There are several factors that go into the cost effectiveness of implementing FTZ for your business. Business operations, compliance regulations for the merchandise, customs duty, quota restrictions and taxes can all have an effect on the costs.
Depending on your business operations and the size of your business, FTZ can bring you savings on costs. GTK, with over 30 years of experience in global trade compliance and FTZ implementation lists some of the cost saving benefits of FTZ:
- The main cost saving advantage of FTZs comes from MPF savings, duty deferrals, reductions and eliminations on exports:
- You can defer paying duty and excise tax on imports until the merchandise leaves the FTZ
- No duty on goods destroyed in FTZ
- No duty or quota charges on re-exports except for countries under NAFTA
- You have the ability to move merchandise in-bond, zone to zone without duty
- No duty on labor, profits or overheads for merchandise within zones
- If the product is manufactured in the FTZ, and the US tariff rate for the product is lower, you will save on costs. You can pay the duty for the raw materials or the finished product, whichever is lower. You will not incur separate duties on waste, loss and scrap either.
- You can file a single entry for a week’s (7 consecutive days) worth of imports which saves costs on merchandising processing fees during the course of a year.
- Quota restrictions within the FTZ are more lenient. Imports can be retained in the FTZ even after quota is reached. The merchandise can be retained indefinitely and shipped after the quota restrictions are lifted.
- Merchandise consumed while processing in the zone is largely exempt from duties.
- Most merchandise in the zone retained for import or export are exempt from state and county inventory taxes. Goods held in the zone for exhibition are exempt from customs duty as well.
- For merchandise allowed in the FTZ, harbor maintenance fees are paid on a quarterly basis instead of on every US customs entry.
- You could save on insurance costs as the sum insured most often doesn’t include customs duty.
- Costs for country of origin marking and labeling can be cut down as labeling can be done after goods enter the FTZ.
- Subject to certain conditions(Zone restricted status merchandise), goods in the FTZ could be eligible for drawbacks and drawback claims can be filed while the goods are held in the zone.
- Inventory in the zone is managed carefully and meticulously avoiding any costs due to poor tracking and management.
As you can see, there are several cost-saving benefits to be gained from implementing FTZs.
GTK being a pioneer in the global trade management and compliance arena can help you with information about saving costs for your business through FTZs.