FTZ
General Purpose Foreign Trade Zone #70
Evans Distribution operates General Purpose Foreign Trade Zone #70. A Foreign Trade Zone, or FTZ for short, can be advantageous for many companies involved in the import and export of goods.
What is a Foreign Trade Zone?
An FTZ is a secured area within the United States, in or near a U.S. Customs port of entry, where foreign and domestic merchandise is considered to be legally outside of U.S. Customs territory. Certain types of merchandise can be imported into an FTZ without going through formal Customs entry procedures or paying import duties. Customs duties and excise taxes are due only at the time of transfer from the FTZ for U.S. consumption. What are the benefits of operating in a Foreign Trade Zone?
- Weekly Entry Savings: Under weekly entry procedures users save by only having to file ONE customs entry per week, rather then one per shipment, while maintaining the same maximum processing fee. There is a minimum $25 processing fee and a maximum of $485 per entry. The maximum is reached for any shipments valued over $230,952. By taking advantage of weekly entries companies can save substantial amounts. For example, if you receive 10 shipments per week valued over the maximum amount ($230,952) you would owe $4850 per week ($485 x 10), which annualized would amount to $252,000 ($4850 x 52) per year. By importing into a Foreign Trade Zone you can combine these shipments into one entry for the week for a total of $485 per week, or $25,220 per year. This simple example shows how a company could decrease their customs costs by $226,780 per year.
- Duty Exemption on Re-exports: Whenever a manufacturer imports a component or raw materials into the U.S. they are required to pay the duties once it enters the country. However, since the Foreign Trade Zone is considered to be outside the commerce of the United States and U.S. Customs, no duty is owed until the merchandise leaves the zone and enters the commerce of the United States. If the imported merchandise is exported back out of the country, no duty is ever due.
- Duty Deferral: Customs duty on merchandise brought into a Foreign Trade Zone is deferred until the goods are released from the Zone. Therefore, companies can avoid substantial amounts of money being tied up for custom duties on inventory until they are prepared to release into commerce.
- No Time Limits:There is no time limit placed on goods stored in an FTZ and goods can be released immediately, unlike bonded storage.
What functions can be done in a Foreign Trade Zone?
A variety of functions can be conducted in a foreign trade zone, including assembling, testing, re-work, cleaning, re-labeling, re-packing, co-packing with other foreign or domestic product, or destroying.
For more information on Foreign Trade Zones visit the NAFTZ website.
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