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Foreign Trade Zone Duty Savings Examples

FTZ Duty Deferral Savings Example

  • Duty owed on goods may be deferred until the product leaves the FTZ for U.S. consumption. Importers can improve cash flow while providing faster response to customer’s needs by warehousing goods prior to paying duties. If the product is exported from the FTZ, no duty is owed to U.S. Customs.

FTZ Duty Elimination Savings Example

  • Manufacturers may realize significant savings on imported component parts that are destined for foreign markets. For example, imported speakers and headphones, when combined with other imported and domestic component parts in manufacturing a computer to be trans-shipped to foreign markets, qualifies for duty elimination.

FTZ Duty Reduction Savings Example

  • Importers may manufacture or process imported products within the FTZ and choose to pay the duty rate for either the component parts or finished goods, whichever is less. An example is the importation of a foreign automobile, which has a duty rate of 2.5 percent. Unfinished automobiles are imported into FTZs where final assembly occurs, including the addition of such items as glass mirrors, air conditioners, radios and bumpers.

FTZ Weekly Entry Savings

  • The weekly entry process available to companies in the FTZ may result in savings of up to 85 percent on Customs entries and Merchandise Processing Fees (MPF): Entry and MPF fees are paid weekly, rather than daily, saving time as well as brokerage fees.

FTZ Savings on Defective Goods, Damaged Goods and Waste   

  • Duties can be avoided on defective or damaged goods by inspecting and testing imported goods within the FTZ.

Additional FTZ Savings

  • Spare parts: Spare parts can be held in the FTZ without U.S. Customs duty payment, generating cash flow savings. Obsolete parts can be destroyed in the FTZ without duty payment.
  • Quota restriction avoidance: Imported quota merchandise can be warehoused in the FTZ duty free until the next quota period opens.
  • Temporary removal: Imported goods can be removed from the FTZ for 120 days while under bond for exhibition or repair.
  • Reduce inventory taxes: Goods imported and warehoused in the FTZ, as well as tangible personal property produced in the U.S. and held in the Zone for exportation, are not subject to state and local value-added taxes. Most state and county tax authorities exempt all merchandise in an FTZ from inventory taxation.
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38300 Sierra Highway, Palmdale, CA 93550 · 661/267-5100 · 661/267-5122 - fax

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