FTZ vs. Bonded Warehouse

Advantages of Foreign Trade Zones vs. Bonded Warehouse

 

Function

 

Foreign Trade Zone

 

Bonded Warehouse

 

Customs Entry

 

A Foreign Trade Zone is not considered within customs territory. Customs entry is filed when goods are removed from the FTZ.

 

A bonded warehouse is within the US Customs territory. Customs entry must be filed for goods to enter the warehouse.

 

Customs Bond

 

A Bond is not required for goods in a FTZ. Admissions to the zone are covered under the FTZ operators Customs Bond.

 

Customs Bonds are required for all warehouse entries.

 

Permissible Cargo

 

Foreign and domestic goods may be placed in a FTZ.

 

Only foreign goods may be placed in a bonded warehouse

 

Payment of Duty

 

Duties are due only upon entry for

US consumption

 

Duties are due prior to release from bonded warehouses.

 

State & Local Inventory Tax

 

Foreign goods are not taxed as well as domestic goods that are to be exported are not taxed.

 

All goods are taxed.

 

Manufacture of Goods

 

Manufacturing is permitted within the FTZ. Duty is payable on either the imported components or the finished product, whichever has the lower rate. There is no duty on waste material or on value added manufacturing such as labor, overhead and profit.

 

Manufacturing is not permitted in a bonded warehouse.

 

Appraisal and Classification

 

The tariff rate and the value of goods may be determined either at the time of admission into a FTZ or when goods leave at the user’s discretion.

 

Tariff rates and the value of goods is determined immediately upon entering a bonded warehouse.

 

Storage Period

 

Unlimited

 

Not to exceed five years

 

Permitted Activity

 

Goods may be: sorted, destroyed, cleaned, graded, mixed with foreign or domestic goods, labeled, assembled, manufactured, exhibited, sold and repacked.

 

Goods may only be cleaned, repackaged and sorted under customs supervision. Duty is owned on entire shipment entering a bonded warehouse including waste and damaged goods.

 

Domestic Goods

 

May be admitted without customs permit and co-mingled with foreign goods.

 

May not be admitted.

 

Control of Goods

 

FTZ has full control of goods 24 hours a day.

 

Customs has primary control of goods. The goods can only be inspected and transferred during regular working hours in a bonded warehouse.

 

Movement of Goods

 

Movement of goods is relatively unrestricted in and out of an FTZ.

 

Movement of goods is limited in a bonded warehouse. Specific customs approval is required for each movement.