Understand Better On How FTZ Works With Illustrations
Examples of FTZ Advantages
I. Matching Cost With Revenues/ Saving Cash Flows
Example 1: Duty Paid Up Front Upon Entry
The goods go directly into a “non-trade zone” facility to be distributed; sales are made in June, October, and February:
$39,000.00 duty is paid up front, cash outflow for sales not occurring for months.
Example 2: Duty Paid in Installments
The goods go into a Foreign Trade Zone in February; sales are made in June, October, and February:
The duty is paid in three payments when the goods are released for sale into the U.S. market, matching cash flows with sales.
II. IMPORTING PARTS FOR MANUFACTURE & ASSEMBLY/DECREASING DUTIES
III. IMPORTING PARTS FOR MANUFACTURE & ASSEMBLY/DECREASING DUTIES
When a product enters the United States border without proper labeling, missing documentation, or above quota, U.S. Customs will either seize the goods, fine the importer, or both.
Goods brought into an FTZ can be re-labeled to meet U.S. Customs requirements, await proper documentation, and be stored above quota without the threat of U.S. Customs seizure and stiff penalties.