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What Is an FTZ? Trey W. Boring, Sr. Vice President IMS Worldwide, Inc. Consultant to the City of West Memphis, Arkansas FTZ #273.

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Presentation on theme: "What Is an FTZ? Trey W. Boring, Sr. Vice President IMS Worldwide, Inc. Consultant to the City of West Memphis, Arkansas FTZ #273."— Presentation transcript:

1 What Is an FTZ? Trey W. Boring, Sr. Vice President IMS Worldwide, Inc. Consultant to the City of West Memphis, Arkansas FTZ #273

2 What Is an FTZ? An area inside the United States that is designated as being outside Customs Territory. –Where items are brought into the Zone duty free. –Where Customs duty is determined when the merchandise leaves the Zone.

3 What Is a Zone Site? An Industrial Park. An Industrial Development Inside a Port or Airport. A Companys Facility.

4 What Can I Do in an FTZ? Distribute Store Test and Inspect Repack Assemble Repair Manufacture

5 How Do I Make Money in an FTZ? Duty Deferral Duty Elimination Duty Reduction MPF Savings

6 Duty Deferral Duty is not paid when an item enters the Zone. –An item enters the Zone in January. Duty is paid when the item leaves the Zone. –The item leaves the Zone in April. Four months of duty deferral.

7 Received January Shipped April Product A Duty Owed Product A Duty Paid Foreign-Trade Zone

8 Duty Elimination Testing and inspection is conducted in the Zone duty free. –All rejected and destroyed items are duty free. Exports are duty free. –All items exported from the Zone are duty free.

9 Inbound Goods Scrapped Duty Free Foreign-Trade Zone Receiving Process Quality Control

10 Foreign-Trade Zone Export Imported Product A Exported Duty Free

11 Duty Reduction For manufacturing Zones. –The Zone allows a company to choose the lowest duty rate associated with its components and finished product(s). A company imports 3 components. –A has a duty rate of 10%. –B has a duty rate of 9%. –C has a duty rate of 8%.

12 Duty Reduction The companys finished product has a 5% duty rate. The company will pay for the value of the components at the finished product rate. –A from 10% to 5%. –B from 9% to 5%. –C from 8% to 5%. This reduction means a savings of 5% to 3%.

13 Foreign-Trade Zone Component C 5% Duty Rate Component B 5% Duty Rate Component B 9% Duty Rate Component C 8% Duty Rate Final Product 5% Duty Rate Manufacturing Process Component A 10% Duty Rate Component A 5% Duty Rate

14 Merchandise Processing Fee Savings Each entry into the United States is assessed a Merchandise Processing Fee (MPF). Foreign-Trade Zones are allowed one entry per week. The MPF is collected on that one entry.

15 Foreign-Trade Zone Shipments into commerce with weekly entry. 15 shipments per week. MPF $7, shipments per week; one entry filed at end of week. MPF $485

16 IMS Worldwide, Inc Foreign-Trade Zone Consultants Over 197 Projects Completed Nationwide Rated #1 in Customer Service for over 30+ years


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