BENEFITS FOR BUSINESSES:   

FTZ’S lend a hand to US companies by improving competitiveness against their counterparts abroad.

• Defer, Reduce, or Eliminate Duties

Duty is not paid on labor, overhead, or profit for production operations in FTZ’s. Duty is not to be paid until cargo enters into the US Customs and Borders Protection, and is never paid if the merchandise is exported to a country outside the US. There is also duty reduction on component materials and finished products. In addition, duties are reduced or eliminated completely on scrap material that is either returned or destroyed.

• Inventory Tax (Ad Valorem Tax) Exemption

Any tangible personal property imported from outside the US, and any tangible personal property produced in the US and designated for export, all of which are held in the zone are not subject to state or local ad valorem taxes.

• Elimination of Drawback

In some cases, duties previously paid on exported merchandise may be refunded through a process called drawback. The drawback law has become increasingly complex and expensive to administer. By using FTZ’s, drawbacks may be eliminated keeping these funds within the company’s capital.

• Exhibition Space

Merchandise may be held in a zone for as long as needed without Customs or duty payments. Eventually, it may be entered into US territory or exported.

• Security

FTZ’s follow Customs’ supervision and security procedures, which save operator’s customers expenses for security and insurance.

• Zone-to-Zone Transfer

 Increasing numbers of firms are making use of transferring merchandise from one zone to another. Because merchandise is transported in-bond, duty may be deferred until the product is ready for entry into the U.S. Customs and Border Protection territory.

• Quotas

U.S. absolute quota restrictions do not apply to merchandise admitted to zones, although quotas will apply when the merchandise is brought into U.S. commerce. Merchandise subject to absolute quota, with the permission of the Foreign-Trade Zones Board, may be substantially transformed in a FTZ to a non-quota article that may then be entered into U.S. Customs and Border Protection territory, free of quota restrictions.

• Other

Supplementary benefits, sometimes referred to as intangible benefits, have started playing a greater role in a company's evaluation of the FTZ program. Many companies in FTZs find that their inventory control systems operate more efficiently, escalating their competitiveness. FTZ users also find that in meeting their FTZ reporting responsibilities to the U.S. government, they are eligible to take advantage of special Customs procedures, such as direct delivery and weekly entry. These procedures expedite the movement of the merchandise, so they are able to apply just-in-time inventory methodologies.