directly reduces your tax liability (e.g. an R&D tax credit or import duty credit). In ecommerce, duty drawback on returned international orders functions more like a refund Swap automatically reclaims this for brands shipping DDP cross-border.