Question

What is a Foreign Trade Zone (FTZ)?

What types of operations can be performed in an FTZ?

Answer 1

Foreign Trade Zone (FTZ): This is also called as Free Trade Zone. These are secured zones, and would be under the control of Customs and Border Protection (CBP) security of the government of the country importing/exporting. This FTZ facilitate the importer for importing the raw material, components ...etc without paying any customs duties, VAT. And these FTZ are located nearest to the port of entry or discharge of the country. Tax rebates are available for exporting as well as for importing from FTZ. As long as the goods are in FTZ, no duties are collected.

Types of Operations performed in an FTZ:

1. Manufacturing/Assembling/Reworking: FTZ allows to manufacture the goods with the imported raw material, assembling the parts, reworking or repairing...etc.
2. Stocking/ storage: In FTZ, warehouse facility is available for the imported goods including raw material for a certain period. This is a great advantageous benefit for the manufacturer/exporter/trader.
3. Facilities for Trader: FTZ is a place for the traders for dismantling, inspection, assembling, packing, marking, labeling for their onward activity.
4. Exhibitions: As the FTZ is a free trading zone, it allows the manufacturers/exporters/traders to conduct international trade fares / Exhibitions to promote their new products to develop the new customers/ buyers. Goods/ new parts/ materials ..etc can be brought from all around the world to exhibit to the potential buyers.
5. Main advantage: FTZ is a one of the solutions for the importing/re-exporting for manufacturers/ Business development for existing investors and traders.