The FTZ program helps American and foreign companies improve their competitive position in the global market economy. The FTZ program allows U.S.-based companies to defer, reduce or even eliminate Customs duties on products admitted to the zone.
Deferral of Duties: Customs duties are paid only when and if merchandise is transferred into U.S. Customs and Border Protection 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.
Reduction of Duties: In a FTZ, with the permission of the Foreign-Trade Zones Board, users are allowed to elect a zone status on merchandise admitted to the zone. This zone status determines the duty rate that will be applied to foreign merchandise if it is eventually entered into U.S. commerce from the FTZ. This process allows users to elect the lower duty rate of that applicable to either the foreign inputs or the finished product manufactured in the zone. If the rate on the foreign inputs admitted to the zone is higher that the rate applied to the finished product, the FTZ user may choose the finished product rate, thereby reducing the amount of duty owed.
Elimination of Duties: No duties are paid on merchandise exported from a FTZ. Therefore, duty is eliminated on foreign merchandise admitted to the zone but eventually exported from the FTZ. Generally, duties are also eliminated for merchandise that is scrapped, wasted, destroyed or consumed in a zone.
Avoid Customs Fines and Seizures: Merchandise can be admitted into an FTZ without markings, visa or quota documentation, while bringing their products or documentation into compliance with customs regulations.
No Duty on Waste: Merchandise that arrives damaged or is subject to defect, obsolescence, waste, or scrap, can be returned, stored in the FTZ, or destroyed without having to pay duty or taxes.
Elimination of Drawback: In some instances, duties previously paid on exported merchandise may be refunded through a process called drawback. The drawback law has become increasingly complex and expensive to administer. Through the use of a FTZ, the need for drawback may be eliminated allowing these funds to remain in the operating capital of the company.
Labor, Overhead, and Profit: In calculating the dutiable value on foreign merchandise removed from a zone, zone users are authorized to exclude zone costs of processing or fabrication, general expenses and profit. Therefore, duties are not owed on labor, overhead and profit attributed to production in a FTZ. Taxes: By federal statute, tangible personal property imported from outside the U.S. and held in a zone, as well as that produced in the U.S. and held in a zone for exportation, are not subject to State and local ad valorem taxes.
Quotas: U.S. quota restrictions do not apply to merchandise admitted to zones, although quotas will apply if and when the merchandise is subsequently entered into U.S. commerce. Merchandise subject to quota, with the permission of the Foreign-Trade Zones Board, may be substantially transformed in a FTZ to a non-quota article that may then be entered into U.S. Customs and Border Protection territory, free of quota restrictions. Quota merchandise may be stored in a FTZ so that when the quota opens, the merchandise may be immediately shipped into U.S. Customs and Border Protection territory.
Zone-to-Zone Transfer: An increasing number of firms are making use of the ability to transfer merchandise from one zone to another. Because the merchandise is transported in-bond, duty may be deferred until the product is removed from the final zone for entry into the U.S. Customs and Border Protection territory.
Improve Cash Flow and Profitability: Through special Customs procedures such as Weekly Entry and Weekly Exports, companies can save on Customs transaction fees and expedite shipments out of an FTZ, thus improving their competitiveness.
Reduced Bond & Brokerage Costs: In an FTZ the cost of buying an entry bond is eliminated, and brokerage fees are reduced because there is no post entry work.
Electronic admission: Now available expedites and simplifies the human interaction for getting goods from the port of entry to the zone.
Some local advantages in FTZNo. 68
- One-stop shop, U.S. Customs Inspectors located onsite at FTZ administrative offices
- Strategically located on the U.S.- Mexico border
- Advanced telecommunications systems for clearing merchandise in and out of the zone
- Located on a major interstate highway system with international trucking facilities
- Access to rail facilities serving every major North American market
- Abundant air cargo handlers and facilities at a modern international airport
- Streamlined FTZ procedures for prompt distribution of merchandise
- Tax exemption of inventory held in active zone
The Small Manufacturing Business Accelerator (SMBA) Project The SMBA is a project that helps small manufacturing companies expand their markets or compete on a global basis through the use of El Paso’s Foreign-Trade Zone. The objective of this project is to act as a catalyst for development of business by reducing the start up cost and accelerating the approval process for a small manufacturing business to set up in FTZ No. 68.
- A business selected for this project would be permitted to activate a FTZ facility for a period of one year without any Grantee/Operator activation fee or transaction fees being charged to the business.
- FTZ Operations Training fees waived for up to four (4) key employees during initial year.
- Receive start up support from FTZ No. 68 Grantee/Operator.