Are you an importer interested in the opportunity to defer duty and tax or reduce costs associated with duty and tax altogether?
Free Trade Zones (FTZ) might be a viable option.
FTZ programs have many forms including Foreign-Trade Zones (U.S. only), export processing zones, special economic zones, bonded warehouses, and maquiladoras.
Each country has their own set of rules and regulations for use and operation of FTZ, however, the general goals of an FTZ is to encourage job creation, use of local products and services, and streamline customs processes.
An increasing number of companies are also utilizing free trade zones as a means to reduce exposure to duties and taxes through accepted programs.
In the U.S., a Foreign-Trade Zone is a defined area, where foreign and domestic merchandise is considered outside the U.S. Customs territory.
Merchandise may be admitted for storage, repackaging, manipulation, destruction, and with prior approval by the Foreign Trade Zones Board, manufacturing and processing, without formal Customs entry procedures or payment of Customs duties and taxes.
Duties and taxes are applicable only at the time the merchandise leaves the Zone and enters the U.S. territory. Merchandise may also be destroyed within or exported from the zone without duty payment.
FTZ BENEFITS
Customs Entry: Goods withdrawn into the US are eligible for weekly entry and MPF is capped at $498
Duty Exemption: No U.S. Duty, MPF, Federal Excise Taxes, or Anti-Dumping Duties Applied to Re-Exports
Inverted Tariff Relief: Manufacturing companies
Inverted Tariff Relief: Manufacturing companies may elect the duty rate of either the imported inputs or finished products
Duty Deferral: Unlimited storage period, U.S. Duty and Federal Excise Taxes Deferred until Withdrawn into U.S.
Destruction/Scrap: Duty will not be assessed on product destroyed or scrapped
Companies will want to consider the capital cost, time investment, and compliance risks to determine if a Foreign-Trade Zone program is the right fit!
Download the below whitepaper to learn more about how Expeditors can support FTZ in your supply chiain!
