Benefits of FTZ

  • DUTY EXEMPTION ON RE-EXPORTS: If merchandise is re-exported after being placed in a FTZ or shipped to another FTZ and then re-exported, then no duty is ever paid.
  • RELIEF FROM INVERTED TARIFFS: Generally, if foreign merchandise is brought into a FTZ or Subzone and manufactured into a product that carries a lower duty rate, then the lower rate applies.
  • DUTY ELIMINATION ON WASTE AND SCRAP: No duty is charged on most waste and scrap from production in FTZs.
  • AD VALOREM (Inventory) TAX RELIEF: The FTZ program allows companies to obtain exemptions from inventory taxes while merchandise is located inside the FTZ
  • WEEKLY ENTRY SAVINGS ON MERCHANDISE PROCESSING FEE (MPF): Every formal customs entry has a processing fee of $25 to $485 depending on the value of the merchandise. An FTZ can utilize the Weekly Entry Procedure where all entries are combined on a single form for single weekly payment
  • NO DUTY ON REJECTED OR DEFECTIVE PARTS: Merchandise found to be defective or faulty may be returned to the country of origin for repair or simply destroyed. Whichever choice is taken, no duty is paid. Many companies suffer from the “double duty crunch.” That is, they pay duty on imported merchandise, find it to be faulty and return it to the country of origin for repair, and then pay duty again when the merchandise reenters the United States. If you are a FTZ user or Subzone, the “double duty crunch” is never a problem, because your merchandise never enters the commerce of the United States.
  • DUTY DEFERRAL: No duty is ever charged on merchandise while it is in a FTZ, and there is no limit on the length of time merchandise may be kept in a FTZ. By deferring the duty, capital is freed for more important needs.
  • ZONE TO ZONE TRANSFERS: A vendor located in one FTZ can sell goods to another company in another zone and transfer those goods without payment of duty
  • NO DUTY ON DOMESTIC CONTENT OR VALUE ADDED: The “value added” to a product in a FTZ (including manufacture using domestic parts, cost of labor, overhead and profit) is not included in its dutiable value when the final product leaves the Zone. Final duties are assessed on foreign content only.
  • NO DUTY ON SALES TO THE U.S. MILITARY OR NASA: No duty is charged on merchandise sold from a FTZ to the U.S. Military or NASA, returned to the country of origin for repair or simply destroyed. Whichever choice is taken, no duty is paid.

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