Foreign Trade Zone (FTZ)
A Foreign Trade Zone (FTZ) is a designated area within the United States where foreign and domestic merchandise can be brought in without being subject to customs duties or taxes.
In the United States, a Foreign Trade Zone is a designated location where businesses can use special customs processes. Furthermore, by competing with foreign possibilities, these procedures serve to encourage US activity and value-added activities. They accomplish this by allowing businesses to postpone or cut duty payments on imported items and by providing other benefits. A location cannot be used for zone activities unless it has been cleared by local Customs and Border Protection (CBP) officials for FTZ activation. Moreover, CBP is in charge of all zone activities. Furthermore, Foreign Trade Zone locations and facilities remain under the jurisdiction of municipal, state, or federal governments or authorities.
Three Main Benefits of Being a Foreign Trade Zone (FTZ):
Customs Duties Reduced or Deferred: This is the major advantage of using a Foreign Trade Zone. Companies that bring products into an FTZ can avoid paying customs taxes until the commodities are removed from the zone. Furthermore, companies may be able to receive a complete refund of duties in some situations if the goods are later exported from the United States.
Streamlined Customs Procedures: Foreign Trade Zones provide expedited customs procedures that can assist businesses in saving time and money. When importing goods into an FTZ, for example, businesses are not required to file a formal customs entry.
Manufacturing and Assembly Flexibility: Finally, Foreign Trade Zones provide manufacturing and assembly flexibility, which can help businesses decrease costs and enhance efficiency. Companies, for example, can bring in parts from other countries duty-free, and they may repack and label goods in the zone duty-free.