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What Is an FTZ?

What Is an FTZ?. Trey W. Boring, Sr. Vice President IMS Worldwide, Inc. Consultant to the City of West Memphis, Arkansas FTZ #273. What Is an FTZ?. An area inside the United States that is designated as being outside Customs Territory. Where items are brought into the Zone duty free.

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What Is an FTZ?

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  1. What Is an FTZ? Trey W. Boring, Sr. Vice President IMS Worldwide, Inc. Consultant to the City of West Memphis, Arkansas FTZ #273

  2. What Is an FTZ? • An area inside the United States that is designated as being outside Customs Territory. • Where items are brought into the Zone duty free. • Where Customs duty is determined when the merchandise leaves the Zone.

  3. What Is a Zone Site? • An Industrial Park. • An Industrial Development Inside a Port or Airport. • A Company’s Facility.

  4. What Can I Do in an FTZ? • Distribute • Store • Test and Inspect • Repack • Assemble • Repair • Manufacture

  5. How Do I Make Money in an FTZ? • Duty Deferral • Duty Elimination • Duty Reduction • MPF Savings

  6. Duty Deferral • Duty is not paid when an item enters the Zone. • An item enters the Zone in January. • Duty is paid when the item leaves the Zone. • The item leaves the Zone in April. • Four months of duty deferral.

  7. Product A Duty Owed Received January Foreign-Trade Zone Shipped April Product A Duty Paid

  8. Duty Elimination • Testing and inspection is conducted in the Zone duty free. • All rejected and destroyed items are duty free. • Exports are duty free. • All items exported from the Zone are duty free.

  9. Foreign-Trade Zone Inbound Goods Inbound Goods Quality Control Receiving Process Scrapped Duty Free

  10. Product A Exported Duty Free Export Imported Product A Foreign-Trade Zone

  11. Duty Reduction • For manufacturing Zones. • The Zone allows a company to choose the lowest duty rate associated with its components and finished product(s). • A company imports 3 components. • A has a duty rate of 10%. • B has a duty rate of 9%. • C has a duty rate of 8%.

  12. Duty Reduction • The company’s finished product has a 5% duty rate. • The company will pay for the value of the components at the finished product rate. • A from 10% to 5%. • B from 9% to 5%. • C from 8% to 5%. • This reduction means a savings of 5% to 3%.

  13. Foreign-Trade Zone Final Product 5% Duty Rate Component A 10% Duty Rate Manufacturing Process Component A 5% Duty Rate Component B 9% Duty Rate Component B 5% Duty Rate Component C 8% Duty Rate Component C 5% Duty Rate

  14. Merchandise Processing Fee Savings • Each entry into the United States is assessed a Merchandise Processing Fee (MPF). • Foreign-Trade Zones are allowed one entry per week. • The MPF is collected on that one entry.

  15. 15 shipments per week. MPF $7,275 Shipments into commerce Foreign-Trade Zone 15 shipments per week; one entry filed at end of week. MPF $485 Foreign-Trade Zone Shipments into commerce with weekly entry.

  16. IMS Worldwide, Inc Foreign-Trade Zone Consultants Over 197 Projects Completed Nationwide Rated #1 in Customer Service for over 30+ years

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