Overview & Benefits
Fundamentally, the FTZ designation provides the ability to defer, reduce, or eliminate Customs duties on imported goods admitted to a zone. Among a variety of other benefits, the highlights are:
Deferral of Duties
As a rule, Customs duties are paid when the merchandise enters into U.S. Customs territory. Since the FTZ is considered outside of Customs territory, the duties are delayed until the products exit the zone. This provides cash flow savings and allows companies to keep funds accessible for operational necessities while the merchandise remains in the zone. Unlike bonded warehouses, there is no time limit on the length of time that merchandise can remain.
Reduction of Duties
Operators of Foreign Trade Zones are allowed to elect the zone status of the merchandise upon admittance to the zone. This status determines the duty that will be applied to the foreign merchandise when it exits the zone. Operators may elect the duty rates that apply to either the foreign inputs or the finished product produced in the FTZ, whichever is lower.
Elimination of Duties - Exports & Scrap
For merchandise that is produced and re-exported or scrapped material that is wasted in production within the zone, the products never technically enter the U.S. market. Therefore, Customs duties are completely eliminated.
For companies that file a significant volume of Customs entries, a substantial way to save is through filing only one entry per week - rather than filing one entry for each shipment as is normally required by federal law. This results in a reduction in the overall amount due for Merchandise Processing Fees (MPF) owed for each entry.