Duty Deferral Imports may be admitted and held in a foreign-trade zone without paying U.S. Customs duties. Customs duties are paid only when imported merchandise is shipped into U.S. Customs territory. This benefits the cash flow operation of the business.
Inverted Customs Duty Savings FTZ users can pay the duty rate applicable to either raw materials or the finished product manufactured from the raw materials, depending upon which is lower.
Exports Customs duties are never paid on merchandise exported from a zone.
Defects, Damage, Obsolescence, Waste, Scrap Duties are reduced or eliminated on materials subject to defect, damage, obsolescence, waste or scrap.
International Returns Merchandise may be exported and returned to an FTZ without duty payment. It can be repaired and re-exported without duty payment.
Spare Parts Unneeded spare parts may either be returned to the foreign vendor free of duty or destroyed without duty payment.
Simplification of Import/Export Procedures Delays in Customs clearances and duty drawback are eliminated. Delivery times are reduced by direct shipments to the FTZ.
Nondutiability of Labor Overhead and Profit Customs duties are not owed on labor, overhead, or profit attributed to production operations in the FTZ.
Quality Control The FTZ may be used for quality-control inspections to ensure that only products that meet specifications are imported. Substandard goods can be destroyed before duty is paid.
Zone-to-Zone Transfer An increasing number of firms are transferring merchandise from one zone to another. Because the merchandise is transported in-bond, Customs duty is not owed until the product is finally shipped into the U.S.
Weekly Entry This allows 24/7 shipping during a week, with only one entry filed at the end of the next week. The FTZ operator pays only one Merchandise Processing Fee (MPF) for one weekly entry. This reduction translates into significant savings in MPF over a year. The maximum weekly entry is capped at $485. For a company not operating in a zone, it must pay an MPF for each individual entry.
U.S. Quotas Most merchandise may be held in the FTZ, even if it is subject to absolute quota restrictions. When the quota opens, the merchandise may be immediately shipped into the U.S. Customs territory.
Security The FTZ is subject to Customs supervision and security procedures, saving you, the FTZ users, expenses for security and insurance.
Harbor Maintenance Fee Fees are paid quarterly on merchandise admitted in the FTZ, not on U.S. Customs entry.
Inventory Control FTZ operations require careful accounting on receipt, processing and shipment of merchandise. Firms find that the increased accountability cuts down on problems with inaccurate receiving and shipping as well as waste and scrap.
Consumed Merchandise Merchandise consumed in processing in the FTZ is generally not subject to Customs duties.
Inventory Taxes By federal statute, tangible personal property imported from outside the U.S., and tangible personal property produced in the U.S. held in a zone for export are not subject to state and local ad valorem taxes. Most state and county tax authorities exempt all merchandise in the FTZ from inventory tax.
Exhibition Merchandise may be held for exhibition without Customs duty payments. Many companies use FTZs as display areas for merchandise and machinery.
Reduced Insurance Costs The insurable value of merchandise held in the FTZ need not include the Customs duty payable on the product. Therefore, insurance costs should be less.
Country of Origin Marking and Labeling No country-of-origin labels are required on merchandise admitted to the FTZ, saving a complicated procedure and up-front expense. If needed, the labels can be applied in the FTZ.
Transfer of Title Title to merchandise may be transferred in the FTZ, as long as there is no "retail" sale. The global supplier can own it until it is shipped just-in-time to local manufacturers.