foreign trade zone #5
The Port of Seattle’s Foreign Trade Zone (FTZ) #5 can give your company a competitive edge and help manage cash flow by deferring, reducing and potentially eliminating customs duties and reducing overall operating costs.
FTZ Advantages
- Defer customs duties and federal excise taxes until merchandise is transferred from the FTZ to domestic market customs territory of the U.S. or a North American Free Trade Agreement (NAFTA) country (Canada or Mexico).
- Reduce processing/entry fees by as much as 85 percent with the Weekly Entry Process, which allows goods to be shipped 24 hours a day, seven days a week, with just one entry filed each week and just one Merchandise Processing Fee per entry.
- Reduce customs duties on goods processed or assembled in the FTZ when imported components have a higher duty rate than the finished goods (see example below).
- Defer Harbor Maintenance Tax payments and pay quarterly instead of at time of entry.
- Eliminate customs duties entirely when goods are re-exported from the FTZ.
- Store quota merchandise in the FTZ until the quota period opens and immediately ship goods into U.S. Customs and Border Protection territory.
- Exempt imported goods from state and local ad valorem taxes when they are held in the FTZ for storage, sale, exhibition, repackaging, assembly, distribution, sorting, grading, cleaning, mixing, display, manufacturing or processing. Goods manufactured in the U.S. and held in the FTZ are also exempt.
- Eliminate the need for drawback and keep funds in the operating capital of the company.
Additional information can be found through Miller & Company (http://www.millerco.com/mainpages/main.shtml), the National Association of Foreign Trade Zones (naftz.org), U.S. Customs and Border Protection (www.cbp.gov) and the U.S. Foreign Trade Zones Board (www.ia.ita.doc.gov/ftzpage), U.S. Census Bureau (http://www.census.gov/foreign-trade/statistics/index.html), U.S. International trade Commission (http://www.usitc.gov/) and Export Assistance Center (http://export.gov/).
FTZ #5 Reduces Costs
There are a number of ways FTZ #5 can reduce operating costs and enhance your company’s bottom line. The Weekly Entry Process and assembly of imported components in the FTZ are just two examples.
Weekly Entry Cost Savings
The Weekly Entry Process available to companies operating within the FTZ can result in savings of up to 85 percent on entry and processing fees. Entry and Merchandise Processing Fees can be paid weekly, rather than daily, saving time and brokerage fees, as well.
Example:
| 160 entries per year at $485 |
$77,600 |
| 52 entries per year at $485 |
$25 220 |
| Annual savings |
$52,380 |
Savings on Duties through Assembly in FTZ
A company that sells first aid kits imports most of the kit components from Asia – items like bandages, gauze pads, cold packs, tape, scissors, tweezers, rubber gloves, metal cases, etc. The kits are assembled in the U.S. Most of the components have import duty rates of two to three percent. The duty rate for the metal boxes is 17 percent, but the import duty rate for complete first aid kits is zero.
Example:
| Annual value of kit components |
$10,000,000 |
| Averaged duty rate of components |
10% |
| Annual Duty savings from assembly in FTZ |
$1,000,000 |
The same kinds of advantages can apply to a wide range of companies, especially manufacturers that import components or materials for processing or assembly in the U.S.