Companies can save money with an FTZ designation for activities that range from warehousing to repackaging to more intensive manufacturing. The FTZ program gives special status to foreign imports and duty-free status for re-exported items. Industries of all types benefit: construction, food production, fashion and luxury goods, green tech, and pharmaceuticals.
Benefits of an FTZ Designation
These various FTZ mechanisms may be combined and layered for optimal savings depending on the particular business practices and needs.
- Duty Elimination: Customs duties are not paid on merchandise re-exported from the FTZ.
- Duty Deferral: Imports may be admitted to the FTZ and held indefinitely in inventory without paying Customs duties. Duty is paid only when imports are shipped into US Customs territory.
- Inverted Customs Duty Savings: FTZ users may elect to pay the duty rate on either component material or finished product merchandise produced from imported and domestic component material—whichever is lower.
- Expedited Shipments: Delays in Customs clearance and duty drawback procedures are eliminated. Delivery times after US arrival are reduced due to the special Direct Delivery procedure.
- Quality Control: The FTZ may be used for quality control inspections to ensure that only products that meet specifications are imported. Substandard goods can be destroyed or returned before duty is paid.
- Exhibition: Merchandise and machinery may be held for exhibition or displayed in the FTZ without duty payments. Retail trade is prohibited.
- Weekly Entry: All shipments from the FTZ in a business week may be placed on one Customs entry, significantly reducing paperwork and expense.
- Zone to Zone Transfer: Merchandise may be transferred under bond from one FTZ to another. Duties are not owed until the merchandise is finally admitted into US Customs territory.
Hypothetical Case Studies
All companies are unique. Supply chains and individual business practices vary wildly. The cost of materials, number of units, and individual Customs duties change for each company using an FTZ. The following case studies show simple examples of how hypothetical companies save money with FTZs. Please note, these examples are for reference only and do not represent real company activities.
Is an FTZ Designation Right for Your Company?
- Do you have facilities in New York City's five boroughs?
- Do goods (components or finished product) that you sell or transport come from abroad?
- Annually, do your imports result in payment of $50,000–$100,000 in Customs duties and fees?
A company may be designated an FTZ and begin saving money on import duties in just 30 days—faster than ever before.
Additionally, our new FTZ program allows companies to remain in their existing facilities within New York City. It is not necessary to move to a different site. This means that companies who become FTZs do not incur relocation costs and can start receiving FTZ savings as soon as their applications are processed.
To designate a site, a company must file an official application with the FTZ board.
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