| FTZ BENEFITS |
Deferral of duties
Customs duties are paid only when and if merchandise is transferred into U.S. Customs territory. This benefit equates to a cash flow savings that allows companies to keep critical funds accessible for their operating needs while the merchandise remains in the zone. There is no time limit on the length of time that merchandise can remain in a zone.
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Duty Elimination
Goods may be imported into, and then exported from, a zone without the payment of duty and excise taxes except to certain countries, such as NAFTZ counties, in which case, any applicable duty and excise tax will be levied. Goods may also be imported into, and destroyed in a zone, without the payment of duty and excise taxes.
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Reduction of Duties
This process allows users, with permission of the FTZ Board, to elect the lower duty rate of that applicable to either the foreign input or the finished product manufactured in the zone. For example, the duty rate on an imported muffler for an automobile is 4.5 percent if imported directly into United States commerce. However, if that muffler if brought into a Foreign-Trade Zone and incorporated into an assembled automobile, the duty rate on the finished automobile, including the muffler, is 2.5 percent.
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Tax exemption
Since goods in a zone are considered to be in international commerce, merchandise imported from outside the United States and held in a zone; as well as merchandise produced in the United States and held in a zone for exportation, are not subject to State and local ad valorem taxes.
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Quotas
United States quota restrictions do not apply to merchandise admitted to zone, though quotas will apply if and when the merchandise is subsequently entered into U.S. commerce. Quota merchandise may be stored in a FTZ so that when the quota opens, the merchandise may be immediately shipped into U.S. Customs territory.
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Security and Insurance Costs
Customs security requirements and federal criminal sanctions are deterrents against theft. This may result in lower insurance costs and fewer incidents of loss for cargo imported into a FTZ.
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Other
Additional benefits, sometimes referred to as intangible benefits, have begun to play a greater role in a company’s evaluation of the FTZ program. Many companies in FTZs find that their inventory control systems run more efficiently, increasing 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 entries, which facilitate the timely movement of cargo in and out of the country and improve competitiveness.
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