Foreign Trade Zones (FTZs) are commerce sites (industrial sites, buildings) set up in or near U.S. Customs ports of entry where merchandise is considered legally outside U.S. Customs territory. FTZs are a fiscal tool which can reduce duty payments, streamline supply chain costs and improve a company’s competitive position in domestic and foreign markets.
FTZs can help businesses by:
MINIMIZING DUTY PAYMENTS
Deferring and Reducing Duty Payments
Merchandise in inventory within an FTZ may be held indefinitely without paying Customs duty. You only pay duty when the merchandise is brought into U.S. Customs territory so you can manage and conserve cash.
Your goods may be cleaned, stored, tested, assembled, manipulated (subject to required approvals), displayed or destroyed while in the Zone. If you combine domestic and foreign goods in an FTZ, duty is paid only on the foreign content of the finished product imported into the U.S. market.
Making Duty-Free Exports
Goods imported and stored in a Foreign Trade Zone may be re-exported without ever incurring Customs duties, avoiding lengthy drawback procedures.
Reducing Inventory Taxes
Goods imported and held in an FTZ, and tangible personal property produced in the U.S. and held in a Zone for exportation, are not subject to state and local value-added taxes. Most state and county tax authorities exempt all merchandise in an FTZ from inventory taxation.
MAKING DISTRIBUTION EASIER AND MORE PROFITABLE
Improving Quality Control
The FTZ may be used to inspect your incoming products duty-free. Product not meeting specifications can be repaired, re-exported or scrapped without duty payments.
Comply with Country of Origin Marking/Labeling
Correct marking and/or labeling may be applied on merchandise in an FTZ. This can substantially reduce expenses for improper marking on goods entering the U.S
Reduce Overhead-Increase Profit
Production or assembly operations within an FTZ can result in significant savings. By importing finished product, U.S. duty is applicable on foreign labor, overhead and profit since it is included in the value of the product. Substantial savings in duty may be obtained by making the finished product within an FTZ.
Managing Products Subject to Import Quotas
Merchandise under quota restrictions can be stored until quotas are changed or lifted. Quota-restricted goods may also be processed in a Zone into products not subject to a quota.